Selling Your Home? Watch Out For These Estate Agents' Tricks
This is the very first of three posts warning buyers and house sellers regarding the tricks estate agents utilize to get your hard earned money also that will help you avoid being fleeced by your estate agent.
1. The sucker sign up
The basis for the success of almost any estate agency is obviously to support the utmost amount of sellers to sign with that service rather than with their competitors that are many generally look-alike. Studies have repeatedly demonstrated that the majority of us believe our houses 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 often emotionally attached to them. We likely believe our daring colour scheme, modern open plan living space, 'first attribute' fireplace or 'designer' restroom would entrance any prospective purchaser and would be the height of good taste and practicality. But on viewing our dwellings that are beloved, many buyers' first thought may be how they can gut the place and replace our execrable decorations with something better suited to their own preferences and lifestyle.
This could present an issue for estate agents. Therefore, when pitching for our company as sellers, us will flatter by commending our house, make an effort Radlett estate agents to sound us out over how much we feel then assert they can quickly match or exceed our price anticipations and our property may be worth. This often results in them overvaluing our houses. But the broker knows that once we sign up with them, have located a brand new house, have psychologically already moved into our new house and are under fiscal pressure to market our existing property, it is easy to coerce us into accepting a reduced price than we'd initially been led to expect.
Besides the overvalue, another common approach agents use to get us to hire them is the buyer that is phantom. As we are showing them round our home, they'll likely tell us that they have lately been contacted by one or several buyers that are looking to get a property just like ours. The broker may phone his office in our existence, purportedly to check these buyers are still in the industry, to demand us even more. Always his office will confirm that there are bus loads of enthusiastic buyers pantingly eager to find our property. The agent's message is going to be clear - then we'll miss the opportunity of a sale that is rapid at a good cost if we don't sign up with them fast. Several days after we have signed, when the promised buyers seem to have inexplicably vanished into thin air, it's easy for the agent 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 describe the buyers' astonishingly rapid disappearance.
2. The price-slash
It is fairly likely your broker may have overvalued your property so as to get you to sign with them. So, unless the market is unusually buoyant or unless they are fortunate enough to find a buyer with more money than sense, once they start actively marketing your property, they will probably have to soften you up to the prospect of accepting a lesser cost than they had initially proposed.
Many sellers presume that it's in the agent's interest to get the very best price possible. But this simply is not the situation. Let us we assume you've got a Sole Agency agreement using a selling fee of 1.5%. If you are seeking say GBP285,000, the estate service will earn the individual broker and GBP4,275 perhaps - GBP427. The agency will pocket GBP3,975 and the agent GBP397 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. As the broker and also the agency will be under pressure to hit their sales targets each week or month, it's generally better for them to push you to sell in a lower cost instead of waiting forever for a buyer to provide the full cost - a GBP20,000, GBP30,000 or even GBP50,000 fall in your price will have relatively little effect on their commission. Some bright agents may even get you to agree a fixed fee of 1.5% of the asking price, so that when they afterwards convince you to accept a lower offer, their percentage remains gloriously intact.
Getting your price to drop is normally relatively simple. Though the broker may have initially been highly complimentary about your home, they tell you that they have had several buyers see the property rather than all the feedback continues to be as favorable as they'd expected. The excellent transportation links may suddenly turn into a concern because of an excessive amount of traffic and congestion; your sizeable garden, which had been such a big selling point, might present an issue for the type of active young professional couples who would be in the market to get a property like yours; your exceptionally creative colour scheme, which the agent had so admired, might well have put off buyers looking for a much more impartial decor and so forth. The agent may even inform you that after you had signed up, they surprisingly got several other similar properties on the agency's novels and that they all sold amazingly fast as they were more 'competitively priced'. Or the agent might claim that there happen to be a few offers on your home which were much below your asking price. But whatever tactics are utilized, most sellers can quickly be persuaded to drop their cost down to the amount the broker had always known they would get.
The perfect situation for the agent is when a customer signs an Exclusive Agency agreement giving exclusive rights to that broker to sell the property for an agreed period. This puts the agent under less pressure to sell the property because, as long as they change it during the contract period, they will get their commission. Less beneficial for the agent is a Multiple Agency agreement where the seller's property is put by they with several agents. This sets up a race between agencies as to who gets the sale and also the commission, meaning several services may do quite plenty of work but miss out on earning any money - not something likely to be appreciated by the agency supervisor. Having a Multiple Bureau scenario, there are two common scenarios which can develop. You may see that each agent will do less work as the know it's likely another broker will get the sale as well as the commission to sell your premises. They therefore concentrate their efforts on properties where they try to shove buyers and have Sole Agency. Or else there can be a frenetic race as each agent attempts to get you to take any offers they receive. In this instance, they may feel an even greater demand to convince you to accept a cost-slash and also you'll get bombarded with agent calls all suggesting what fantastic buyers they have ready to take your property if only you will show some flexibility on price. It is just later, once you have accepted an offer and withdrawn your property from various other agents, that you determine the buyer wasn't quite as solid as was proposed - they could maintain a chain trying to sell their property, or might not have the finance entirely organised or might not have the capacity to complete as rapidly as you had believed. But by then it is usually too late to improve your mind and return to other brokers.
3. The slash-and-catch
The most fiscally damaging scenario for a seller is when an agent determines that they'll produce plenty of money for themselves by getting you to sell your property at an attractively low price to someone who's actually one of the broker's business contacts, friends or family. This slashing your price and grabbing your home could be quite straightforward as when the broker manages to convince you to accept a low offer from among their associates plus they subsequently resell your property for a healthy gain netting the broker perhaps GBP10,000 to GBP20,000 or more for only a few hours work.
A more sophisticated variant of the scam is when you've got a house which could be split up into flats or house which needs to be modernised or a flat. Here the broker can possess a relationship having a programmer. The bargain will usually be that the agent alerts the developer to the chance, motivates the programmer's offer to be accepted by you (while maintaining your property is going to a private buyer) and then gets a bung from the programmer. This bung is known in the trade as a 'drink' and will usually range from GBP5,000 to GBP10,000 per deal according to the gain made by the programmer.
The net has made the slashandcatch somewhat more difficult by providing sellers with easy access to information regarding the prices similar properties have realized. But, the slash-and-grab works an absolute treat with older, possibly more exposed sellers who might be downsizing- moving to some bungalow and selling off a bigger family dwelling or level after their children have grown up and left home. These sellers make easy targets because, if they have lived in a house for quite some time, they may have bought it for a five-figure amount - maybe GBP40,000 or GBP50,000. So when sellers get a six-figure offer like GBP350,000, they will believe they're already making a profit that is massive and may feel uncomfortable about pushing for more. Additionally, often such sellers will usually not have thought about the worth of the properties if converted into flats and so may be duped by the broker into just comparing the cost offered to that paid for other similar family houses, that will generally be considerably significantly less in relation to the value when converted into flats. This scam hit the headlines in 2009 when an agent was found to have convinced a seller to accept GBP2.9 million for a property which had a value as a development of nearer GBP10 million. Still, it happens to normal people all the time - on my street a retired couple sold their 3-floor end-of-terrace house for GBP385,000 that is around.