Real Estate Is Getting Real: Whisper Prices Aren’t As Innocent As They Sound
Pssst…have you heard about whisper prices? If you’re thinking about buying yourself some real estate soon, then you should be aware of this completely illegal (yet still totally happening) practice. Here’s the deal.
Usually when a real estate sale occurs, both the buyer and seller are represented by brokers who look after their interests and negotiate the deal. The two professionals then split the commission on the sale. If the buyer happens to be a direct buyer — one who isn’t using a broker — then the entire commission will go to the seller’s representative.
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So, when there are several interested buyers, it’s in the seller’s broker’s best interest to do what he can to sell to a direct buyer. The broker’s best interest, not his client’s, and that’s where things can get dicey. In a situation where several potential buyers are all putting in their best offers, brokers often “whisper” the highest price to the unrepresented buyer in order to give him an edge and help him win the sale.
So what’s the harm? The broker may be looking after his own interests but he’s also getting a high sale price, right? Yes. Technically. The problem is that the broker should be representing his client’s wishes and wallet, not looking after his own bottom line. Making decisions or negotiating deals behind his client’s back is always a no-no.
Tell us, have you heard (or experienced) this shady practice?
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