Schemes and Scams
There are a lot of great, honest, ethical Realtors. There are also some not so great, not so honest, not so ethical ones. This page is designed to help you identify common tactics employed by the ethically challenged.
Don’t Get Suckered
A real estate broker has only one objective when communicating with prospects: Get an appointment to make a sales presentation and close them. Alec Baldwin illustrates the attitude in his famous scene in the movie Glengarry Glen Ross.
To get the appointment, a number of offers have evolved. I call them scams, because that’s what they are. They are bait and switch tactics designed to get the real estate broker an appointment.
The common thread is what Dr. Robert Cialdini calls the “principle of substitution.” If the original reason we have chosen to make a decision (3% to sell, I’ll buy it if it doesn’t sell in 30 days) disappears, we will find another reason to justify our decision rather than admit we were wrong.
The broker utilizing these tactics will always make his sales presentation before explaining the bogus offer. By that time, the prospect has likely already decided to list with the broker, so, even when they find out the offer is bogus, they will still hire the dishonest broker.
X% to Sell
There are several brokers whose advertising themes are “X% to sell.” One in my area advertises “3% to sell,” inviting a seller to imagine what they’d save by not paying a 6% brokerage fee to sell a $500,000 house.
Here’s what they don’t tell you: “X% to sell” is only their commission – it does not include the commission for the buyer’s brokerage. That 6% commission they talk about is split between the brokerage representing the seller, and the brokerage representing the buyer.
In order to get buyers’ brokers to show your home, you have to offer them a commission. Buyers’ brokers are supposed to show homes to their clients without regard for their potential commission, even if that commission is zero, but the reality is that if you are offering the buyers’ brokers a lower commission, your house will get shown to fewer buyers. You wouldn’t do a job for less than you could earn, neither will a buyer’s broker.
Here’s the kicker: In my market, the seller’s broker’s portion of the brokerage fee is often only 2.5%, so almost all of the “discount” broker’s clients are paying more to sell their homes than clients of traditional brokers.
If I Don’t Sell Your House in XX Days, I’ll Buy It
What the broker wants you to think is that if he lists your house at, say, $350,000, and it doesn’t sell in XX days, s/he’ll give you $350,000 for it.
Dream on. There are a lot of conditions to these kinds of offers. The house must usually be within a certain price range, and in perfect condition, and the broker will buy the house at far less than the listing price.
Let me save you some time, if you’re willing to do the repairs necessary to put your house in perfect condition and sell it to me for eighty cents on the dollar, I’ll buy it today, you won’t have to wait thirty days.