This is the second in a series of three articles warning buyers and sellers of the top tips realtors use to get your money back. These articles aim to keep you from being robbed by your real estate agent.
Sell to buyers
While we all know that agents act for sellers, many are experts at befriending buyers and making them feel like they're on our side, working to help us get the best possible. property at the best price. If you are buying a property, you need to be on your guard against several selling pitfalls, including foreclosure, stock transfer, price increase, spider web and scam. the sealed offer.
1. The block
Of all the realtor tips, the block is probably the one people least expect. Most of us assume that agents want to sell us properties and so it doesn't occur to us that they might be interested in preventing us from buying. There are several reasons an agent might try to stop us from buying a property. Most obvious is that they've planned a slash-and-grab for themselves or one of their contacts and therefore don't want us to disrupt their plans by buying at a higher price than what they are doing. # 39; they offer. Another reason may be that the agent has a buyer who also takes out a mortgage through that agent or an associated mortgage agent. The agent can earn almost as much commission by flogging the mortgage as by selling the property and therefore may be less interested in helping a buyer with money or who has arranged their own mortgage. . In both of these cases, an agent may decline our offers to a seller, or if they pass them on, they may discourage the seller from accepting them by suggesting that we may not be in a good position to buy. A journalist's investigation found that out of six offers made to real estate agents, only two were passed on to sellers.
2. Stock transfer
Buyers can search for their ideal home, but agents can only sell the properties they have on their books. Plus, they have to move their inventory if they want to meet their sales targets. Unless an agent is lucky enough to have properties that perfectly match buyers' requirements, the only way to get their monthly bonus is to convince buyers to take it all. that they have for sale. So the art of a successful agent is to get buyers to compromise and take what is available rather than expecting the property of their dreams.
There are different ways to get buyers to compromise. The easiest way is to use fear to push yourself into making an offer. An agent can tell you they own the perfect property, that this one has just hit the market, but you need to act quickly before someone else does. take. Or if a buyer is hesitant, the agent will use the ghost buyer trick and claim that several other buyers are interested as well. To add some color, the agent can also say that one of the phantom buyers is a cash buyer and therefore in a much better position than you. Or an agent can ask multiple buyers to view a property at the same time. This is meant to trick buyers into believing that there is competition for property and can lead buyers to get infected with auction fever – always a great way to get them to take action and jack up the price. Typically, an agent will say prices in the area are going up, so if you don't buy quickly, you'll end up paying a lot more in a few months. And there's the sandwich – here the agent shows a buyer three properties with the first and third being unsuitable or out of their reach and the middle one being closer to what they want. This helps to create the impression in the buyer's mind that there are few properties that match their needs and makes them more open to being fobed with something that is reasonably close. of what he was looking for.
3. The price pump
Research has repeatedly shown that around 70% of buyers on average spend around 20% more on their home than they originally planned. So whatever a buyer might say to an agent about their price limit, the agent already knows from experience that the vast majority of buyers can be way above if shown a property that they like it. The easiest way for the agent to increase the price is to pretend they already have multiple offers on a property, so if you're interested you're going to have to make a pretty hefty offer. Or an agent can use accumulation – show you four or five properties, starting with the cheapest and going through the most expensive. Most buyers, when they see a property they really like, will stretch their financial limit rather than letting the property go to someone else. Another tactic is to show yourself a house that is well above your financial limit. In comparison, all subsequent properties will seem reasonably priced. Or the agent could use the sneer – take you to an expensive property and then suggest it's a shame you can't stretch your budget to buy such a perfect home. This is especially easy if the agent can use the buyer's partner or family to build up emotional pressure.
4. The spider web
In addition to real estate sellers and developers, agents have a large network of people who can help them increase their income. For example, if an agent convinces a buyer to use a particular mortgage adviser or supposedly independent financial adviser, on an average loan the adviser will pocket around £ 2000 and the agent will pocket £ 1000 to £ 1500. Even if a buyer has financing available, an agent can tell buyers that “ it is company policy ''. to make sure all buyers get the best loan deals available and so whether you like it or not, the agent makes an appointment for you to meet a mortgage seller with a relationship business with the agency.
Likewise, an agent will usually receive generous kickbacks if he transfers buyers to attorneys and surveyors with whom he works regularly. An added benefit of using attorneys and surveyors known to the agent is that they will tend to overlook issues with properties to allow sales to proceed. In any city or even parts of a city, most agents, lawyers, and surveyors will have worked together in the past and none will want to disturb others. So even when a buyer believes his lawyer and surveyor represent his interests, it is likely that the lawyer and surveyor will be more sensitive to maintaining a good relationship with the landlord. Real estate agent rather than worrying about a buyer's best interests they probably never will. process again. When I started questioning my lawyer and my surveyor about things they had apparently 'overlooked' the lawyer paid me £ 6,000 and the surveyor paid me £ 2,500. £ – maybe it was because they were terribly nice people and especially loved me; or maybe it was because they realized that their cozy little arrangement with the realtor had been scolded and so they wanted to avoid any possibly embarrassing explanation. Any buyer who gets caught up in the spider web of agent business associates can find this a very expensive experience.
5. Sealed auction scams
If multiple buyers are looking for a property, the seller and agent can ask all potential buyers to submit their 'best and final' offer. in an envelope by a certain date and time with the understanding that the highest bid will be accepted. This is a great way to raise prices, as the competitive nature of buyers can cloud their common sense. But the sealed submission process is open to abuse. For starters, the seller doesn't have to accept the highest offer – a slightly lower cash offer may be better than a higher offer from someone who needs time to set up a funding. Also, once the bids are open, the agent can easily go back to the bidder with the deepest pockets and suggest that if they increase their bid by a certain amount, then the property belongs to him. If they think a potential buyer has access to more money, the agent may also lie about the highest bid level or invent a phantom bid in order to drive up the price. Or, if they want to slash-and-grab property for themselves, a developer, family member, or friend, then an agent can withhold some offers.