If you’ve tried to buy or sell a house, you probably worked with a licensed real estate professional—there are more than 3 million of them in the U.S., and their advice and assistance are often invaluable. Real estate agents know the properties in their area and can help you locate them (and weed out deceptive listings) and guide you through every step of the process. A good real estate agent who has your best interests at heart is worth their commission and then some.
But not everyone who has a real estate license is a good agent—or an ethical one. Sometimes the red flags around an agent are big and obvious, but sometimes real estate pros engage in subtle little scams that aren’t obvious at all. These down-low tricks aren’t always illegal, but they’re unethical—and they can cost you big time when it comes to what’s likely the biggest financial purchase in your life. If you’re looking for a real estate pro to help you with your house hunt or sale, watch out for these subtle scams.
Sketchy referrals
One of the most subtly unethical things a real estate agent can do is push sketchy referrals on you. It’s normal for an agent to help you find a mortgage broker, a home inspector, or even a contractor to help you figure out if a house is a good fit for you. It crosses into unethical territory, though, if they try to insist you use their referrals or even push you to use them.
You can defend yourself from this simply by getting other referrals for any services you need, especially when it comes to mortgage brokers. Real estate agents sometimes have what are called “preferred lenders,” and there can be benefits to using them (like a smoother process)—but you never have to use them. Getting a few other quotes will help you figure out if the person your agent suggests is doing right by you.
Buying a listing
If you’re selling a house, you know that one of the trickiest aspects is choosing which real estate agent to work with. Agents know there’s competition for that commission, so there’s always a sales pitch. One subtle little scam some agents pull is simply telling you what you want to hear: That your house will sell for a higher price than what other property experts are telling you.
It’s called “buying a listing.” They know that if they confidently assure you that your house will sell for significantly more, you’ll be enticed to sign with them. And they know that when offers come in lower than they promised they can blame the shifting market or some aspect of the property for the discrepancy—and you will probably not be willing to walk away from an offer even if it’s not as high as you were led to expect.
A good way to avoid this trap is to do your own research. Get several estimates on what your property could sell for, and look for comparable properties in your area that have recently sold. If an agent comes back with a suggested listing price that is way out of line with the rest, be suspicious.
Steering
If you’re working with a real estate agent and you notice that they never show you homes in specific areas, or ignore your preferences and only show you homes in certain areas, you might be the victim of “steering.”
Steering is the practice of trying to steer you into a certain neighborhood or area based entirely on some attribute like race, religion, or gender. It can be very subtle—the homes you’re seeing are in your price range and match your list of must-haves, they’re just always in the same area. Steering isn’t always obvious, either—if you’re single and your agent never seems to show you a large house in a family-oriented neighborhood despite your stated preference for just that, they might be steering you toward what they think of as a more “appropriate” property, your desires be damned.
Some signs that you’re being steered include a lot of personal opinions from your agent on who should live in certain properties and a pattern of ignoring your preferences in terms of property size, type, and location.
Personal property
If your agent sweetens a deal by helping you reduce your future tax burden with a lower official price on the home, you might think you’ve found the brilliant real estate hustler of your dreams. This is usually done by suggesting that a portion of the sales price be listed as payment for “personal property” and not the house itself. This reduces the actual price of the house, which in turn will reduce future tax payments.
It’s true that it’s not uncommon to buy stuff like furniture or appliances from a seller, and these items are usually considered personal property and a separate sale. But lying about this is, of course, illegal, and opens you up to a long list of potential consequences.
Lax marketing
When you hire an agent to help sell your house, they’re not just someone to rubber-stamp paperwork and be there for open houses. They’re supposed to market your home to prospective buyers. When you sign with a real estate agent, they should detail what they’re going to do in that department—from advertising to web listings, staging, and even video brochures or virtual tours.
Some agents will promise the moon when closing you as a client, then actually do very little in terms of marketing, which saves them time and money. They might still sell your home, of course, but they won’t work as hard for that commission as you expected. Your best practice is to make the marketing plan part of the contract—and then follow up to make sure the plan is being followed.
Bait listings
If you landed with your current real estate agent because you spied a listing for a house that was absolutely perfect and much cheaper than you expected—only to be told that the house had already sold—you may have been the victim of a bait listing.
Bait listings are sometimes old listings that saw a lot of interest, so the agent leaves them up in order to attract latecomers, but they can also be deceptive listings designed to lure interest. Once the agent has you in their office or on the phone, they admit the listing is gone—but assure you they can find the right property for you regardless.
Off-market
If your real estate agent tells you that your house isn’t in prime condition and suggests you sell it off-market—without listing it publicly on the multiple listing service (MLS)—they might be setting you up for a subtle scam involving a property investor they already have a relationship with. Once you agree to sell off-market (because the agent has convinced you that sprucing the place up properly is prohibitively expensive), the investor magically appears, offering to buy the place as-is. You wind up selling at a discount, the investor does the sprucing up you could have done, and sells it for a profit—a profit that could have been yours.
Meanwhile, the agent may have gotten away with a triple commission: From you and the investor on your home’s sale, then later when the investor sells the house again. Always be skeptical of an off-market suggestion and drill down into how it helps you to have fewer potential buyers—and get your own estimates on repairs and improvements that will make your home more marketable.
The ghost buyer
Sketchy real estate agents sometimes invent phantom buyers when it serves them. There are usually two basic scenarios:
When you’re selling your house and looking for an agent, they contact you and tell you they have an interested buyer, or your property fits the bill for someone they know of. Then they push for you to hire them as your agent. That interest buyer probably vanishes—they were just a way to get the agent’s foot in your door.
When you’re buying a house and you’ve found a property you want to make an offer on, suddenly there’s another interested buyer, and you’re advised to improve your offer on the house to ensure you get the property. It’s entirely possible there is another buyer, of course, but it’s also an effective (if unethical) way of getting you to pay a higher price, with a higher commission.
The best way to defend against ghost buyers is to choose your listing agent according to your needs, and not just because they rang you up out of the blue, and to know at the outset how much you’re willing to pay for a house—and commit to sticking to that.
