Selling your house can be a complex and emotional process. The stakes are high, and you want to ensure you’re getting the best possible deal. But how can you be sure the real estate agent (REA) is telling the truth?
We’d like to believe that real estate agents are honest, professional workers who wouldn’t intentionally lie for their own benefit.
But if you’re ever in doubt, we’ve put together some common scenarios and how to do your own property market research.
Common Tactics and Situations
Real estate agents are professionals who facilitate property transactions, acting as intermediaries between buyers and sellers.
Their primary goal is to sell your property at the highest possible price, earning a commission based on the sale price.
Looking to sell your home? Find real estate agents on Soho to find one who specialises in your suburb.
1. Overstating the Price
Situation: Some agents might inflate the estimated selling price to win your business. This tactic can lead to disappointment if the market doesn’t support such high expectations.
Solution: To avoid this, compare valuations from multiple agents and do your research on recent sales in your area.
2. Underquoting
Situation: An agent might underquote the expected selling price to attract more buyers and create a competitive bidding environment.
Underquoting is illegal in states like NSW and while we hope all real estate agents heed this warning, it does still occur.
Solution: Ensure you get a realistic appraisal and set clear expectations.
3. Pressure to Sell Quickly
Situation: An agent might push for a quick sale, suggesting that the market is about to drop or that there’s a limited window of opportunity.
Solution: While market conditions can fluctuate, make sure the timeline aligns with your needs and that you’re not being rushed into a decision.
4. Soliciting Negative Feedback
Situation: Some agents solicit negative feedback about the property from viewers or potential buyers to psychologically prepare the seller for accepting a lower offer than initially expected.
This tactic can also involve highlighting negative aspects of recent market developments, like interest rate hikes, to convince the seller to lower their reserve price.
Solution: Get an independent property valuation to have a more objective idea of their property’s worth. You can also have direct and open communication with the agent, asking for specific feedback and data to support their statements.
Real-Life Experiences and Tips For Sellers from Reddit Users
When navigating the process of selling your home, understanding the tactics and experiences shared by others can be invaluable.
The Reddit community provides a platform for individuals to share their personal encounters with real estate agents, highlighting both positive and negative aspects.
Here are some detailed examples from discussions on r/AusPropertyChat:
Example 1: Monitor Market Dynamics
One user noted that median prices often reflect sales over the past 12 months. By examining quarterly medians and trend lines, sellers can understand if prices have been dropping recently, even if the annual median suggests otherwise. This highlights the importance of current, localised market data.
Example 2: High Interest Rates Impact
High interest rates have forced many sellers into the market out of necessity. This creates a buyer’s market, with fewer bidders and lower auction clearances.
Observing local auctions and understanding the financial landscape can provide valuable insights into the best time to sell.
Example 3: Prepare an Auction Strategy
Sellers should prepare for real estate auctions with pre-planned outcomes for each potential price point. Knowing the consequences of each possible sale price in advance can help make quick, informed decisions under time pressure.
It’s crucial to determine the minimum acceptable price before the auction, regardless of the agent’s opinion.
Suggested Reading: Soho’s guide on Auction Bidding will help you prepare for auction day!
Example 4: Mortgage Valuation Issues
A significant challenge can arise if a buyer’s mortgage valuation doesn’t match the sale price. For instance, if a house sells for $800k but the valuation is only $650k, the buyer must cover the difference plus the deposit.
This can derail the sale if the buyer’s finances are contingent on the higher valuation.
Renegotiation as a solution:
- Reduced Sale Price: This is the most common solution. You can negotiate with the buyer to lower the sale price to match the valuation. This might be a good option if you’re flexible on price and want to avoid the hassle of finding a new buyer.
- Split the Difference: You and the buyer could agree to split the difference between the sale price and the valuation. This can be a compromise if both parties are invested in making the sale happen.
Practical Case Studies from Real Estate Transactions
Practical case studies highlight common experiences and lessons learned from individuals navigating the real estate market.
These examples shed light on typical scenarios sellers may encounter and offer valuable insights into handling interactions with real estate agents.
Case Study 1: The Over-Promiser
An agent promised a significantly high selling price to secure a client’s business, assuring them that their property would fetch top dollar based on recent sales in the area.
However, after listing the property and conducting a few open houses, the agent suggested that market conditions had shifted and encouraged the seller to lower their expectations.
Lesson Learned: This scenario underscores the importance of getting multiple appraisals before choosing an agent. Relying solely on the highest valuation can lead to disappointment if the market doesn’t support that price.
By comparing evaluations from different agents and doing your own research on recent sales, you can set a more realistic price range.
Case Study 2: The Rush Tactic
An agent pressured a seller to accept the first offer that came in, stating it was the best they would likely get given the current market conditions. The seller, however, felt uneasy and decided to wait a bit longer. Within a few weeks, they received a much higher offer.
Lesson Learned: This highlights the value of patience and market understanding. While it’s important to take market advice into account, sellers should also trust their instincts and not feel rushed into a decision. Sometimes, waiting can lead to a better outcome.
Case Study 3: The Invisible Buyer
An agent claimed to have multiple interested buyers ready to make offers above the asking price. However, when it came time to present the offers, these buyers seemed to vanish, and the agent suggested accepting a much lower offer.
Lesson Learned: It’s crucial to question and verify the claims made by your agent. If an agent mentions multiple interested parties, ask for written offers or direct communication with the potential buyers. Transparency is key in ensuring that you are making informed decisions based on actual interest.
Case Study 4: Misleading Advertising
An agent advertised a property at a significantly lower price than discussed, aiming to attract more interest. This tactic, known as underquoting, led to a flood of potential buyers who were not qualified to meet the seller’s actual price expectations, wasting time and resources.
Lesson Learned: Ensure that the listing price aligns with your expectations and market research. Clear communication with your agent about the pricing strategy can prevent such situations and attract serious buyers from the outset.
These real-life experiences provide practical insights into the common challenges and strategies involved in selling a property.
Rules of Thumb
1. Due Diligence: Always perform your due diligence by obtaining multiple appraisals and researching the market independently.
2. Patience: Don’t rush into accepting the first offer. Sometimes, waiting can yield better results.
3. Verification: Verify claims made by your agent, especially regarding interested buyers and market conditions.
4. Clear Communication: Maintain clear and open communication with your agent about your expectations and strategies to avoid misalignment and underquoting tactics.
By learning from these real-life experiences, you can better navigate the complexities of selling your home and ensure that your agent is truly working in your best interest. For more detailed discussions and insights, visit the original Reddit thread here.
FAQ Section
Do estate agents have to tell the truth?
Estate agents are legally required to disclose any connections they have with parties involved in a property sale, such as connections to the seller or other buyers.
What is honesty in real estate?
Honesty in real estate means that agents must disclose all known defects in a property. Failing to do so is considered a breach of their duty of honesty.
What is the most common complaint filed against realtors?
The most common complaints filed against realtors involve issues with septic systems, solar leases, failure to disclose, seller’s property disclosures, water rights, miscommunication, agent-owned property, multiple offers, and unpermitted work.
