Can you create fictional Real Estate bidding wars?

Question

I know this cannot be legal, but I would like to know how and if it still goes on. I am not a real estate agent, but I just finished selling my home a month ago.

While my house was on the market, I didn't get any offers until the third week. At which point, all of a sudden 2 people decided to bid (good for me), and my LA said he would accept both offers at 6PM.

When 6 PM came around, 1 of the offers never came through - and the people who ended up getting the house were the only ones to make an offer. At the end of the day, it worked out for me because I got my listing price at $789,000, but I can't help but wonder if I the couple that bought my house felt pressured to increase their bid. If not for this "multiple offer" jazz, perhaps they may have come in at $749,000 etc...

So it got me thinking. What if I had one of my good friends (no way to track the relation) have a fake bid come in through an unknowing BA agent to create more of a bidding war and basically test the true "plateau" level of the home's value. People generally seem to be more inclined to bid higher if they know there are others because they feel like the house is more desirable.

I don't know, maybe I am way off, but I can't seem to find any loop holes in my idea. And probably no "realtor" will be willing to answer my question honestly.

Looking forward to your responses.

Answer 1

Aside from being dishonest, that would be fraud and conspiracy to commit fraud, and they are  crimes. If you get caught, you and the friend could be looking at jail and/or a fine, and/or there could be a civil suit brought against both of you. I have seen it done and seen the aftermath. It wasn't pretty.  As I recall there was a celebrity of some note who got caught doing this a few years ago. He avoided jail, but lost a civil suit. Can't remember the name.

Answer 2

I'm a little skeptical about the absent 2nd bid.  It sounds like your LA teamed up with the BA to create of lot BS for the buyer.  Good for you though.

Answer 3

Yes, this sort of thing can be done and is done some - but not much to my knowledge.  It can also happen the other way where you are the seller and the buyer has a buddy put in a really lowball offer just to try to find out the lowest price you will accept.  Its not legal, but very hard to prove and it can also backfire on you if the real buyer decided, for example, they didnt' want the palce that badly and instead of bidding high they just dropped out.  

I remember an auction no to long ago, that I was at where me and another bidder were the only active bidder there for one particular house (and we were both legit bidders).  The auctioneer really wanted us to get into a bidding war but he was taking bids we were not putting in.  For example I'd bid 70K while the other guy would bid 71K, but before I could get my hand down he'd have me up to 72K and act like I'd actually made that bid to.  I got so annoyed the first time he did it that I just flat out refused to go higher even though I was willing to pay a bit more.  The other guy got a bargain (and the auctioneer screwed himself) but there are so many houses out there right now that I really didn't care.

Anyhow, this and other stuff does go on - but its pretty rare from what I've seen - you're not exactly selling the Empire State building here.

Answer 4

Be careful what you do.  Some buyers, upon hearing that there are other bids coming in will simply back out - then you'd be stuck with just your friend for a buyer.........