Buying a Home? Watch Out For These Estate Agent Tricks

Buying a Home? Watch Out For These Estate Agent Tricks




This is the second in a series of three articles warning home buyers and sellers about the main tricks estate agents use to get keep up of your money. These articles are aimed at helping you avoid being fleeced by your estate agent.

Selling to buyers

Although we all know that agents are acting for sellers, many are experts in befriending buyers and getting them to feel that they are on our side, working to help us get the best character at the best price. If you’re buying a character you should be on your guard against several sales traps including the block, stock-shifting, pumping up the price, the spider’s web and the sealed-bid scam.

1. The Block

Of all estate agents’ tricks, the block is probably the one people least expect. Most of us assume agents want to sell similarities to us and so it doesn’t occur to us that they may be interested in preventing us from buying. There are several reasons an agent might try to block us from buying a character. The most obvious is that they’ve planned a slash-and-grab for themselves or one of their contacts and so don’t want us to disrupt their plans by buying at a higher price than they’re offering. Another reason may be that the agent has a buyer who is also taking out a mortgage by that agent or an associate mortgage agent. The agent can earn almost as much commission from flogging the mortgage as from selling the character and so may be less interested helping a buyer with cash or who has organised their own mortgage. In both these situations, an agent may withhold our offers from a seller or, if they do pass on our offers, they may discourage the seller from accepting them by suggesting that we may not be in a good position to buy. An investigation by one journalist found that of six offers made to estate agents, only two were passed on to sellers.

2. The stock-shift

Buyers may be looking for their ideal home, but agents can only sell the similarities they have on their books. additionally, they have to shift their stock if they are to meet their sales targets. Unless an agent is lucky enough to have similarities that perfectly match buyers’ requirements, the only way they can get their monthly bonus is by convincing buyers to take in any case they’ve got to sell. So the art of a successful agent is to influence buyers to compromise and take what is obtainable instead of keep up out for their dream character.

There are various ways of getting buyers to compromise. The easiest is to use fear to push you into making an offer. An agent may tell you that they have the perfect character, that this has just come on the market, but that you’ll have to move quickly before someone else snaps it up. Or if a buyer is hesitating, the agent will use the phantom buyer trick and claim that several other buyers are also interested. To add a little colour the agent may also say that one of the phantom buyers is a cash buyer and consequently in a much better position than you. Or an agent may position for several buyers to view a character at the same time. This is intended to make buyers believe that there is competition for the character and can rule to buyers being infected by auction-fever – always a great way to stimulus them into action and push the price up. Typically an agent will say that 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 time. And there’s the sandwich – here the agent shows a buyer three similarities with the first and the third being either unsuitable or out of their range and the middle one being closer to what they want. This helps create the impression in the buyer’s mind that there are few similarities fitting their requirements and makes them more open to being fobbed off with something which is reasonably close to what they were looking for.

3. The price pump

Research has repeatedly shown that around 70% of buyers use on average about 20% more for their homes than they had originally intended. So, in any case a buyer may say to an agent about their price limit, the agent already knows from experience that the large majority of buyers can be squeezed well above this if shown a character they like. The simplest way for the agent to push the price up is to claim that they already have several offers on a character, so if you’re interested, you’re going to have to put in a fairly juicy bid. Or else an agent may use the build-up – show you four or five similarities, starting with the cheapest and moving on to the most expensive. Most buyers, when seeing a character they really like, will stretch their financial limit instead of letting the character go to someone else. Another tactic is to show you a home that is way above your financial limit. In comparison, any later similarities will seem reasonably priced. Or the agent could use the sneer – take you to an expensive character and then suggest that it’s a pity that you can’t stretch your budget to buy such a perfect home. This is particularly easy if the agent can use buyer’s partner or family to pile on the emotional pressure.

4. The spider’s web

In addition to sellers and character developers, agents have a wide web of people who can help them increase their earnings. For example, if an agent convinces a buyer to use a particular mortgage advisor or presumably independent financial advisor, on an average loan the advisor will pocket about £2,000 and the agent £1,000 to £1,500. already if a buyer has finance obtainable, an agent might tell buyers that ‘it’s company policy’ to ensure that all buyers get the best loan deals obtainable and so, whether you want it or not, the agent makes an appointment for you to meet a mortgage salesman with business connections to the agency.

Similarly, an agent will usually get generous kickbacks if they pass buyers onto lawyers and surveyors that they regularly work with. An additional advantage of using lawyers and surveyors known to the agent is that they will tend to overlook problems with similarities to permit sales to go by. In any town or already areas of a city, most agents, lawyers and surveyors will have worked together in the past and none will want to upset any of the others. So already when a buyer believes their lawyer and surveyor are representing their interests, it’s likely that the lawyer and surveyor will be more sensitive about ensuring continuing a good relationship with the estate agent instead of worrying about the interests of a buyer that they will probably never deal with again. When I began to question both my lawyer and surveyor about things they had seemingly ‘overlooked’, the lawyer paid me £6,000 and the surveyor £2,500 – this may have been because they were terribly nice people and particularly liked me; or it may have been because they realised their cosy little arrangement with the estate agent had been rumbled and so were keen to avoid any possibly embarrassing explanations. Any buyer who gets caught in the spider’s web of the agent’s business associates may find it a very expensive experience.

5. Sealed-bid scams

If there are several buyers chasing a character, the seller and agent may ask all the possible purchasers 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 wonderful way of getting the price up as buyers’ competitive natures can cloud their shared sense. But the sealed bid course of action is open to abuse. For a start, the seller doesn’t have to accept the highest offer – a slightly lower cash offer may be preferable to a higher offer from someone who needs time to position finance. Also, once the bids are opened, the agent can easily go back to the bidder with the deepest pockets and suggest that if they increase their offer by a certain amount, then the character is theirs. If they think a possible buyer has access to more money, the agent can also lie about the level of the highest bid or invent a phantom bid in order to push the price higher. Or, if they want to do a slash-and-grab to get the character for themselves, a developer, a family member or friend, then an agent may withhold some bids.




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