Some years ago, on a flight, I made the acquaintance of a prominent real estate professional, who, during the conversation, described some of the sales techniques she regularly employed to drum up interest in her properties. When hosting an open house, for example, a tactic was to create a sense of urgency, including but not limited to claiming that there were multiple offers (including on social media), such that a bidding war would ignite.
Another way to capitalize on market dynamics is to get rebates from both parties. When probed, she said that it was no different from the ‘staging’ of flowers in a shop and that nobody had been explicitly lied to. This brought to mind other practices of rentals (and sales) where agents essentially assured the prospective tenant/buyer that the property was theirs, only to be told at the last minute that they had received a higher offer and were welcome to counter bid, leaving many stranded in the middle as they had already served vacancy notices on their existing premises.
We are all aware of these tactics, yet RERA (similar to the National Association of Realtors in the US) explicitly spells out a ‘duty of care’. Conflicts of interest (where they exist) must be spelled out, and no remuneration must be accepted without the prior consent of all parties. Furthermore, whilst realtors have a primary obligation to their client, at all times they must interact with all the parties in an honest and transparent manner.
To be sure, most real estate agents are honest. Nonetheless, the house hunting process is so fraught with anxiety and second-guessing, that it is no wonder that the profession is held in such low esteem. A 2016 Harris poll conducted in the US, found that more than 73 per cent of respondents found real estate agents to have less prestige. And 24 per cent found it to have no prestige at all.
Whilst the poll may have been somewhat harsh, realtors walk a funambulistic (and often thankless) path in matching the needs of the buyers and sellers whilst earning a living for themselves. In this process, those who weaponize social media or deploy other questionable tactics (including top ups) find themselves being crowded out by a horde of followers, with the end result of a high churn rate in the industry. And leaving the rest frustrated at the impression that they leave behind for the rest of their colleagues.
A time for ethics
From cold calling to false advertising and exaggerating, there are always ways to seek redress from RERA, which has become increasingly proactive. They have done so in response to the number of complaints that they have received. The punishments can often be in the form of penalties levied. However, in all markets, the role of the middleman is not only to act for the client, it is also to aid in the process of ‘price discovery’.
In this process, a relationship gets formed. For these to be nurtured over the long term, it is in their interests to spurn such short-term tactics. This is easier said than done, which is why some of these practices continue to recur.
While technology has been supposedly increasing transparency, it has also worked in more deleterious ways. Social media advertising and the whole click-bait phenomenon has led to a breakdown of personal relationships between parties in real estate transactions. In point of fact, the anonymity of the web has allowed middlemen to play fast and loose with the facts on the ground (such as manipulating property listings and indulging in bait-and-switch tactics).
For those that are disillusioned with the process (many have stated that the best decision is not to move at all), the good news is that RERA is on the case to aggressively weed out such tactics. For the industry as a whole, it would bode well to eschew these tactics altogether by going back to first principles, ethics should govern every transaction in order for the industry to flourish in a sustainable ecosystem.