Selling Your Home? Watch Out For These Estate Agents’ Tricks
This really is the first of three articles warning buyers and house sellers about the tricks estate agents utilize that will help you avoid being fleeced by your estate agent and to get your hard earned money.
There are at least three primary techniques commonly used by estate agents that sellers should be watching out for – the sucker sign-up, the cost-slash as well as the slash-and-grab.
1. The sucker signup
The foundation for just about any estate agency’s success is clearly to support the most quantity of sellers to sign with that service rather than with their competitions that are many usually look-alike. Research has repeatedly demonstrated that many of us consider our dwellings to be worth more than they really are. Because we have lived in them and decorated them in a way that satisfies us, we are often emotionally attached to them. We likely think our daring colour scheme, modern open-plan living area, ‘first feature’ hearth or ‘designer’ lavatory would entrance any potential purchaser and would be the height of great taste and practicality. But on viewing our precious homes, many buyers’ first thought may be they can gut the place and replace our execrable decorations with something better suited to their own tastes and lifestyle.
This can present a problem . If they are brutally honest with us about our home’s (often lack of) attractiveness and give us a realistic selling price, then we are more likely to get quite grumpy and grant our business to a different agent who’s more complimentary about our preferences and much more confident about how much we can sell for. Therefore, when pitching as sellers for our business, most brokers will flatter us by praising our home, try and sound out us we believe then claim they are easily able to meet or exceed our price expectations and our property is worth. This often results in our homes being overvalued by them. But the agent understands that once we sign up with them, have found a brand new dwelling, have emotionally already moved into our new house and are under fiscal pressure to sell our existing property, it is easy to coerce us into accepting a reduced cost than we had originally been led to anticipate.
In addition to the another common approach agents use to get us to hire them is the phantom buyer. They’ll likely tell us that they have lately been contacted by one or several buyers that are looking for a property simply like ours, as we are showing our home rounds. To demand us even more, the agent’s office may be phoned by he in our existence, allegedly to check these buyers remain in the industry. Always his office will affirm there are bus loads of ready buyers all eager to find our property. The agent’s message is going to be clear – if ours do not sign up with the buyers quickly, then we’ll miss the chance of a rapid sale at a good price. A few 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 located somewhere else or changed their minds or for the broker to give us some other cock-and-bull story to spell out the buyers’ astonishingly fast disappearance.
2. The price-slash
It’s fairly likely that your broker will have overvalued your property in order to get one to sign with them.
Many sellers suppose that it’s in the agent’s interest to get the best cost possible. But this simply isn’t the case. Let us we presume you have a Sole Agency agreement with a selling fee of 1.5%. If you are looking for say GBP285,000, the estate service will earn GBP4,275 and the individual agent maybe 10% of that – GBP427. The agency will pocket the representative GBP397 and GBP3,975 if the agent manages to convince one to accept an offer of GBP265,000. So while you drop GBP20,000, the agency simply loses the agent GBP30 and GBP300.
Getting you to drop your cost is generally comparatively easy. Even though the agent may have initially been highly complimentary about your home, they now tell you they’ve had several buyers view the property rather than all the feedback continues to be as positive as they’d anticipated. The excellent transportation connections may unexpectedly become a concern because of an excessive amount of traffic and congestion; your large garden, which had been such a big selling point, might pose an issue for the type of busy young professional couples who’d take the market to get a property like yours; your tremendously creative colour scheme, which the agent had so admired, might well have put off buyers seeking a much more neutral decor and so on. The agent may even inform you that after you’d signed up, they unexpectedly got several other similar properties on the service’s books and that they sold incredibly quickly as they were more ‘competitively priced’. Or the broker might assert that there happen to be a few offers for the house which were substantially below your asking price. But whatever strategies are employed, most sellers can immediately be persuaded estate agent Radlett to drop their price down to the level the broker had always understood they would get.
The perfect scenario for the agent is when a customer signs an Exclusive Agency agreement giving that broker exclusive rights to sell the property for an established period. This puts the agent under less pressure to offer the property because, for as long as it is shifted by them during the contract period, they will get their commission. This sets up a race between services as to who gets the commission and the sale, meaning several agencies may do rather plenty of work but miss out on bringing in any cash – not something likely to be appreciated by the service manager. Using a Multiple Bureau situation, there are two common scenarios which can develop. You may discover that every broker will do less work to sell your home as the understand it is likely another broker will get the sale along with the commission. They therefore concentrate their efforts on properties where they attempt to push on buyers and have Sole Agency. Or else there could be a frenetic race as each agent tries to get one to accept any offers they receive. In this particular case, they may feel an even greater demand to convince you to accept a price-slash and you’ll end up bombarded with agent calls all telling you what great buyers they’ve ready to take your property if just you will reveal some flexibility on price. It’s just afterwards, once you’ve accepted an offer and removed your property from other agents, that you discover the buyer was not quite as solid as was suggested – they may maintain a chain trying to sell their property, or may not possess the finance totally organised or may not have the capacity to complete as rapidly as you had considered. But by then it’s usually too late to alter your mind and get back to other brokers.
3. The slash-and-grab
The most financially damaging situation for a seller is when an agent determines that they can earn lots of cash for themselves by getting you to sell your premises at an attractively low price to somebody who is in fact among the broker’s business contacts, friends or family. This slashing your cost and grabbing your home could be somewhat clear-cut as when the agent manages to convince one to accept a low offer from one of their associates plus they subsequently resell your property to get a strong gain netting the broker perhaps GBP10,000 to GBP20,000 or more for merely a few hours work.
A more advanced version of the scam is when you’ve got house which must be modernised or a flat or a house that may be split up into flats. Here the agent can have a relationship having a developer. The bargain will normally be that the broker alerts the programmer to the chance, encourages one to accept the developer’s offer (while asserting your house is going to a private buyer) and then gets a bung from the programmer. This bung is well known in the trade as a ‘drink’ and can normally range according to the gain made by the developer. So as to motivate one to sell at below market value, the agent may withhold offers from buyers that are actual or get friends to put in low offers to drive you towards a price-slash.
The Internet has made the slashandcatch similar properties that were marginally tougher by providing sellers with easy accessibility to information about the prices have reached. However, the slash-and-catch works an absolute treat with older, perhaps more vulnerable sellers who may be downsizing- selling off a larger family dwelling and moving to some bungalow or level after their kids have grown up and left home. These sellers make easy targets because, when they have lived in a house for quite some time, they may have bought it to get a five-figure amount – GBP50,000 or maybe GBP40,000. So when they receive a six-figure offer they will believe they may feel uneasy about pushing for more and are making a huge gain. 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. Still, it happens to everyday people all of the time – on my street a retired couple sold their 3-floor end-of-terrace house for GBP385,000 that is around.