Selling Your property?

Selling Your house?

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

There are at least three principal techniques widely used by estate agents that sellers must be watching out for - the sucker sign up, the price-slash and the slash-and-grab.

1. The sucker sign up

The basis for the success of virtually any estate agency is obviously to support the most number of sellers to sign with that agency rather than with their competitors that are many usually lookalike. Studies have repeatedly demonstrated that most folks believe our houses to be worth more than they really are. Because we've lived in them and decorated them in a way that satisfies us, we are often emotionally attached to them. We probably believe our bold colour scheme, modern open-plan living space, 'first feature' hearth 'designer' bathroom are the height of practicality and great taste and would entrance any prospective purchaser. But on viewing our cherished dwellings, many buyers' first idea may be how they could gut the place and replace our decorations that are execrable with something better suited to their tastes and lifestyle.

This may present a problem . When they've been brutally honest with us about our house's (frequently deficiency of) attractiveness and give us a realistic selling price, then we're more likely to get fairly grumpy and grant our business to a different broker who is more complimentary about our preferences and much more optimistic about how much we can sell for. Therefore, when pitching as sellers for our business, us will flatter by commending our home, attempt to sound us out we feel our property may be worth and then maintain they can certainly meet or exceed our cost anticipations. This frequently results in them overvaluing our dwellings. But the broker knows that once we sign up with them, have found a new house, have emotionally already moved into our new home and are under fiscal pressure to market our existing property, it is simple to coerce us into accepting a lower price than we'd originally been led to anticipate.

As well as the another common strategy agents use to get us to hire them is the phantom buyer. They'll probably tell us that they've recently been contacted by one or several buyers that are looking for a property just like ours, as we're showing them round our home. The agent may telephone his office in our existence, allegedly to check these buyers remain in the industry to force ours even more. Invariably his office will support that there are bus-loads of eager buyers all pantingly eager to see our property. The message of the broker will be clear - if we do not sign up with them fast, then we'll miss the opportunity of a fast sale at a good cost. Several days after we've signed, when the promised buyers seem to have inexplicably vanished into thin air, it's possible for the agent to tell us that the buyers have found someplace else or changed their minds or for the broker to give us some other cock-and-bull story to describe the buyers' astonishingly quick disappearance.

2. The cost-slash

It's fairly likely your broker may have overvalued your property in order to get one to sign with them.

Many sellers assume that it's in the agent's interest to get the most favorable cost possible. But this simply is not the case. Let us we assume you've got a Sole Agency agreement with a selling fee of 1.5%. If you're looking for say GBP285,000, the estate agency will get GBP4,275 and the individual broker perhaps - GBP427. The agency will pocket GBP3,975 and the representative GBP397 in the event the broker manages to convince you to accept an offer of GBP265,000. So while you drop GBP20,000, the agency just loses GBP300 and the agent GBP30. As the agent and the agency is going to be under pressure to reach their sales targets each week or month, it is usually better to allow them to push you to sell in a lower price rather than waiting endlessly for a buyer to offer the entire price - a GBP20,000, GBP30,000 or even GBP50,000 drop in your cost will have comparatively little effect on their commission.

Getting your cost to drop is generally comparatively easy. Although the agent may have initially been highly complimentary about your house, they tell you that they have had several buyers see the property and not all the feedback continues to be as favorable as they'd anticipated. The broker could even let you know that just after you had signed up, they unexpectedly got several other similar properties on the service's publications and that they all sold very quickly as they were more 'competitively priced'. Or the broker might claim that there have been a few offers for your home which were substantially lower than your asking price. But whatever approaches are used, most sellers can quickly be persuaded to drop their price right down to the level the broker had always understood they would get.

The ideal situation for the broker is when a customer signs an Exclusive Agency agreement giving that broker exclusive rights to sell the property for an agreed interval. This puts the broker under less pressure to sell the property because, so long as they change it 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 services may do rather lots of work but miss out on getting any money - not something likely to be valued by the agency supervisor. With a Multiple Agency scenario, there are two common scenarios which may develop. You may see that each agent will do less work as the understand it is likely another agent can get the sale and the commission to market your home. They therefore focus their efforts on properties where they try to shove buyers towards these properties and have Sole Agency. Or else there might be a frenetic race as each agent tries to get you to take any offers the receive. In this particular case, they may feel an even greater demand to convince you to accept a price-slash and you will 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 cost. It's only after, as soon as you've accepted an offer and removed your property from other brokers, that you determine the buyer had not been quite as solid as was suggested - they can maintain a chain attempting to sell their property, or might not possess the finance entirely organised or might not be able to finish as quickly as you had believed. But by then it is normally too late to improve your mind and return to other brokers.

3. The slash-and-catch

The most fiscally damaging scenario to get a seller is when an agent determines they can produce plenty of cash for themselves by inducing one to sell your home at an attractively low cost to someone who is in fact among the broker's business contacts, friends or relatives. This slashing your cost and grabbing your home may be somewhat straightforward as when the broker manages to convince you to accept a low offer from among their associates and they then resell your property to get a healthy gain netting the broker maybe GBP10,000 to GBP20,000 or more for just a few hours work.

A more advanced variant of this scam is when you have a house which could be split up into flats or house which should be modernised or a flat. Here the broker could have a relationship with a programmer. The price will generally be that the agent alerts the developer to the chance, motivates the developer's offer to be accepted by you (while claiming your property 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 usually range from GBP5,000 to GBP10,000 per price according to the profit made by the programmer.

The Internet has made the slashandgrab similar properties that were slightly harder by providing sellers with quick accessibility to information about the prices have reached. However, the slash-and-grab works an absolute treat with older, perhaps more exposed sellers who might be downsizing- selling off a bigger family dwelling and moving to your bungalow or flat after their kids have grown up and left home. These sellers make easy targets because, if they have lived in a house for several years, they may have bought it for a five-figure sum - maybe GBP40,000 or GBP50,000. So when they receive a six-figure offer they will consider they may feel uneasy about pushing for more and are already making a gigantic profit. This scam hit the headlines in 2009 when an agent was discovered to have convinced a seller to take GBP2.9 million for a property which had a value as a development of nearer estate agent Radlett GBP10 million. However, it occurs to normal people all the time - on my road a retired couple sold their 3-floor end-of-terrace house for GBP385,000 that is around.

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