Selling Your property?
Here is the very first of three articles warning buyers and home sellers about the tricks estate agents utilize to get your hard earned money and that will help you avoid being fleeced by your estate agent.
1. The sucker sign up
The foundation for the success of almost any estate agency is obviously to encourage the maximum quantity of sellers to sign with that service rather than with their competitors that are many generally look alike. Studies have repeatedly demonstrated that most of us consider our houses to be worth more than they really are. Because we decorated them in a way that suits us and have lived in them, we're frequently emotionally attached to them. We probably believe our fearless colour scheme, modern open plan living space, 'first attribute' fireplace or 'designer' restroom will be the height of good taste and practicality and would entrance any potential purchaser. But on seeing our dwellings that are cherished, many buyers' first idea may be how they can gut the place and replace our execrable decorations with something better suited to their preferences and lifestyle.
This could introduce an issue for estate agents. When they've been brutally honest with us about our home's (commonly lack of) attractiveness and give us a realistic selling price, then we are more likely to get quite grumpy and grant our company to a different agent who is more complimentary about our tastes and much more optimistic about how much we can sell for. So, when pitching as sellers for our business, most brokers will flatter us by commending our house, attempt to sound out us we believe then claim they can certainly meet or exceed our cost expectations and our property may be worth. This often results in them overvaluing our dwellings.
In addition to the another common strategy agents use to get us to hire them is the buyer that is phantom. They'll likely tell us that they have lately been contacted by one or several buyers who are searching for a property just like ours, as we are showing our home rounds. The agent may phone his office in our presence, allegedly to check these buyers remain in the industry to demand ours even more. Always his office will affirm there are bus-loads of enthusiastic buyers all pantingly eager to find our property. The message of the agent is going to be clear - if we do not sign up with them immediately, then we'll miss the opportunity of a rapid sale at a good cost.
2. The price-slash
It's fairly likely that your broker will have overvalued your property so that you can get you to sign with them.
Many sellers presume that it is in the broker's interest to get the best cost possible. But this just is not the case. Let's we presume you have a Sole Agency agreement using a selling fee of 1.5%. If you are seeking say GBP285,000, the estate agency will get GBP4,275 and the individual broker maybe - GBP427. The agency will pocket the http://www.statons.com representative GBP397 and GBP3,975 in the event the agent manages to convince one to accept an offer of GBP265,000. So while GBP20,000 drops, the agency only loses GBP300 and the broker GBP30.
Getting you to drop your cost is usually relatively simple. They tell you that they have had several buyers view the property rather than all the feedback has been as positive as they had expected although the agent may have initially been highly complimentary about your home. The exceptional transport links may unexpectedly become a concern because of an excessive amount of traffic and congestion; your sizeable garden, which had been such a huge selling point, might pose an issue for the kind of active young professional couples who would be in the market to get a house like yours; your tremendously creative colour scheme, which the agent had so admired, might well have put off buyers seeking a more unbiased decor and so on. The broker may even let you know that just after you had signed up, they surprisingly got several other similar properties on the agency's publications and that they all sold amazingly quickly as they were more 'competitively priced'. Or the broker might maintain that there happen to be a few offers to your house which were much below your asking price. But whatever approaches are utilized, most sellers can instantly be convinced to drop their cost right down to the level the broker had always known 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 interval. This gets the agent under less pressure to sell the property because, 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's property is put by they with several agents. This sets up a race between agencies as to who gets the sale as well as the commission, meaning several agencies may do rather lots of work but miss out on getting any cash - not something likely to be appreciated by the service supervisor. With a Multiple Agency situation, there are two common scenarios which may develop. You could find that every broker will do less work as the understand it is likely another broker will get the commission and the sale, to market your home. The thus concentrate their efforts on properties where they have Sole Agency and attempt to push buyers. Or else there could possibly be a frenetic race as each agent tries to get you to accept any offers the receive. In this particular case, they may feel an even greater demand to convince you to accept a cost-slash and also you'll find yourself bombarded with agent calls all suggesting what great buyers they have prepared to take your property if just you'll show some flexibility on cost. It's just later, once you have accepted an offer and removed your property from other brokers, which you discover the buyer had not been quite as solid as was proposed - they can maintain a chain trying to sell their property, or might not have the finance totally organised or might not be able to finish as quickly as you had considered. But by then it's generally too late to improve your mind and get back to other brokers.
3. The slash-and-grab
The most fiscally damaging scenario for a seller is when an agent determines that they can create lots of money for themselves by getting you to sell your home at an attractively low price to someone who is in fact one of the agent's business contacts, friends or family members. This slashing your cost and grabbing your house might be somewhat straightforward as when the broker manages to convince you to accept a low offer from among their associates and they subsequently resell your property for a strong gain netting the agent perhaps GBP10,000 to GBP20,000 or more for just a few hours work.
A more advanced version of this scam is when you have house which should be modernised or a flat or a house that may be split up into flats. Here the agent may have a relationship having a developer. The price will normally be that the broker alerts the developer to the opportunity, encourages you to accept the developer's offer (while asserting your house is going to a private buyer) and then gets a bung in the programmer. This bung is known in the trade as a 'drink' and will usually range according to the gain made by the programmer.
The web has made the slash-and-catch similar properties that were slightly more difficult by providing sellers with quick access to advice about the prices have achieved. However, the slash-and-catch works an absolute treat with older, possibly more exposed sellers who may be downsizing- moving to some bungalow and selling off a bigger family house or flat after their children have grown up and left home. These sellers make easy targets because, if they've lived in a house for quite some time, they could have bought it to get a five-figure sum - maybe GBP40,000 or GBP50,000. So when the seller are given a six-figure offer like GBP350,000, they will believe they are already making a massive gain and may feel uneasy about pushing for more. Also, often such sellers will generally not have thought regarding the worthiness of the properties if converted into flats and so can be duped by the broker into just comparing the cost offered to that paid for other similar family dwellings, that will usually be considerably less than the value when converted into flats. Nevertheless, it happens to common people most of the time - on my road a retired couple sold their 3-flooring end-of-terrace house for GBP385,000 that is around. Unknown it was purchased by an associate 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 probably less than GBP50,000 had been spent on the conversion.