Caveat Emptor

Since we are heading into the Spring buying season it seems like it would be prudent to remind people of the ways in which sellers and realtors can be deceptive. Of course, that's not to say that all are deceptive, but enough are that it is a common point of discussion on the blogs and elsewhere. So what things should buyers keep a watchful eye out for? Here is a partial list. Feel free to add to it:

1. Relisting a house on the MLS. A house is placed in the MLS and it doesn't sell for whatever reason. The realtor takes it off the MLS for a couple weeks (and the seller possibly reduces the asking price a little) and then relists the house. It is suspected by some that this is done so that the house now looks like a new listing and all the stigma of sitting on the market is gone. Others argue that it is normal operating proceedure when the listing expires. Either way, one shouldn't draw the wrong conclusion. To combat this practice, search for the address using various tools like Google, Domania, etc. and find out what the listing and selling history of the house is.

2. "Price reduced" signs. These are suspected by some people to be used to give the buyer the impression that they are getting a deal on a house when in fact they are not. According to some people, what often happens is that a seller sets the asking price well above what they think the house will really sell for. The seller is hoping for a sucker to come along and pay that price. If no one makes an offer at that elevated price, the seller then reduces the asking price down to closer to what he thinks the house will really sell for and advertises that fact with a "price reduced" sign.

3. It has been claimed that sometimes a seller will deliberately set the asking price for their house below the market value in the hopes that a lot of buyers will then bid the price of the house above market value. This seems like a risky tactic and works best during speculative periods.

4. Sometimes, in order to fuel a sense of buying urgency, realtors tell potentials buyers that there are other people interested in the property, when in fact there are not or these 'potential buyers' were just casual browsers. (Submitted by Bubble Meter)

5. Giving misleading market statistics or flat out lie about market conditions. (Submitted by Bubble Meter)

6. Falsely validating the asking price for a house based on comps that are not fair comps. For example, the "comp" had spectacular views of the Bay whereas the house that the buyer is interested in has no such views. (Submitted by Bubble Meter)

7. Realtor hype. Some examples (gleaned from various sources):
"There is a lot of pent up demand."
"This may be your last chance to buy because interest rates are going up."
"Renting is equivalent to flushing your money down the toilet."
"I have to reschedule your appointment because it seems there is another couple looking at the house that day."
"Well, I live in this neighborhood."
"This is a former model home."
"This floorplan has been discontinued by the builder; there will be no more like this one."
"They're not making any more land."
"The schools in this area are top-notch."
"If you buy now we will throw in the following incentives; just our way of saying 'thank you'" (where the cost of the incentives is far less than the premium you are paying for the house).