Jason Crouch makes a great point in his Blog.  My-Plan-to-Change-the-Real-Estate-Industry-Forever-Sounds-Humble-Right.  

He's right - it's hard working with owner-occupants, to get them to keep the emotions in check about a potential home for their family.  Especially once you've been working with them for weeks, or months, and you finally run across the property that trips their trigger to make an offer.

What Jason is advocating is why shills at an auction have been ruled to be illegal.  Yet, it's tough to catch a shill and it's tough to determine whether a listing agent is making stuff up.  And, don't you just hate it when you're the only one who bids on the item at an auction?  Been there, done that but at least I wasn't bidding against a phantom bidder!   I'd at least like to think there was at least one other interested party who wanted to bid, but if there isn't really another bidder, I want to know that, too! 

Listing agents want your Buyer to think there might be another interested party in the property.     But if they cross over to egregiously lieing -- if they get unethical in their practices -- they are no better than a shill at an auction.  

What they may be doing, however, is trying to help YOU get your offer up high enough that there is actually some hope that the seller will accept the offer!  Sure it's unethical if they really don't HAVE an offer, so what they need to be doing is sharing with you hard facts, on what the status really is on the property.   

How many showings have there been?  Is anyone else currently saying they expect to be writing an offer?  Is there actually an offer in the works?  If they are not lieing about that, that actually works in a Buyer Agent's favor, doesn't it, to help them get their people off the dime?  Who will they be mad at if they don't make the offer and later discover that was absolutely the best deal going, for the next year!  

But lieing is what you're objecting to and I'm with you 100%.  It's not a best business practice, even if it does get more money for the seller.   LA's have a fiduciary responsibility to try and work for their seller, and the buyer's agent has the same responsibility to their client.  The sad part is that when "Joe and Suzy Homemaker" let their emotions escalate their bid to the point that no legitimate appraiser would value the house at that price, or if they have a Buyer's agent who has not done a thorough CMA.  That's the real crime here.  Buyer's agents need to let the CMA speak for itself, though 50% of valuation is art, and the other 50% is science. 

And that's what has gotten us into this economic mess.  REALTORS, Appraisers and Loan Originators, not doing their job to help make sure the emotions of a buyer (who is obviously elated with a home), help the Buyer keep their emotion in check.  We "professionals" should be keeping them from overpaying for a property. 

Somehow, I think you may be shifting too much of the blame onto the Listing Agent, when more of it needs to stay with the Buyer, Buyer's Agent, Appraiser, and LO.  You have to figure that the LA is going to say whatever he can to get the house sold, and unless you want homes to be sold on eBay without agents ... or as FSBO's... then full-service brokers are going to work hard to get their listings sold. 

You're right, Jason.  Agents like this give our industry a bad name.  Honesty is always the best policy.  If we've only had one showing, and I'm the listing agent, I'm working that showing  for all it's worth!  Nothing happens until somebody sells something!