Estate agents, in general, do help in making the buying/selling process of your property more convenient.
Nobody is denying this.
But that doesn’t mean they always operate with high morals and principles. Keeping in mind that agents are people with dreams, desires, and bills at the end of the month, it makes sense that some might make the deal work in their favor, as opposed to the clients. The typical real estate commission fee averages about 5 percent to 6 percent of the home’s sales price, so make sure they are earning it the right way. These are some of the most common tricks agents tend to use.
1. Creating Hype And Urgency
Time is of the essence for the agent, because property owners don’t want their real estate dead on the market. So, agents might hype up the property in order to get some attention. In fact, they might even schedule a showing with another potential buyer at the same time they are supposed to meet you, just to create urgency on your part. In some cases, they try to introduce what is referred to as sealed bids, where you blindly bid against other buyers. More specifically, you have no idea what the other buyers are offering.
This is aimed to achieve two things. Firstly, the agent wants you to bid higher than the budget you established. And secondly, they want you to think under pressure. Naturally, you should never feel pressured to make a purchase. And if other buyers show up during a showing, it just means you are working with a very unprofessional agent. Stick to your guns and your established budget at all times. Because what’s the point of getting your dream house, but you can’t afford to eat?
2. Keep Your Budget Info Personal
Want free money?
There is absolutely no reason why you need to share your budget details with an agent. More specifically, you don’t have to tell them your bottom line if you are selling, or your maximum if you are looking to buy. There are agents who will ask for this information, and if they do, they intend on using this information to their benefit.
Don’t let the agent’s personal agenda become part for your deal, seeing as it will not count in your benefit. Consider valuing your house beforehand, so you know what you’re dealing with.
3. Fake Bids for a Higher Price
It happens that right in the middle of a deal when you think everything is settled and the final paperwork has to be finished, the agent calls. And instead of telling you, you are the new owner, they inform you a higher bid has been placed by a buyer that was previously interested. And even though this happens, it doesn’t mean it is true. Phantom offers created by agents to drive up your maximum still happen, and you can fight this in different ways.
- Ask for official proof that the buyer exists and that they made the offer that is supposedly higher
- Enforce the Good Will Charter, where both parties put down a deposit, which they lose if they don’t go through with the offer
- A lock-out agreement sees the owner of the property removing it from the market for a certain amount of time, while you handle the finances and paperwork
- These options are not full-proof, but they provide some basic protection against fake offers pushing your budget.
4. Exploiting Special Circumstances
Some lenders can be deceiving when it comes to advertising. For example, they advertise the property at 80% of the price, which confuses Help to Buy (government loans of 20% the property value) and implies they are getting a better deal.
5. Forcing Mortgage Brokers
You will no doubt come across some agents who will recommend specific mortgage brokers. And this is fine if it stays with a recommendation. But if the agent insists you work with his or her broker, only to add consequences if you don’t, then get another agent.
The reality of the situation is that many brokers and agents have a close relationship. And that means they help each other make as much money out of their clients as possible. Sure, get a quote. But never feel pressured or forced to work with a specific mortgage broker.
6. They Try to Sell You Extra Advertising
Not every house is going to sell the moment it hits the market. And when a property sits for too long, it gets tougher and tougher to move it. However, that doesn’t mean you should start paying for extra advertisement, which is something an unethical agent is most likely to offer.
This is where you have to start asking yourself some questions. For example, if the agent did the best he or she could the first time around, what type of advertising will be effective now? And why did they avoid it with the initial campaign? You can even ask whether they plan on giving the money back after they get a sale.