Do realtor's sometimes put up fake listings?

August 11, 2015 8:03 AM

Been looking to buy a home in a particular neighborhood and within the span of only a couple of months the prices have increased dramatically.

2 months ago there were several places I could get for a certain price and now similar places of same size and quality have asking prices that are literally 100's of thousands more. I don't understand it at all. How can the market change that much in a few weeks time?

But at the same time there aren't really buyers who are very interested now either unlike a couple of months ago. There is one home asking for 800k (which was 150k more than similar houses in the area) so naturally and that one remained unsold. Looked up the place and realized it has been on the market for about a year and they still keep the asking price?? Now 2 more similar houses have popped up and they are asking for even more than the one that hasn't sold for a year.

I've seen this happen enough that I'm starting to wonder if some of these listings are fake. How can you be serious about selling a 6,000 sq foot house with all the trimmings for 1, Million when the same darn house in essentially every way half a block down the street will not sell 800k? Are they just trying to artificially inflate the market somehow? Maybe they keep that one house that they ask way more money for on the block without intending to sell it, in order to provide a template for the asking price of other homes in the area?

posted by manderin to Home & Garden (17 answers total)

I don't know that realtors put up fake listings but I do think that this is the big prime season for real estate. In my area, July supposedly had the highest number of closed sales and pending contracts since 2005.
posted by kat518 at 8:08 AM on August 11, 2015 [2 favorites]

I can't speak to your actual question, but I will note that when I bought my current home (early 2010), it was for around half what the previous owner had been asking before the real-estate bubble burst. I talked to the realtor about the previous owner after everything was done, and he said that lowering her asking price had been "a real issue." So it might just be that the homeowners are just being unrealistic.
posted by Etrigan at 8:10 AM on August 11, 2015 [2 favorites]

It doesn't cost anything to list a home. Or rather, the seller's agent covers the cost in exchange for a listing agreement that guarantees them a commission if the home sells within a particular time. Now, the agent isn't required to list at a ridiculous price, but sometimes they will with the idea that they will talk the owner down to a realistic price over time. This all goes back to the idea that the agent is working for the deal, not for you.
posted by wnissen at 8:15 AM on August 11, 2015 [1 favorite]

Same boat as Etrigan, we live in a "hot" real estate city but there is definitely a cap and realtors know what it is but homeowners just hear "sellers' market!" and "all cash! way over asking!" And it is hard to convince some homeowners that they aren't going to get that amount.

I'm not sure it is possible to put up a fake listing? I mean you would at least need the homeowners' permission right? I guess you could do that but any responsible buyers agent is going to look at selling prices not at asking prices and figure that out pretty quick.
posted by magnetsphere at 8:15 AM on August 11, 2015 [1 favorite]

In my area (northern suburb of Atlanta), prices have gone up on new builds by 200k. Existing inventory is at the price it was back before the bubble. It's pricey out there.
posted by heathrowga at 8:28 AM on August 11, 2015

Putting up a fake listing sounds, at the very least, inconsistent with the Real Estate Association's Code of Ethics (couldn't find a US version of this, but it must exist somewhere).
posted by Kurichina at 8:35 AM on August 11, 2015

Best answer: I do know some people list things just to see if they get any bites at their preferred price. When we were looking for houses, we were very interested in one (even putting an offer in) that had apparently been on and off the market for several years, and my agents said that the seller was renting it and would occasionally see if they could get an offer that would make that preferable to renting. When we did offer on that house, the seller had some ridiculous demands (seriously: $40k in escrow, that the seller would get to keep if the deal fell through for any reason) so we walked away. We see the house back on the market occasionally but it's being rented so it doesn't cost the seller anything to wait and see.

Think of it as taking the temperature of the market. Or maybe casting a wide net. It's not the realtors doing it in general (unless, as in my case, the owner himself is a realtor). It's sellers gaming the market.
posted by This Guy at 8:50 AM on August 11, 2015 [3 favorites]

The seller's asking price is (usually) based on a comp, or comparable price. If a home sells high in a neighborhood, in theory, the price of all the other homes in the neighborhood will also rise.

Note that the asking price is not based on an appraisal, which is something different.

