PROPERTY OWNERS ARE BEING DUPED BY SALES AGENTS
Recently, Nathan spoke about selling properties. This can be a good strategy for certain people to cash out on recent gains, and re-invest into new opportunities which have stronger prospects.
However, selling a property is not always the best move. Unfortunately, too many property owners are being duped into selling…to their own detriment!
The recent price rises in major cities have sent real estate agents into a frenzy. Like sharks sensing blood, they swarm towards easy money…tearing into a property owner’s wealth.
WHAT NO AGENT WILL EVER TELL YOU
Real estate agents rely on churning through properties. If the commissions stop, so does their paycheck.
This is exactly why most agents will tell you to take your gains now, while the market is hot.
They won’t ever mention the other ways to access your capital…ways which could potentially save you wasting hundreds of thousands in fees, commissions and taxes.
They won’t tell you how to access capital gains from your property, without missing out on potential future gains.
We are gob-smacked by how few people know of the alternative even though we have been talking about it for years!
We’ve been educating people about accessing their equity instead via a loan for a long time now. This is still a viable option for many, even in today’s environment.
Yes, this may involve some costs and interest payments, but it’s likely much more cost effective than selling a property.
Letterbox drops with free appraisal offers are standard practice amongst selling agents who try and entice property owners into selling.
But some unscrupulous agents are going even further. We just got wind of some very shonky tactics being used in Sydney’s Hills District.
An aspiring rentvestor and Binvested community member was shocked to hear that the property she was renting had been listed for sale – almost immediately after commencing a lease.
She had moved twice within 2 years, due to landlords selling up – and made sure the landlord had no intention of selling this time around. Something didn’t seem right.
Upon calling, the agent said the landlord had already decided to list the property. The demanded immediate access for appraisals and photography.
Perplexed, she called the landlord directly. Surprisingly, the landlord had no knowledge of any of this.
However, the landlord did say the agency contacted them within the same week when an agent personally visited her business. The agent claimed to have received a hot off market offer from a mysterious buyer.
Upon further enquiry, it seems that buyer had vanished without a trace…but the agent was still insisting on listing the property anyway.
Luckily the landlord knew the true value of the property, and realized very quickly that the agent’s sale estimate was $100,000’s below its true value. Needless to say, the landlord firmly disagreed to sell.
However, it seems this rogue agent continued to run amok doing reconnaissance and making preparations without the owner’s knowledge. The owner’s consent was irrelevant, just a minor detail to overcome further down the line.
OWNERS ARE BEING PLAYED
Agents know that as soon as they have a foot in the door they can start conditioning you into selling your property. They will talk up the market, how much it’s increased and will seduce with promises of cash profits. They will make you doubt the potential to gain more in the future.
Even while they are coercing you, they could be making arrangements for an imminent listing.
Their agency is a machine geared to churning properties and earning commissions. They don’t want the best outcome for you. They want many quick and easy sales.
This is exactly why they will condition you towards accepting a low reserve price. They will start by talking up your property, meanwhile the will actually under-quote its dollar value at price they know will sell fast.
They will bait advertise your property below reserve and funnel lots of people through inspections. All this is designed make you think they are effectively marketing your property. However, very few of these will be people who are actually able to buy it at or above reserve price.
Eventually after 2 – 3 weeks of lowball offers, they will convince you to lower your expectations and settle on a low offer.
After all, from an agent’s perspective, their gains reduce the longer they continue to list. As a seller, your profits come from margin between your sales price and purchase price.
As an agent, only a small portion of their commission is probably coming from this margin. There is little incentive to grow it for you. They need to put in more effort, for relatively little gain.
HOW TO FACT CHECK AN AGENT
So the next time you encounter a grinning sales agent out to list your property, check the facts for yourself.
1) Research the market yourself. Look at what comparable properties have sold for within the last 6 months. Make sure to look at sales from other agencies as well.
2) Speak with a finance strategists about releasing your equity through a finance arrangement.
3) Evaluate your options. What properties can you purchase if you continue to hold this property? What can you purchase after selling a particular property?
4) What potential capital gains or rent could you miss out on if you sell now?
5) Speak with your accountant about the tax and income implications selling. Will selling increase the amount of tax you pay? Will selling benefit your reportable income and ability to get finance in the future?
6) If you do sell, get a solicitor to draw up a contract which protects your interests. Make it clear that they will earn the majority of their commission once your ideal price is achieved.
By following these simple steps, property owners can avoid being duped by flashy sales speak. Contact us if you want to be put you in touch with the agents we trust to get the best sale price.