Selling Your Home? Look out for These Estate Agents’ Tricks
That is the very first of three posts warning buyers and home sellers concerning the tricks estate agents use to get your money also that will help you avoid being fleeced by your estate agent.
There are at least three main techniques widely used by estate agents that sellers should be watching out for – the sucker sign up, the cost-slash and the slash-and-grab.
1. The sucker signup
The foundation for the success of any estate agency is obviously to support the maximum variety of sellers to sign with that service rather than with their competitions that are many generally lookalike. Research has repeatedly shown that almost all folks believe our dwellings to be worth more than they actually are. Because we decorated them in a sense that suits us and have lived in them, we’re frequently emotionally attached to them. We probably believe our fearless colour scheme, modern open-plan living area, ‘original feature’ hearth or ‘designer’ bathroom will be the height of practicality and good taste and would entrance any prospective purchaser. But on viewing our precious houses, many buyers’ first thought may be how they can gut the place and replace our decorations that are execrable with something better suited to their tastes and lifestyle.
This can introduce a problem for estate agents. If they are brutally honest with us about our house’s (commonly deficiency of) attractiveness and give us a realistic selling price, then we’re prone to get rather grumpy and award our company to a different agent who is more complimentary about our tastes and much more optimistic about how much we can sell for. So, when pitching for our company as sellers, us will flatter by praising our home, try and sound out us over how much we believe our property is worth and then claim they can quickly match or surpass our cost expectations. This frequently results in them overvaluing our dwellings.
In addition to the another common strategy agents use to get us to hire them is the phantom buyer. As we’re showing them round our home, they will likely tell us that they’ve recently been contacted by one or several buyers who are looking to get a property simply like ours. To force ours even more, the agent’s office may be phoned by he in our existence, purportedly to check these buyers remain in the marketplace. Invariably his office will affirm there are busloads of eager buyers all pantingly eager to find our property. The broker’s message is going to be clear – then we’ll miss the opportunity of a fast sale at a great price, if we do not sign up with them quickly. Several days after we’ve signed, when the promised buyers seem to have mysteriously vanished into thin air, it’s possible for the broker to tell us that the buyers have found someplace else or altered their minds or for the agent to give us some other cock-and-bull story to explain the buyers’ astonishingly fast disappearance.
2. The price-slash
It is fairly likely your broker will have overvalued your property in order to get one to sign with them.
Many sellers suppose that it is in the broker’s interest to get the most favorable cost possible. But this simply isn’t the situation. Let’s we suppose you have a http://www.statons.com Sole Agency agreement using a selling fee of 1.5%. If you are trying to find say GBP285,000, the estate service will get GBP4,275 and the individual agent perhaps 10% of that – GBP427. The agency will pocket GBP3,975 and the agent GBP397 if the agent manages to convince you to take an offer of GBP265,000. While GBP20,000 drops, the agency just loses GBP300 and the broker GBP30. As the broker and the service will soon be under pressure to hit their sales targets each week or month, it’s frequently better to allow them to push one to sell in a lowly price instead of waiting forever for a buyer to supply the full price – a GBP20,000, GBP30,000 or even GBP50,000 fall in your price will have comparatively little effect on their commission.
Getting one to drop your cost is generally relatively easy. They now tell you that they have had several buyers see the property and not all the feedback continues to be as favorable as they had expected though the agent may have originally been highly complimentary about your house. The superb transportation connections may unexpectedly turn into a concern because of too much traffic and congestion; your substantial garden, which had been such a huge selling point, might introduce an issue for the type of active young professional couples who’d be in the market for a house like yours; your tremendously creative colour scheme, which the representative had so admired, might well have put off buyers looking for a more unbiased decor and so forth. The broker might even let you know that just after you’d signed up, they surprisingly got several other similar properties on the publications of the service and that they all sold amazingly fast as they were more ‘competitively priced’. Or the broker might maintain that there have been a few offers for your home which were much lower than your asking price. But whatever strategies are used, most sellers can immediately be persuaded to drop their price down to the amount the broker had always known they’d get.
The ideal scenario for the agent is when a client signs a Sole Agency agreement giving that broker exclusive rights to sell the property for an agreed period. This gets the broker under less pressure to market the property because, so long as it is shifted by them during the contract period, they will get their commission. Less valuable for the broker is a Multiple Agency agreement where the seller places their property with several brokers. This sets up a race between agencies as to who gets the sale and the commission, meaning several services may do quite lots of work but miss out on bringing in any money – not something likely to be appreciated by the service supervisor. Having a Multiple Agency situation, there are two common scenarios which can develop. You might discover that each broker will do less work as they know it’s likely another agent will get the commission and the sale to market your premises. The therefore concentrate their efforts on properties where they have Sole Service and try to push buyers. Or else there could be a frenetic race as each broker attempts to get you to accept any offers the receive. In this instance, they may feel an even greater demand to convince you to accept a price-slash and also you’ll find yourself bombarded with broker calls all telling you what amazing buyers they’ve prepared to take your property if just you’ll reveal some flexibility on cost. It is just afterwards, as soon as you’ve accepted an offer and withdrawn your property from other agents, that you find out the buyer had not been quite as solid as was suggested – they may be in a chain selling their property, or may not have the finance fully organised or may not be able to complete as rapidly as you’d believed. But by then it is generally too late to change your mind and return back to other brokers.
3. The slash-and-catch
The most financially damaging scenario to get a seller is when an agent decides they can produce lots of cash for themselves by getting one to sell your premises at an attractively low price to a person who is in fact among the agent’s company contacts, friends or family members. This slashing your cost and grabbing your home may be quite clear-cut as when the agent manages to convince one to accept a low offer from among their associates plus they then resell your property to get a healthy profit netting the broker perhaps GBP10,000 to GBP20,000 or more for only a few hours work.
A more advanced variant of this scam is when you’ve got a house which can be split up into flats or house which has to be modernised or a flat. Here the broker might have a relationship using a developer. The bargain will typically be that the broker alerts the programmer to the chance, motivates the offer of the programmer to be accepted by you (while maintaining your property is going into a private buyer) and gets a bung in the programmer. This bung is known in the trade as a ‘drink’ and can usually range based on the gain made by the programmer. So as to encourage you to sell at below market value, the agent may withhold offers from genuine buyers or get friends to place in low offers to drive you towards a price-slash.
The Internet has made the slashandgrab marginally tougher by providing sellers with quick accessibility to info regarding the prices similar properties have achieved. However, the slash-and-catch works an absolute treat with older, potentially more exposed sellers who may be downsizing- selling off a larger family house and moving into a bungalow or level after their children left home and have grown up. These sellers make easy targets because, when they’ve lived in a house for quite some time, they may have bought it for a five-figure sum – maybe GBP40,000 or GBP50,000. So when sellers get a six-figure offer they will believe they may feel uneasy about pushing for more and are making a massive profit. Also, frequently such sellers will generally not have thought concerning the worthiness of the properties if converted into flats and so may be fooled by the broker into just comparing the cost offered to that paid for other similar family houses, which will usually be significantly less than the value when converted into flats. This scam hit the headlines in 2009 when an agent was found to have convinced a seller to take GBP2.9 million for a property which had a value as a development of nearer GBP10 million. Nevertheless, it occurs to common folks all the time – on my street a retired couple sold their 3-flooring end-of-terrace house for GBP385,000 that is around.