There's nothing stopping anyone from setting a high asking price, so there's nothing stopping sellers and real estate agents from going, "Holy shit, XYZ house a few blocks over is asking ABC price. This neighborhood is hot! Let's jack up our asking price, too."
posted by Cool Papa Bell at 8:56 AM on August 11, 2015

In my neighbourhood in Toronto this is happening with almost exactly a 150-200k spread and it is because a) people have realized it exists over the last couple of months and it is still just barely in the affordable range unlike 10 minutes west and b) it's at an interesting phase where a lot of the original owners were selling over the last year, leaving behind their shag rug and wood paneling, and it's like the Summer of Flipping on my street...because of the realization above there is money to be made. No major upgrades usually but a lot of cosmetic work.

So, it's possible.
posted by warriorqueen at 9:12 AM on August 11, 2015 [2 favorites]

Just to add concrete numbers, three houses sold in the $480-520k range in the spring, and one is on the market now for $720k, and another non-flipped house sold for $650k. My neighbourhood is also just gorgeous in the summer so summer prices are always higher; don't die or get divorced in November, is my motto. :)

It may also be that those listings were selling over asking, so the asking prices adjusted. A realtor for the area would know.
posted by warriorqueen at 9:18 AM on August 11, 2015 [1 favorite]

The house we're in was listed originally way over what I think its actual value was. The owner saw homes in the neighborhood going for a lot and decided to list high. We ended up paying $100k lower than the original listing price after it has been on the market for about right months.

The realtors come up with a price based on comps but the seller gets to decide what to list for. Some people who aren't in a hurry to sell will list really high on the off chance they get an offer.
posted by betsybetsy at 9:39 AM on August 11, 2015

Also, when markets get hot you'll have owners who aren't really motivated to sell, but would be willing to if crazy money is offered. So, more houses might enter the market because they are owned by people who don't expect to sell, but would go through the hassle of doing so and moving if they can clear hundreds of thousands in profit on the deal. Around here these are often FSBO listings (even just a sign out front), but I could imagine in other markets they'll still list with a Realtor if that Realtor is willing to do the listing recognizing the long odds on it ever being a sale.
posted by meinvt at 9:42 AM on August 11, 2015 [1 favorite]

A house to you is what you are willing to pay for it. I would ignore the asking price if you are willing to put a bid in. Ask your agent to put in a bid for what you think it is worth and tell the seller that you are not trying to insult them by coming in at 150k less than they are asking, but it is all you can afford to pay for that house. Just as the seller may find that miracle buyer, you never know if a seller will just say yes (after a brief negotiation).

Look at average time on market and the houses you are interested in. If it is more than the average time in that neighborhood, bid.
posted by AugustWest at 10:16 AM on August 11, 2015

When a property has been listed for a long time, you'll almost always find that the price is too high. Some homeowners have an exaggerated idea of what their place will sell for, and they won't listen to reason. The last time I was looking to buy, an agent begged me to make a lower offer on such a place so the owner might get the message.
posted by wryly at 10:18 AM on August 11, 2015

At a guess, I'd say that the reason that $800K house hasn't sold in over a year is the current owner, not their agent: either A) At some point some other house(s) in the neighborhood sold at that level and now this owner is convinced he should/could get the same, no matter how much the market might have changed; or B) The current owner himself paid at or near that level, and he's determined to get his purchase price (at minimum) back when he sells the place.

Sometimes, people just won't accept that they overpaid for something, and insist --- against all objective evidence, like for instance a worldwide recession --- that they can resell it for even more money than they themselves paid. Their agent would probably love to move the house off their inventory, and more than likely has been begging the owner to drop the price, but the agent's hands are tied if the owner refuses to do so.
posted by easily confused at 10:19 AM on August 11, 2015

You should also consider that some houses have problems that keep them from selling at a chosen price, and that some sellers are nutballs who refuse to acknowledge this.
posted by rhizome at 10:21 AM on August 11, 2015 [1 favorite]

Response by poster: I think Guy above might be onto something. I requested to see one of the houses with the crazy asking price, just in case there was a possibility of getting it down 100k or so- I was told that they aren't showing the place right now. Huh??? If you're supposedly listing it for sale, then how are you not showing it to anyone?

I think like you say- Some are just listing to see how much they could potentially get IF they were serious about selling now- Which they are not. But if someone is willing to pay a crazy high enough price they might consider selling it. They are not serious sellers.
posted by manderin at 6:22 PM on August 12, 2015