Estate agents faking offers on a property

Question

I was recently viewing a property to buy in England, with an asking price of £400k. On the day of the viewing, but before my appointment, the estate agent informed me that two offers had already been made that same day, and both had been accepted. Although he couldn't reveal the amount of these offers for legal reasons, it was "not worth me making an offer below the asking price". So, I make an offer for £407k, and this was accepted. After thinking this through, I am now wondering how likely it is that these two other offers were genuine, and how likely it is these two offers never actually existed, but were made up to encourage me to make an offer over the asking price.

As another anecdote, after a previous viewing at a different property, the estate agent informed me that an offer for the asking price had just been accepted, and asked whether I would like to make an offer to myself. I replied that I was not interested in making an offer, but then only to find out a few days later that an advert for the same property was re-listed at £10k below that original asking price. Yes, I know that often the finances don't work out and the buyer has to back out, but it certainly seems possible that in that case too, this other offer was fake.

So, my questions are (and relating specifically to England, but other comments welcomed):

1) When estate agents state that other offers have recently already been made and accepted, is it common for these to be fake? If anybody has any real insider knowledge about this (e.g. if you are / have been an estate agent yourself), comments would be welcomed on how often estate agents make up other offers when trying to get a buyer to increase their offer.

2) Is it actually defined in law that it is illegal for estate agents to suggest that other offers have been made, when this is completely untrue?

3) If I was suspicious about the estate agent faking an offer, how could I go about finding out the truth? If I were to ask the estate agent, he would certainly say to me that it was not within his capacity to reveal the details of his other clients who made these offers. So it seems difficult to ever know, even if you were very suspicious.

Answer 1

A big caution, just because somebody has put down an offer don't try to overbid. That will come back to bite in the future or in the present too. And moreover the internet has loads of buying guides, have a go through them for help.

how likely it is these two offers never actually existed,

That is a common ploy used by estate agents to make buyers outbid each other, so that the agents can make a tidy profit. Remember more the price they get for the seller, more is their commission. So BEWARE. But if you outbid others and then don't want to buy, you can still say no before the contracts are exchanged. So if you want to get back at the estate agent, you can try this.

1) Might be genuine bids, might not be. Only bid what you intend to pay and not what the estate agents want. And one important fact many people forget or don't know is that the estate agent should relay all offers, high or low, to the seller. Most of the agents following the rule book do so, but many don't do so. My friend received all rejected bids he put down for houses in mail, while I received none.

2)Estate agents didn't come under any purview, but mostly self regulated until April 2014. That is why you mostly met the slimy ones as agents. Now the NTSEAT(replacement of OFT) does exist to regulate them, under which they aren't allowed to make misleading statements but you have to take them on that and go through the complaint process. And the ombudsman scheme does exist to compensate you too.

3)There is no sure shot way to do that, unless you know anyone in the agency, with whom you are dealing. But you can take an educated guess i.e. how long has the property been in the market(more than a month or two then chances are the agent is lying), area, area with good schools always have houses in demand etc. Another trick is don't budge with your price. If the agent knows you are a legitimate buyer and keeps on calling you about the property, asking to increase the bid then all so called bids are fake.

I had bid little low on a property and din't budge and the agent kept calling me every other day saying something or else. Finally after 2 weeks he says the seller would accept your bid, but by then I had moved on to another property.