There are some of us who do not venture into the Real Estate market because our lack of understanding aoubt how the whole industry works. In every business, there are ways that agents charge an "idiots tax" on those who don't know what they are doing. Here are some dirty tricks that are used by real estate agents.
There is an old adage among real-estate agents, ''quote 'em low and watch 'em go. Quote 'em high and watch 'em die". The practice of under quoting is widespread and has surged again in recent months. It is when potential buyers are told a price much lower than a property's true market value and the owner's reserve. Unfortunately, under quoting is rife because it works. Every weekend hopeful buyers are lured to an auction thinking they can afford, for example, $850,000-plus for a four bedroom house in Templestowe, Melbourne, only to be broken hearted when sells for $1.51m, as happened at 45 Taparoo Road last month.
Dirty little secret #2
The reverse of under quoting is over quoting, a ploy some agents use to win business. In this case, agents promise a vendor their house will fetch a price well above its market value, whether to convince them to sell or to beat others for the right to sell it. Once the contract is signed, the agent begins to groom the owner to accept a lower price. Adding even more insult to injury is the fact that many times property is actually sold for less than it is worth. This happens when the agent can not be bothered with the hard yakka to get, for example, an extra 5 per cent for their vendor. Such agents have a churn mentality, simply finding a price the owner will accept, selling the house and moving on to the next campaign.
Dirty little secret #3
Vendors can be cheated in another way too. Very naughty agents have been known to withhold good offers made before auction, even those well above the reserve, for several reasons. Sometimes, the offer comes through another agent at the firm and the original agent doesn't want to share commission. So, the bid is never put to the vendor or is put to them but at less than the real offer to be knocked back. Other times the agency wants to promote its brand by pushing ahead with the auction no matter what. It wants the vendor to spend the full amount on advertising because it is a lighthouse to attract other buyers and sellers to the business.
Vendors can be cheated in another way too. Very naughty agents have been known to withhold good offers made before auction, even those well above the reserve, for several reasons. Sometimes, the offer comes through another agent at the firm and the original agent doesn't want to share commission. So, the bid is never put to the vendor or is put to them but at less than the real offer to be knocked back. Other times the agency wants to promote its brand by pushing ahead with the auction no matter what. It wants the vendor to spend the full amount on advertising because it is a lighthouse to attract other buyers and sellers to the business.
See the other two secrets of dummy bidding and fake buyers at TheWest.com.au.
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