It is usually really subtle and the seller doesn't realize it at all, or until it is too late. But there are many instances of brokers or agents buying a seller's listing. The phrase "Buying a Listing" translates in real estate lingo to a broker or agent that tells a seller his house is worth X amount of dollars more than the agent actually believes it's worth. The seller agrees to have the broker list that home to sell because they believe that this broker is better than others based on the false pretenses they will be able to sell their property for more money. Because the real estate "professional" is acting in their own self interest and not the seller's, the broker or agent is acting unethically and if they are a REALTOR®, they are breaking the "code of ethics." On a side note, many state laws regarding real estate across the United States are based on the REALTORS® code of ethics (and for a good reason).

How Unethical Brokers/Agents Buy A Listing

When a seller begins the process of selling their home, its common practice to bring in a number of brokers or agents (around three to four) to present their services and what's called a broker price opinion and or comparative market analysis (an estimate of a properties' value based on comparable properties and condition of the home). While three real estate professionals will tell the seller that his/her property is worth X amount of dollars in a given market, the fourth will tell the seller the property is worth X + Y dollars. Seeing as how the seller wants to net the most amount of money for the property, the seller will choose the fourth real estate agents services despite the fact that agent knows the property will never sell that high.

What Happens To An Overpriced Listing

An overpriced listing sees very little market activity. Market activity includes open house traffic, scheduled showings, offers, & other various inquires. After a few weeks of stagnant activity the seller begins to grow impatient. Even in a slow market (like now) a well priced property will generate some interest. At this time the broker or agent will recommend a price reduction, much to the sellers dismay as it was expected to sell for the amount the agent advised the seller it would. There may be two or three price reductions before the activity increases. By the time the property sells, it will be at or often times below market value; the price the three other brokers/agents said it would sell for. The broker walks away with a nice commission and the seller walks away with six months or more of wasted time, resources, and false expectations. Ultimately these unethical brokers or agents can cost a seller thousands of dollars when the property finally sells. 

Do Not Confuse An Overpriced Listing For Being "Bought"

There are plenty of overpriced listings out there sitting on the market. These listings were not necessarily bought and the listing agents will usually be prominent agents in their respective areas. While it's the duty of a real estate professional to recommend the right price of a property, the seller isn't always interested in coming down from where they perceive their home to be worth. It's understandable. But understand, an overpriced property will sit on the market longer regardless. As long as the agent or broker properly advises the seller, there is nothing unethical about this situation.

How To Protect Yourself From Being Bought

Education is key to protecting your assets and interest. If you're planning on selling your home, call at least three companies up to present their services. After reading this blog post, it should be very evident if someone is trying to buy your listing. If you're following our Newsletter & Market Trends, you will be able to tell if you are being told the truth or if an agents recommendation is backed up by trends and statistics.