Selling Your house? Watch Out For These Estate Agents’ Tricks
Here is the first of three articles warning house sellers and buyers about the tricks estate agents use to get your cash and also to help you avoid being fleeced by your estate agent.
1. The sucker sign-up
The foundation for the success of just about any estate agency is obviously to support the utmost variety of sellers to sign with that service rather than with their many usually look alike competitions. Research has repeatedly demonstrated that many of us consider our dwellings to be worth more than they really 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 daring colour scheme, modern open-plan living space, ‘first feature’ hearth ‘designer’ restroom will be the height of good taste and practicality and would entrance any potential purchaser. But on seeing our beloved homes, many buyers’ first thought may be how they could gut the place and replace our execrable decorations with something better suited to their preferences and lifestyle.
This can present an issue . If they can be 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 grant our company to a different broker who is more complimentary about our preferences and more confident about how much we can sell for. So, when pitching as sellers for our company, most agents will flatter us by praising our home, attempt to sound out us over how much we believe then assert they can easily match or surpass our price anticipations and our property may be worth. This frequently results in them overvaluing our homes. However, the agent understands that once we sign up estate agents in Barnet with them, have located a new home, have psychologically already moved into our new house and are under fiscal pressure to market our existing property, it is simple to coerce us into accepting a lower price than we’d initially been led to anticipate.
As well as 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 house, they’ll probably tell us that they have lately been contacted by one or several buyers that are looking for a property just like ours. To pressure ours even more, the broker may telephone his office in our presence, purportedly to check that these buyers are still in the market. Invariably his office will confirm that there are busloads of ready buyers all 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 fast at a great cost if ours don’t sign up with them fast. Several days after we have signed, when the promised buyers seem to have mysteriously vanished into thin air, it is easy 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 spell out the buyers’ astonishingly quick disappearance.
2. The cost-slash
It is fairly likely your agent may have overvalued your property so as to get one to sign with them. So, unless the market is extraordinarily buoyant or unless they’re lucky enough to locate a buyer with more money than sense, as soon as they begin actively promoting your property, they’ll probably have to soften you up to the prospect of accepting a lower price than they had originally suggested.
Many sellers assume that it is in the agent’s interest to get the most favorable cost possible. But this simply isn’t the case. Let us we presume you have a Sole Agency agreement using a selling fee of 1.5%. If you’re trying to find say GBP285,000, the estate agency will get the individual broker and GBP4,275 maybe – GBP427. The bureau will pocket GBP3,975 and the agent GBP397 in the event the broker manages to convince you to take an offer of GBP265,000. So while you drop GBP20,000, the bureau simply loses the broker GBP30 and GBP300. As the agent along with the agency will soon be under pressure to hit their sales targets each week or month, it is often better to allow them to push one to sell at a lower price instead of waiting endlessly for a buyer to provide the entire cost – a GBP20,000, GBP30,000 or even GBP50,000 fall in your price will have relatively little effect on their commission.
Getting you to drop your cost is usually comparatively simple. Though the agent could have originally been highly complimentary about your house, they now tell you they’ve had several buyers see the property instead of all the feedback continues to be as favorable as they had anticipated. The broker may even inform you that just after you had signed up, they surprisingly got several other similar properties on the publications of the agency and that they all sold amazingly quickly as they were more ‘competitively priced’. Or the broker might assert that there have been a few offers for the dwelling which were substantially lower than your asking price. But whatever approaches are employed, most sellers can immediately be convinced to drop their price right down to the amount the broker had always known they’d get.
The perfect scenario for the broker is when a customer signs a Sole Agency agreement giving that agent exclusive rights to sell the property for an established period. This puts the broker under less pressure to sell the property because, as long as it is shifted by them during the contract period, they will get their commission. Having a Multiple Agency scenario, there are two common scenarios which may develop. You might discover that every agent will do less work to sell your property as they understand it’s likely another agent will get the sale and the percentage. They consequently concentrate their efforts on properties where they’ve Sole Service and try and push on buyers. Or else a frenetic race could be as each broker tries to get you to accept any offers the receive. In this case, they may feel an even greater demand to convince you to accept a cost-slash and you will end up bombarded with agent calls all letting you know what excellent buyers they have prepared to take your property if just you’ll reveal some flexibility on price. It’s only after, after you’ve accepted an offer and withdrawn your property from various other agents, that you determine the buyer wasn’t quite as solid as was suggested – they may be in a chain selling their property, or may not possess the finance entirely organised or may be unable to complete as quickly as you’d considered. But by then it is normally too late to improve your mind and return to other brokers.
3. The slash-and-grab
The most fiscally damaging situation to get a seller is when an agent determines that they’ll earn a lot of cash for themselves by inducing one to sell your home at an attractively low cost to somebody who’s in fact one of the broker’s company contacts, friends or loved ones. This slashing your price and grabbing your house 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 for a strong gain netting the broker perhaps GBP10,000 to GBP20,000 or more for only a few hours work.
A more complex variant of this scam is when you’ve got house which should be modernised or a flat or a house which can be split up into flats. Here the agent may have a relationship with a developer. The deal will normally be that the broker alerts the programmer to the chance, motivates the offer of the developer to be accepted by you (while claiming your property is going into a private buyer) and then gets a bung in the programmer. This bung is known in the trade as a ‘drink’ and can normally range from GBP5,000 to GBP10,000 per price according to the gain made by the developer.
The web has made the slash-and-grab slightly more challenging by providing sellers with quick access to info regarding the costs similar properties have reached. However, the slash-and-catch works an absolute treat with older, maybe more vulnerable sellers who might be downsizing- moving to some bungalow and selling off a larger family dwelling or level after their kids have grown up and left home. These sellers make easy targets because, whenever they’ve lived in a house for several years, they may have bought it to get a five-figure amount – perhaps GBP40,000 or GBP50,000. So when home sellers and buyers get a six-figure offer like GBP350,000, they will believe they may not feel comfortable about pushing for more and are making a massive profit. Still, it occurs to common people most of the time – on my road a retired couple sold their 3-floor end-of-terrace house for GBP385,000 that is around.
Unusual Thoughts And Feelings 