Selling Your property?
Here is the very first of three articles warning buyers and home sellers about the tricks estate agents use to get your cash and that will help you avoid being fleeced by your estate agent.
There are at least three primary techniques widely used by estate agents that sellers should really be watching out for - the sucker sign-up, the cost-slash as well as the slash-and-catch.
1. The sucker sign up
The basis for almost any estate agency's success is obviously to support the most quantity of sellers to sign with that service rather than with their many generally look-alike adversaries. Studies
have repeatedly demonstrated that many folks believe our homes to be worth more than they actually are. Because we decorated them in a sense that satisfies us and have lived in them, we are often
emotionally attached to them. We likely believe our bold colour scheme, modern open plan living area, 'original feature' hearth or 'designer' lavatory would entrance any potential purchaser and will
be the height of good taste and practicality. But on viewing our houses that are precious, many buyers' first idea may be how they can gut the place and replace our execrable decorations with
something better suited to their tastes and lifestyle.
This can present an issue for estate agents. Therefore, when pitching for our company as sellers, us will flatter by commending our house, attempt to sound out us over how much we believe our
property may be worth and then assert they can quickly match or surpass our cost anticipations. This often results in our dwellings being overvalued by them.
Besides the overvalue, another common tactic 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 are showing them round our home. To demand us even more, the agent's office may be phoned by he in our presence, allegedly to check these buyers remain in
the industry. Always his office will support there are bus-loads of eager buyers all eager to find our property. The message of the agent will be clear - then we'll miss the chance of a fast sale at
a good cost if we do not sign up with them fast.
2. The price-slash
It is rather likely that the agent may have overvalued your property so that you can get one to sign with them.
Many sellers suppose that it's in the agent's interest to get the very best price possible. But this just is not the situation. Let's we suppose you have a Sole Agency agreement using a selling fee
of 1.5%. If you are seeking say GBP285,000, the estate agency will earn the individual broker and GBP4,275 perhaps - GBP427. The bureau will pocket GBP3,975 and the representative GBP397 if the agent
manages to convince you to take an offer of GBP265,000. While GBP20,000 drops, the agency simply loses the broker GBP30 and GBP300. As the broker and the agency will soon be under pressure to hit
their sales targets each week or month, it is usually better for them to push you to sell at a lesser cost instead of waiting endlessly for a buyer to offer the full cost - a GBP20,000, GBP30,000 or
even GBP50,000 drop in your cost will have comparatively little effect on their commission.
Getting one to drop your price is usually relatively easy. Although the broker may have originally been highly complimentary about your house, they now tell you that they have had several buyers view
not all the feedback and the property has been as favorable as they'd expected. The agent might even let you know that after you'd signed up, they surprisingly got several other similar properties on
the agency's books and that they sold very quickly as they were more 'competitively priced'. Or the broker might assert that there have been a few offers on your house which were substantially below
your asking price. But whatever tactics are used, most sellers can quickly be persuaded to drop their price down to the amount the agent had always understood they'd get.
The ideal situation for the broker is when a client signs an Exclusive Agency agreement giving exclusive rights to that agent to sell the property for an agreed period. This gets the agent under less
pressure to market the property because, as long as they change 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. With a Multiple Bureau situation, there are two common scenarios that may develop. You could find that every broker will do less work as they know
it's likely another broker will get the fee and the sale, to sell your home. The thus focus their efforts on properties where they've Sole Agency and try to push on buyers. Or else there may be a
frenetic race as each broker tries to get one to take any offers the receive. In this instance, they may feel an even greater demand to convince you to accept a price-slash and you'll find yourself
bombarded with agent calls all telling you what excellent buyers they have prepared to take your property if just you'll reveal some flexibility on cost. It is only after, once you have accepted an
offer and removed your property from various other agents, which you determine the buyer had not been quite as solid as was suggested - they can maintain a chain trying to sell their property, or
might not possess the finance totally organised or may not have the ability to complete as rapidly as you had believed. But by then it's generally too late to change your mind and go back to other
3. The slash-and-catch
The most financially damaging scenario for a seller is when an agent determines that they'll earn plenty of cash for themselves by inducing one to sell your home at an attractively low cost to a
person who is in fact among the broker's business contacts, friends or relatives. This slashing your cost and catching your house might be quite clear-cut as when the broker manages to convince one
to accept a low offer from among their associates and they then resell your property to get a healthy profit netting the agent maybe GBP10,000 to GBP20,000 or more for just a few hours work.
A more advanced version of the scam is when you have a house which can be split up into flats or house which must be modernised or a flat. Here the broker might have a connection having a programmer.
The deal will generally be that the agent alerts the programmer to the opportunity, encourages the developer's offer to be accepted by you (while asserting your house is going to a private buyer) and
then gets a bung in the developer. This bung is well known in the trade as a 'drink' and can generally range from GBP5,000 to GBP10,000 per bargain depending on the profit made by the programmer. To
be able to encourage one to sell at below market value, the agent may withhold offers from buyers that are genuine or get friends to put in low offers to drive you towards a price-slash.
The web has made the slash-and-grab slightly tougher by providing sellers with quick accessibility to information about the prices similar properties have achieved. But, the slash-and-grab works an
absolute treat with older, maybe more vulnerable sellers who may be downsizing- selling off a larger family house and moving into a bungalow or flat after their kids have grown up and left home.
These sellers make easy targets because, when they have lived in a house for several years, they may have purchased it for a five-figure sum - maybe GBP40,000 or GBP50,000. So when they are given a
six-figure offer they'll believe they may not feel comfortable about pushing for more and are making a massive gain. Also, frequently such sellers will usually not have thought concerning the
worthiness of these properties if converted into flats and so may be misled by the agent into just comparing the price offered to that paid for other similar family dwellings, that will generally be
considerably significantly less than the value when converted into flats. 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 Brookmans Park estate agents
GBP10 million. Still, it happens on my road - to normal folks all the time a
retired couple sold their 3-floor end-of-terrace house for GBP385,000 that is around. Unknown a partner in the estate service which had handled the sale and sold as three self-contained flats for
almost GBP750,000 just a few months later after likely less than GBP50,000 had been spent on the conversion bought it.