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Insider Secrets About Bait and Switch Techniques in Real Estate

Here's an Insider Secret About Bait-and-Switch Techniques in Real Estate


Getting caught up in a bait-and-switch scam can happen to anyone.  It doesn't take much and it happens often, many times you do not even know it is taking place.  We get baited in to a retailer because of their advertised low prices on a TV and then we find out when we arrive at the location that either the price is higher or the product as advertised is "no longer in stock".  It is frustrating and unfortunately happens to us frequently.  Whether or not you are buying electronics at a box store, booking an airline ticket, renting a car or checking into a hotel room.  How many times have you been tricked to visit an airline's website because of a low fare?  $294 round trip to Phoenix, then you go on the website and it seems like that price never existed and the lowest fare you can find is $500+...but now you are on that website and end up booking a trip anyway... It happens to all of us and it recently happened to me on a trip to North Conway, New Hampshire with my parents.


Standing at the counter in New Hampshire


We had just arrived from driving approximately 10 hours from our destinations.  I had left my 10 year reunion at the Royal Military College in Kingston,Ontario and my parents had departed from my home town in Sackville, Nova Scotia.  We decided to meet in New Hampshire because it is approximately half way between the two locations and has some great opportunities for climbing, hiking and outlet shopping.  I highly recommend it as a place to visit.


We had decided on a condo for part of the week and my Mom booked the trip using her RCI (time share company) points so that it didn't cost as much...at least that's what we thought.  Once we arrived, having both just finished long days of driving we were presented with additional fees at the counter, a resort fee, a Wi-Fi fee and an additional cleaning fee.  It was pretty frustrating, here we were standing at the counter feeling tricked because these costs were not mentioned in advance.  When my parents booked the condo via the hotel's website there was no mention of the costs that they now wanted us to pay. 


How did we feel?


We felt mislead and frustrated but we were also tired from driving 10 hours, we were in a town that we were unfamiliar with and had no idea if we would find additional accommodations late at night during the peak travel season.  We broke down, paid the extra fees and walked away feeling disgruntled and a bit flustered.  Nothing like the way you want to start your vacation.


That's bait and switch, that's how easy it can happen and how it makes you feel when it does.  We see it and have it happen to us all the time.  Unfortunately it occurs in real estate all too often.  It's one thing to get an extra cleaning fee on your hotel bill and another to get charged an extra $10,000 in commission, or perhaps not being able to sell your home when you were told it would be sold in 90 days or "We'll buy it"


So what are the secret to bait and switch techniques in real estate?  How can you end up paying an extra $10,000 in commissions?


Here is an example of a classic 'bait-and-switch' technique that is used to mislead sellers into signing a contract with an agent.  Just like my family standing at the hotel counter in New Hampshire, waiting to check in and not changing locations even though we were tricked; most people will stick with their realtor regardless of their performance even though they were duped by promises of a low commission when they signed the contact.


Some realtors will market to home owners their extra low commission structure to sell their home that is often half of what another realtor would charge.  Just like they say "If it seems too good to be true then it probably is."


These deceitful realtors get sellers locked into the contact at a lower commission structure and offer to market their home "exclusively".  The agent gets sellers to sign an "Exclusive Listing Agreement" and say they will charge them half the commission another realtor charges to sell their home.  Then, because it is an exclusive listing it does not get uploaded onto the Multiple Listing Service (MLS) and only a sign is placed in their yard, or the window of their condo.  I saw this recently in Canmore, we went to a showing and another unit was for sale in the building but I could not find it online.  The realtor had signed an "Exclusive Listing Agreement" with the seller so the listing was no where to be found.  I can never figure out why a seller would do this.


How the scam normally works is the realtor gets the sellers to list their property with them promising the sellers that they will sell it for half the commission they would normally pay, then because it is an exclusive listing it never gets uploaded to MLS.  It is never emailed to the buyers that are setup on searches waiting to see new listings and the home never shows up on Realtor.ca.  Where do you think buyers find homes? Stats show that 93% of buyers start their searches online.  Why would a seller do this?  Often, in order to get them to sign the contract, the realtor convinces the seller that they are working with "tons of buyers who would love their home".


Then, a month later, when the home hasn't sold, the same agent gets the seller to re-sign another listing contract for the full commission so that the seller's home can be uploaded to MLS.  The scheme here is to get sellers into a contract knowing that the likely hood of them switching realtors is low.  The realtor knows that after a few weeks or a month of no showings and no offers that the seller will decide to list on MLS and enter into another contract with them.  They keep the seller as a client, whom they baited with the promise of only having to pay half commissions and then switched the seller to a different contract a few weeks or a month later with a commission structure that is double what they initially signed up for.


Here's another insider trick: the 'Guaranteed Sales Program'...


There are many other bait and switch tactics in the real estate world though.  One of my least favourites happens to be "Your home sold in 90 days*".  What do you think that asterisk is for?  Recently I saw it marketed this way "Your home sold in 90 days or we may buy it*"  That seems a little more honest but still it is classic bait and switch.  Here's another one, the 90 Day Sellers Guarantee.  Who doesn't want a guarantee that their home will sell?  This is a quote direct from that realtors 90 Day Sellers Guarantee page "you deserve no less than a guarantee." and "Unfortunately you'll find that most realtors simply can not make such a guarantee".


The crap some people will say... It's just not true at all.  All the realtors in my office can make that guarantee, all 200 of them but barely anyone does, just this guy and then he says that "most realtors can not make such a guarantee"  What he should say is most realtors don't want to make that guarantee cause it is bait-and-switch!  Sellers don't deserve a guarantee (although that would be nice), they deserve the truth.  The truth is that the asterisk I mentioned before is the fine print that basically makes it totally unreasonable to use the guarantee.  The home price that you have to agree to in order to sell your home is probably 50% below market value to get them to honour the guarantee...Who would do that? 


I spoke with a broker that offers this program and in approximately 20 years that brokerage actually purchased around 5 homes from people and that's not because the listing realtors sold them all...it's because no one is stupid enough to accept the price that the guarantee provides.  It is a lie and a scam to get you to use that realtor, the bait is the guarantee and the switch is when you find out what that asterisk means.  These are 'guarantees' from some of the biggest realtors.  The real estate trainers who promote this misleading marketing also spend a large majority of their training sessions teaching agents what to write in the fine print on the contract so that the realtors never have to ever actually buy a house if it doesn't sell.  Just like when we were frustrated about paying the extra fees at the hotel, how do you think the sellers feel when this happens?  My guess is the same, frustrated and angry but with a little higher level of conviction.


I am embarrassed as a realtor when this happens


 Similar to the deal you saw advertised for a new TV that wasn't in stock at the store when you arrived or, just like my parents and I checking into that hotel and getting grinded for those "extra cleaning" and special "resort fees"; we see bait-and-switch traps frequently.  What I don't like to see is agents doing the same thing, that's how realtors end up with an industry that has a negative reputation.  Hopefully, this behind the scenes glance at tricks realtors use to get listings will provide you with useful information for the next time you are thinking of selling.  Realtors are supposed to be looking out for seller's interests and protecting their clients at all costs, not luring them in with services that they have zero intention of providing.


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