Article from “Inside Real Estate” Peter O’Malley.
If you want an above-market price for your property, agents have a number of tricks to bring you back down to market price. Some agents employ subtle tactics, while others are more overt. Either way, when you know what they are, you stand a better chance of protecting yourself.
Here are five of the best-known methods used by agents to coerce a scale-back in reserve price:
- The pre-auction low offer. If you are expecting a huge price on auction day, an offer well below your expected price often surfaces about a week before the auction. The agent does not expect the offer to be accepted. They just want you to second-guess your price expectations and feel grateful when the price exceeds the bargain hunter’s low-ball offer.
- Moving the tenants out. The more financially committed the vendor is during a campaign, the more likely they will accept the highest bid on the day. Encouraging tenants to vacate in the name of an ‘improved presentation’ increases the vendor’s financial exposure to the campaign
- Setting a deadline. Sellers are often encouraged to auction their property because the deadline (the auction date) can pressure buyers to act. However, as the deadline draws closer, the pressure of the situation shifts from the buyers to the seller. While buyers can wait for other properties to come onto the market, the seller is publicly exposed on auction day.
Don’t let a reported clearance rate of 80 per cent fool you into a false sense of security. Many properties are withdrawn or fail to sell at auction, so the ‘result’ conveniently goes unreported. It is well known among agents that the real clearance rate is always significantly lower than the figure advertised.
It is important to understand that the agent’s clearing a property and the vendor’s achieving the best possible price are two very separate outcomes.
- Hiring furniture in. When an owner hires expensive designer furniture from a home staging company on a six-week contract, it creates both an expense and a deadline for the vendor.
- Upselling advertising. As you have discovered, agents are addicted to Vendor Paid Advertising (VPA). They often tell each other in training courses that upfront VPA ensures they get a committed vendor from the start. ‘Premium package’ internet campaigns are designed to lighten vendors’ wallets. If an agent really believes in these advertising methods, ask them to carry the cost and risk of the strategy. You may find the agent can quickly deliver a buyer without either of you having to commit to a massive upfront expenditure.
The greatest losses often occur at the time of greatest gains. It’s a reality that vendors are resilient and careful when the market is flat, yet more relaxed and amenable to expenditure in boom markets. If you stay resilient and careful, you can be assured of the best possible net result.
Know the tactics agents use to pressure vendors before you engage any agent.
Discover the Difference…As experts in connecting people with lifestyle solutions, a Clark representative can help you navigate real estate obstacles to ensure you achieve your property goals. If you would like to discuss your property plan or obtain a current market valuation of your property, please don’t hesitate to contact us on 07 3256 1600.
