Generally, Estate Agents do a commendable job at helping people buy and sell houses. However, they are also experts at squeezing every possible penny from clients or convincing people to settle on the sale that best serves them. Here is how to keep your cards close to your chest and pinpoint their monkey games before they pull punches.
It’s the estate agents’ job to blow the horn over a property on sale. When it fails, they may design fear by organizing appointments when other buyers are also viewing the property just to make it look a “hot cake”. Rather than working through offers one at a time, they might try to introduce “sealed bids”, which pits you against other buyers without you knowing how much they are willing to offer.
Be some tough cookie; don’t fall for it. All of this is aimed to push you into driving your price way up much higher than you can afford. So keep in mind what you can pay and stick to this – there’s no point in getting your dream home if you will be broke for the rest of your life.
Watering the Sweet Deal
Never let them know your lowest take (when selling) or your highest bid (when buying). If you do, you are most likely to settle for it.
In order to gain the best deal, often showcase your product to more than three different agents. You can then evaluate an appropriate price.
Throwing in some ghostly offers just to scare you
Your purchase asking price has been accepted. The property you are buying gets off the market and all seems clear towards completion. Then the preceding week, the Estate Agent calls to alert you that someone else (who viewed the property previously) has thrown in an offer above yours. You smell a rat. If you suspect this is a false bid, challenge the Estate Agent and ask for proof in writing that this third party existed and is willing to make a higher offer.
Whether real or hoax, being gazumped is both disturbing and costly. To evade such, there exist two popular options though they all go at some cost.
- A Good Will Charter: where both parties pay a deposit which they will lose if they don’t go through with the sale. It’s not very safe. However, it could help you weed out people who aren’t serious about the deal.
- A lock-out agreement: here the seller has to take the property off the market for a limited amount of time while the deal is being completed. You will have to move quickly to get everything done before the time period is up. Discuss the pros and cons with your solicitor.
Misleading you over Help to Buy
Help to buy phase 1 allows some people to get a government loan of 20% of the price of their house. Since it is a loan, it will still require to be repaid. However, some lenders advertise the property at 80% of the price. That will deliberately mislead Help to Buyers into thinking they are entering a cheaper deal.
Pressurizing you to use their mortgage brokers
Some estate agents have been reported to be mounting pressure on people to use their mortgage service. They claim that one will get preferential treatment or, worse, claiming they will be unwilling to work with them unless they did. Such acts are illegal. By all means, if you have the time, get a quote from the Estate Agent’s mortgage adviser before shopping around, but bear in mind that:
- Estate agents are almost always getting some kind of commission for their mortgage services – commission that you will ultimately pay for.
- Such agents are likely to have a far narrower selection of mortgages than if you look further afield.
- There may be an upfront charge for their advice whereas banks and some mortgage brokers can give you mortgage advice for free.
Also be aware there have been accusations of mortgage brokers and estate agents working closely together, openly discussing potential buyers’ budgets in order to get as much money out of the buyer as possible. So again, be free to find out what deal they can offer while keeping in mind that you are under no obligation to accept their weird mortgage offers.
Charging a little extra for advertising
If your house isn’t selling, you may need to think about changing your scheme. Your estate agent might then advice you to pay them more for advertising your property.
Here is an argument: why haven’t they done everything they can to market your property already? And is the extra money refundable if you still don’t get an offer?