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I think you misunderstood. The second offer would not be a fake offer, but a real offer by a qualified confederate buyer using a different agent. It has been very effective in several of my transactions.
But wouldn't this "confederate buyer" still need earnest money and the trouble of being approved for a loan? A cash offer could be risky because some sellers will take a lower offer if its cash just to avoid lending issues. I guess the earnest money isn't put in escrow until everything is finalized, but still...
And what is to stop an actual real other offer from coming in while this is going on?
Believe me, I am all about making savvy moves to shut down this other offer nonsense, but it seems like this could backfire. I am curious to know more.
Unless it’s a house that was listed within the last 30 days or so, or just had a price cut, it’s likely BS IMO. Anecdotally seems like this almost always happens
This tactic is used to create a sense of urgency to write an offer and in my experience, is widely used in residential real estate. It preys on the desire to not miss out on something.
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Repeating what I said in the other thread; I have seen real buyers withdraw their offer when told there was another offer because they, like you, thought it was a lie. There is probably an equal chance of losing a real buyer as creating a "sense of urgency".
On the other hand if a listing agent says "someone said they'll be bringing an offer" I tend to believe that. I have a listing right now that I've been told three times an offer was coming from three different buyer's agents and have yet to see one.
Not only do I not see this working (I'm not sure I agree with your psychology)... I can't imagine an agent who would submit a 'fake' offer in the hopes of boosting the appeal of another one. I'm not in the mood to look it up... but I'm sure it would be expressly against both regulation and ethics.
I did something similar years ago to score on a big console tv set that a finance company had repossessed. When I entered my bid, for the exact price they were asking, they said they had to have three bids, and they would notify me when they got the third bid. Since I lived 20 miles away, I wanted to take the tv right then and there, so I turned to a person who was making out a loan application, handed him a bid ticket, and told him to bid on the tv, but less than my bid. He did, and I paid my bid on the tv, loaded it in my truck and went home.
I know of a person who listed their home in an extreme "sellers market" on a Thursday, had an open house on Saturday, and a bidding war started. The winner was the guy who bid "10% above the highest bid". He could not be beat!
I see nothing wrong with having a friend make a valid offer (less than your offer, of course) on a place you are interested in to give your offer a better appearance. The friend will lose nothing; any Earnest Money he pays will be refunded as soon as your offer is accepted (if it is).
I had that happen on a motorcycle sale. I was asking $350 for it, and a migrant farm worker was trying to get me to lower the price. A friend walked up and said "I will gladly pay the three fifty!" The migrant worker got the money out of his pocket immediately, accepted the title, and rode off.
IMO, that is an acceptable bargaining ploy.
As a seller of real estate, I have had several people express an interest in busting something, but no offer ever materialized. As a purchaser, I have always been told that there are other very interested parties, and speed is important if I want to purchase the property.
I fell for that one when I purchased my first house. It was still a decent deal, so I don’t regret it. All of my subsequent purchases for major items are done at my preferred pace. Yes, I have missed an item/property or two, but more frequently I have succeeded in my purchase, or I have seen the house, boat, property, car, whatever stay posted for sale long enough that I know there wasn’t a second serious offer.
I see nothing wrong with having a friend make a valid offer (less than your offer, of course) on a place you are interested in to give your offer a better appearance. The friend will lose nothing; any Earnest Money he pays will be refunded as soon as your offer is accepted (if it is).
While everyone, myself included, likes to get a good deal, that method borders on unethical, IMO. Real estate contracts are legally binding and they are all structured differently depending upon state/county. It is not necessarily just a case of getting EM money back.
Your example above of a valid offer is not a valid offer as "your friend" has no intent to purchase said property. Unless they have a chunk of cash laying around and are bypassing a lender, it still seems like that scenario is playing Russian Roulette with RE purchase contracts and wasting an agents time in writing up an offer for a property they are not remotely interested in purchasing.
I think most realtors are bound by ethical standards to not make up "phantom offers". no? it has to be bona fide. If anyone could prove there was no better offer on the table, that real estate office would be forced close in a minute. A better offer might have been accepted, but the financing fell through. lot's of other reasons come to mind.
I did something similar years ago to score on a big console tv set that a finance company had repossessed. When I entered my bid, for the exact price they were asking, they said they had to have three bids, and they would notify me when they got the third bid. Since I lived 20 miles away, I wanted to take the tv right then and there, so I turned to a person who was making out a loan application, handed him a bid ticket, and told him to bid on the tv, but less than my bid. He did, and I paid my bid on the tv, loaded it in my truck and went home.
I know of a person who listed their home in an extreme "sellers market" on a Thursday, had an open house on Saturday, and a bidding war started. The winner was the guy who bid "10% above the highest bid". He could not be beat!
I see nothing wrong with having a friend make a valid offer (less than your offer, of course) on a place you are interested in to give your offer a better appearance. The friend will lose nothing; any Earnest Money he pays will be refunded as soon as your offer is accepted (if it is).
I had that happen on a motorcycle sale. I was asking $350 for it, and a migrant farm worker was trying to get me to lower the price. A friend walked up and said "I will gladly pay the three fifty!" The migrant worker got the money out of his pocket immediately, accepted the title, and rode off.
IMO, that is an acceptable bargaining ploy.
Purchasing a TV or selling a motorcycle is on a totally different level from asking someone to make a fraudulent offer on a home.
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