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Selling Your Home? Look out for These Estate Agents' Tricks

Selling Your property?

This is the very first of three posts warning house sellers and buyers about the tricks estate agents utilize that will help you avoid being fleeced by your estate agent and also to get your cash.



1. The sucker sign-up

The basis for virtually any estate agency's success is clearly to support the maximum quantity of sellers to sign with that agency rather than with their competitors that are many generally lookalike. Studies have repeatedly shown that the majority of us believe our homes to be worth more than they really are. Because we decorated them in a sense that satisfies us and have lived in them, we're frequently emotionally attached to them. We likely believe our daring colour scheme, modern open-plan living area, 'original attribute' hearth 'designer' toilet are the height of practicality and great taste and would entrance any prospective purchaser. But on viewing our beloved dwellings, many buyers' first thought may be they can gut the place and replace our execrable decorations with something better suited to their tastes and lifestyle.

This could present a problem for estate agents. If they've been brutally honest with us about our house's (often lack of) attractiveness and give us a realistic selling price, then we're prone to get fairly grumpy and award our business to another agent who's more complimentary about our preferences and more optimistic about how much we can sell for. So, when pitching for our business as sellers, us will flatter by commending our house, attempt to sound out us we feel then maintain they can quickly match or exceed our cost anticipations and our property is worth. This often results in them overvaluing our houses.

As well as the overvalue, another common approach agents use to get us to hire them is the buyer that is phantom. As we're showing them round our home, they will probably tell us that they have recently been contacted by one or several buyers who are looking for a property simply like ours. The broker may phone his office in our existence, allegedly to check that these buyers are still in the marketplace, to demand ours even more. Invariably his office will support there are bus-loads of ready buyers all eager to find our property. The message of the agent is going to be clear - then we'll miss the chance of a sale that is fast at a good price if we do not sign up with them quickly.

2. The cost-slash

It is not rather unlikely that your broker may have overvalued your property so as to get one to sign with them.

Many sellers assume that it is in the broker's interest to get the best cost possible. But this simply is not the situation. Let us we suppose you have a Sole Agency agreement with a selling fee of 1.5%. If you are searching for say GBP285,000, the estate agency will make GBP4,275 and the individual agent of that - GBP427. The agency will pocket the representative GBP397 and GBP3,975 in case the broker manages to convince one to accept an offer of GBP265,000. So while you drop GBP20,000, the agency only loses the agent GBP30 and GBP300. As the agent and also the service is going to be under pressure to hit their sales targets each week or month, it is generally better to allow them to push one to sell in a lowly price rather than waiting forever for a buyer to provide the total price - a GBP20,000, GBP30,000 or even GBP50,000 fall in your price will have comparatively little effect on their commission. Some intelligent brokers may even get you to agree a fixed fee of 1.5% of the asking price, so that when they later convince you to accept a lower offer, their percentage remains gloriously intact.

Getting your price to drop is generally relatively easy. Although the agent could have originally been highly complimentary about your house, they tell you they've had several buyers see not all the feedback and the property continues to be as favorable as they had expected. The exceptional transportation links may suddenly become a concern because of a lot of traffic and congestion; your sizeable garden, which had been such a big selling point, might introduce a problem for the kind of active young professional couples who'd be in the marketplace for a home like yours; your tremendously creative colour scheme, which the representative had so admired, might well have put off buyers seeking a more unbiased decor and so on. The broker may even tell you that after you'd signed up, they unexpectedly got several other similar properties on the novels of the service and that they all sold amazingly quickly as they were more 'competitively priced'. Or the agent might assert that there have been a few offers for your own home which were considerably lower than your asking price. But whatever tactics are employed, most sellers can quickly be convinced to drop their price right down to the amount the agent had always known they would get.

The perfect situation for the broker is when a customer signs a Sole Agency agreement giving that broker exclusive rights to sell the property for an established period. This puts the broker under less pressure to market the property because, for as long as they shift it during the contract period, they'll get their commission. Less beneficial for the broker is a Multiple Agency agreement where the seller places their property with several brokers. Using a Multiple Bureau scenario, there are two common scenarios which can develop. You may see that each broker will do less work to market your property as they understand it is likely another agent can get the sale and the fee. The consequently concentrate their efforts on properties where they've Sole Agency and try and push on buyers. Or else a frenetic race might be as each agent attempts to get you to accept any offers the receive. In this instance, they may feel an even greater need to convince you to accept a cost-slash and also you'll find yourself bombarded with agent calls all letting you know what amazing buyers they have prepared to take your property if just you'll reveal some flexibility on price. It is just later, once you have accepted an offer and removed your property from other agents, which you figure out the buyer wasn't quite as solid as was suggested - they could maintain a chain selling their property, or may not possess the finance totally organised or may be unable to finish as rapidly as you'd believed. But by then it is normally too late to alter your mind and return to other agents.

3. The slash-and-grab

The most fiscally damaging situation to get a seller is when an agent decides they can create plenty of cash for themselves by getting one to sell your premises at an attractively low cost to somebody who's in fact one of the broker's business contacts, friends or relatives. This slashing your cost and catching your home may be quite straightforward as when the agent manages to convince one to accept a low offer from among their associates plus they then resell your property for a healthy profit netting the agent maybe GBP10,000 to GBP20,000 or more for only a few hours work.

A more complex version of this scam is when you've got a house that can be split up into flats or house which needs to be modernised or a flat. Here the agent can have a relationship using a developer. The price will normally be that the agent alerts the programmer to the chance, encourages the offer of the developer to be accepted by you (while maintaining your property is going to a private buyer) and gets a bung from the programmer. This bung is well known in the trade as a 'drink' and can generally range depending on the profit made by the developer. To be able to motivate one to sell at below market value, the agent may withhold offers from actual buyers or get friends to place in low offers to drive you towards a cost-slash.

The Internet has made the slash-and-grab somewhat harder by providing sellers with quick access to info about the costs similar properties have attained. However, the slash-and-catch works an absolute treat with older, potentially more exposed sellers who might be downsizing- moving to your bungalow and selling off a larger family dwelling or flat after their kids left home and have grown up. These sellers make easy targets because, whenever they have lived in a house for a long time, they could have purchased it to get a five-figure amount - perhaps GBP40,000 or GBP50,000. So when older receive a six-figure offer they'll believe they're already making a profit that is gigantic and may feel uncomfortable about pushing for more. This scam hit the headlines in 2009 when an agent was discovered to have convinced a seller to accept properties for sale Hadley Wood GBP2.9 million for a property which had a value as a development of nearer GBP10 million. Nevertheless, it happens on my road - to common people all of the time a retired couple sold their 3-floor end-of-terrace house for around GBP385,000. Unknown an associate in the estate agency which had handled the sale and sold as three self-contained flats for nearly GBP750,000 only a few months later after probably less than GBP50,000 had been spent on the conversion purchased it.

Tags: Estate Agents

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