Buy a house? Beware of these real estate agent tricks
This is the second in a series of three articles warning home buyers and sellers of the top tricks real estate agents use to get their money. These articles are intended to help you avoid being scammed by your real estate agent.
Sell to buyers
While we all know that agents act on behalf of sellers, many are adept at befriending buyers and making them feel on our side, working to help us get the best property at the best price. If you are buying a property, you should be on your guard against various sales pitfalls, including lockdown, stock change, price increase, cobweb, and sealed deal scam.
1. The block
Of all the tricks of real estate agents, the lock is probably the one that people expect the least. Most of us assume that agents want to sell us property and therefore it does not occur to us that they may be interested in preventing us from buying. There are several reasons why an agent may try to prevent us from buying a property. The most obvious is that they have planned a sale for themselves or one of their contacts, so they do not want us to interrupt their plans by buying at a higher price than they offer. Another reason may be that the agent has a buyer who is also obtaining a mortgage through that agent or an associated mortgage agent. The agent can earn almost as much commission from paying off the mortgage as from selling the property, and therefore may be less interested in helping a buyer with cash or who has arranged their own mortgage. In both cases, an agent can withhold our offers to a seller or, if he transfers our offers, he can dissuade the seller from accepting them by suggesting that we may not be in a good position to buy. An investigation by a journalist found that of six offers made to real estate agents, only two were delivered to sellers.
2. The change of shares
Buyers may be searching for their ideal home, but agents can only sell the properties they have on their books. Also, they have to change their stocks if they want to meet their sales goals. Unless an agent is lucky enough to have properties that perfectly match buyers’ requirements, the only way they can get their monthly bonus is by convincing buyers to take what they have to sell. So the art of a successful agent is to influence buyers to commit and take what’s available instead of waiting for their dream property.
There are several ways to get buyers to commit. The easiest thing to do is to use fear to push him into making an offer. An agent may tell you that you have the perfect property, that it has just come on the market, but that you will have to move quickly before someone else buys it. Or if a buyer is hesitant, the agent will use the ghost buyer trick and claim that other buyers are interested as well. To add a bit of color, the agent may also say that one of the ghost buyers is a cash buyer and therefore in a much better position than you. Or an agent can arrange for multiple buyers to view a property at the same time. This is intended to make buyers believe that there is competition for the property and can lead to buyers being infected by auction fever, which is always a great way to propel them into action and drive up the price. Usually an agent will say that prices in the area are going up, so if you don’t buy quickly, you will end up paying a lot more in a few months. And there is the sandwich: here the agent shows the buyer three properties, the first and third are either unsuitable or out of their range and the one in the middle is closer to what they want. This helps create the impression in the buyer’s mind that there are few properties that fit their requirements and makes them more open to being fooled into something that is reasonably close to what they were looking for.
3. The price pump
Research has repeatedly shown that about 70% of buyers spend on average about 20% more on their homes than they originally planned. Therefore, regardless of what a buyer may tell an agent about their price cap, the agent already knows from experience that the vast majority of buyers can find themselves squeezed far beyond this if they are shown a property that like. The easiest way for the agent to raise the price is to state that you already have several offers on a property, so if you are interested, you will have to make a fairly juicy offer. Otherwise, an agent can use accumulation: show you four or five properties, starting with the cheapest and moving to the most expensive. Most buyers, when they see a property that they really like, stretch their financial limit rather than letting the property go to someone else. Another tactic is to show you a home that is well over your financial limit. By comparison, any subsequent property will seem reasonably priced. Or the agent could use the taunt: take you to an expensive property and then suggest that it’s too bad you can’t stretch your budget to buy such a perfect home. This is particularly easy if the agent can use the buyer’s partner or family to increase emotional pressure.
4. The cobweb
In addition to sellers and real estate developers, agents have a wide network of people who can help them increase their profits. For example, if an agent convinces a buyer to use a particular mortgage adviser or a supposedly independent financial adviser, on an average loan the adviser will pocket around £ 2,000 and the agent between £ 1,000 and £ 1,500. Even if a buyer has financing available, an agent can tell buyers that ‘it is company policy’ to ensure that all buyers get the best loan deals available and therefore, whether they want to or not, the agent makes an appointment for you to meet with a mortgage seller with business ties to the agency.
Similarly, an agent will generally receive generous bribes if he transfers buyers to attorneys and surveyors with whom he works regularly. An additional advantage of using attorneys and surveyors known to the agent is that they will tend to overlook problems with the properties to allow sales to take place. In any town or even city areas, most agents, lawyers, and surveyors will have worked together in the past and none will want to upset others. Therefore, even when a buyer believes that their attorney and surveyor represent their interests, the attorney and surveyor are likely to be more sensitive in ensuring a continued good relationship with the real estate agent rather than worrying about the a buyer’s interests that probably never will. try again. When I started questioning my lawyer and surveyor about things they had apparently ‘overlooked’, the lawyer paid me £ 6,000 and the surveyor £ 2,500; This may be because they were terribly nice people and they particularly liked him; Or it may have been because they realized that their cozy little arrangement with the realtor had been discussed and were therefore eager to avoid any possibly embarrassing explanations. Any buyer caught in the web of the agent’s business partners can be a very expensive experience.
5. Sealed offer scams
If there are multiple buyers chasing a property, the seller and agent may ask all potential buyers to submit their “best and final” offer in an envelope prior to a specified date and time, with the understanding that the latest offer will be accepted. high. This is a wonderful way to raise the price, as the competitive nature of buyers can cloud your common sense. But the sealed bidding process is open to abuse. To begin with, the seller does not have to accept the highest offer; a slightly lower cash offer may be preferable to a higher offer from someone who needs time to arrange financing. Also, once the bids are opened, the agent can easily go back to the bidder with the deepest pockets and suggest that if you increase your bid by a certain amount, then the property is theirs. If they believe that a potential buyer has access to more money, the broker can also lie about the highest bid level or invent a phantom offer to increase the price. Or, if they want to cut down and grab the property for themselves, a developer, a family member, or a friend, then an agent can withhold some offers.