Ethics

You might recall that I recently wrote an article about negotiating strategy in which I suggested that one tactic you can use when dealing with a stonewalling seller is to stonewall yourself.

To make this work, you have to get everyone to believe that once you have made your best-and-final-offer, that if they don’t accept it you really are moving on to another property. I believe that you have to include your agent in the group of those who really needs to believe this in order to be fully motivated. I suggested that you could “imply that this [next] property is one you found on your own,” so the agent wouldn’t be earning a commission.

Well, one reader, a real estate agent, got quite angry that I suggested that my readers lie. The direct quote was, “lying is not an ethical way to handle other problems. I am not going to waste my time with people who encourage people to lie to their agents.” This is a valid comment and, therefore, I feel that it deserves some further discussion

Lying is not a part of my life. While I pride myself on being a truth-teller, there are times when bending the truth is called for. Has your wife ever asked, “This dress doesn’t make me look fat, does it?” You ought to be real careful how you answer questions like that.

When you get into business dealings, wouldn’t you like the other party to reveal his complete negotiating strategy to you? Sure you would, but he won’t, and you shouldn’t reveal yours to him either. That is something you should keep to yourself until it comes time to execute a particular tactic.

So what about dealing with agents? The agent is supposed to be on your side. Why wouldn’t you be completely truthful with your agent? Well, most of the time, the client does not have a relationship of long-standing with the agent. You may have just met your agent a week ago and, frankly, you may not know the agent’s ethics and motivation. More particularly, you do not really know if the agent is working for you or himself. The truth is the lots of real estate agents will do some pretty outrageous things in order to earn a commission, and truth gets left somewhere behind, in the dust.

Let’s consider the agent for a moment. How’s this simple statement? “This house is a really good buy.” That may not be true but if the agent thinks that you can be motivated by the statement to make an offer, out it comes.

What about the agent who is talking with a seller about listing their home, the worst one in the neighborhood? The seller probably is proud of his home so making a totally true statement such as, “This home is dark, doesn’t have a good location, is not in good condition, and is going to be difficult to sell,” is not going to get the listing. It’ll be listed with another agent.

Over the years I have seen lots of agents, even well-intentioned ones who were not well-informed, make statements that got their clients in trouble. I’ve seen others make statements that I’m sure they knew were patently false when they said them.

That agents sometimes lie is not a justification for you to lie, but the fact is that agents also do not always tell the truth to their clients and until and unless you have a substantial body of knowledge that leads you to believe otherwise, I’d be careful about how much I disclosed to my agent.

I think that telling your agent that you “have to buy this home” is a mistake. I think that telling your agent the maximum price you will offer is a mistake. In the case of a seller, telling your agent that you are desperate to sell or disclosing the absolute bottom price you’ll take is a mistake. As one who studies the literature in this field, there are a number of experts who agree with me.

Finally, the tactic I talked about in the Stonewall article was taken from real life at the time it was happening, a couple of weeks ago. I was the one who made the suggestion to the frustrated buyer, he used it, and 24 hours later, the previously intransigent seller accepted his offer. It worked, we’re about to fund his loan, and they will soon own the home. Quod erat demonstrandum!

Be careful out there.