Phantom Bids to Drive Up Final Price

You’ve found the perfect home. You put in a fair offer, maybe even a little above asking. The seller’s agent tells you there are multiple competing bids. Feeling pressured, you raise your offer again. You eventually win the house, but at a price that leaves you stretched thin and secretly wondering if you overpaid. What you might not know is that some of those “other offers” never existed. They were phantom bids—fake offers invented by a dishonest real estate agent or broker to manipulate you into paying more.

Phantom bidding is one of the dirtiest tricks in the real estate playbook, and it targets the very people who can least afford to lose thousands of dollars to a con. As part of Unreputable’s coverage of Real Estate Agents & Broker Misconduct, this article will show you how to spot this scam and protect your hard-earned money.

First, understand the mechanics. In a hot market, sellers and their agents have the upper hand. A buyer’s agent is supposed to represent your interests, but some agents are more interested in closing a fast deal and pocketing a bigger commission. When your agent or the seller’s agent tells you there are other bids, you have no way to verify that claim. That’s the whole point. Phantom bids exploit your fear of losing the house. The scam works because agents rely on the fact that most home buyers are emotionally invested and trust their real estate professional to be honest.

How can you spot phantom bidding? Start by asking direct questions. A reputable agent will not hesitate to show you proof that multiple offers exist. You can request a copy of the seller’s disclosure form, which in many states requires the seller to list all offers received. If the agent becomes defensive, vague, or says “that information is confidential,” you have a red flag. In legitimate transactions, the existence of other offers is a material fact that can be disclosed without revealing the identity of other bidders. If they refuse to confirm even that basic fact, assume they are bluffing.

Another telltale sign is an artificially tight deadline. Phantom bidders often pressure you to make a decision within hours. The agent may say, “You have to submit your best and final offer by 5 PM today, or you’ll lose it.” While some markets do move fast, a truly competitive situation usually gives buyers at least a day or two to respond. If the timeline feels manufactured, it probably is. Legitimate agents know that a forced, hasty decision benefits only the seller and the dishonest agent.

You can also use your own due diligence. Ask for a list of recently sold comparable properties in the same neighborhood. If the price you are being asked to beat is far above those comparables, the phantom bid might be the only way to justify that number. Cross-check public records. In many counties, offer and sale data is eventually made public. If you later discover that no other offers were recorded, you have grounds for a complaint. But you do not want to be the one paying the lesson.

What can you do if you suspect phantom bidding? First, do not raise your offer. Instead, tell your agent you want to submit a written offer with a contingency that requires the seller to provide written proof of any competing offers. A legitimate seller will typically allow this because they have nothing to hide. A scammer will stall or insist the offer is “non-negotiable.” Second, consider hiring an independent buyer’s agent who has no relationship with the listing broker. Some agents work for the same brokerage and have a financial incentive to push deals through without scrutiny.

If you have already been victimized, you are not without recourse. File a complaint with your state’s real estate commission or licensing board. In many states, phantom bidding is considered fraud and can result in the agent losing their license. You can also consult a real estate attorney to see if you have a claim for damages. The National Association of Realtors’ Code of Ethics requires agents to be honest, and violating that code can lead to sanctions.

The bottom line is this: phantom bidding preys on your hope and fear. Unreputable is here to keep you informed, just like the old Consumer Reports or a trusted TV consumer reporter. When an agent starts talking about multiple offers, slow down. Demand proof. Do not let someone else’s lie cost you tens of thousands of dollars. In real estate, the only bid that should drive the final price is one that exists. Keep your guard up, and you will buy smart.