If you want above market price for your property, agents have a number of tricks to bring you back into line. Some of these tactics are subtle whilst others are more transparent. Either way, when you know what they are, you stand some chance of protecting yourself. In fairness, some of the tricks outlined below can also be advice that assists a vendor sell their property, circumstances depending. Being able to discern between professional advice and a selling tactic designed to increase your motivation is the key to making the right decision.
‘The market is going to crash, sell now’ – there were times during 2020 year where the property market looked particularly vulnerable. But agents predicting imminent doom to the vendor at the point of bids being made has been used well before 2020. Markets gyrate and Melbourne’s market has been particularly volatile since 2007 – where sharp rises have been punctuated by sharp corrections. 2008, 2012, 2017-2019 were all period of price decline. The market bounced out of all these downturns though.
Pre-auction low offer – If you are expecting a huge price on auction day, a low offer well below the expected price often arises the week before the auction. The agent does not expect the offer to be accepted, it’s more a case of causing the vendor to second guess their price expectations and be grateful when the price exceeds the bargain hunters low ball offer.
Move the tenants out – the more financially committed the vendor is during the campaign, the more likely they will accept the ‘highest bid on the day’. Moving the tenants out in the name of an ‘improved presentation’ also increases the vendor’s financial exposure to the campaign. Hence the real motive to encouraging landlords to move their tenants out, unless of course there is clutter everywhere. Working with the existing tenants during the sales campaign can often lead to a better net result for the vendor.
Deadline – sellers are often encouraged to auction as the deadline apparently pressures buyers to act. As the deadline (auction) draws closer, the pressure of the situation begins to shift from the buyers towards the seller. The buyer can wait for the next property whilst the owner is publicly on the chopping block on auction day. Don’t let a reported clearance rate of 70% fool you into a false sense of security. Many properties are withdrawn and/or fail to sell at auction, so the ‘result’ conveniently goes missing and unreported.
Hire staging furniture – when the owner hires designer furniture for 6 weeks, it creates both an expense and a deadline for the vendor. If a landlord selling their investment property moves the tenant out, leases furniture and commits to a $8,000 advertising campaign, they are committed to the tune of $13,000 on day one of the campaign, regardless of the result. There are few instances where staged furniture hire can improve the appearance of a property.
Upselling (needless) advertising – many agents are addicted to VPA – that stands for Vendor Paid Advertising. Industry training encourages agents that upfront VPA ensures they get a committed vendor from the beginning of the campaign. VPA comes in many forms. In the past it was full page newspaper ads, then it was real estate magazines & flyers and now the latest craze is ‘premium package” internet campaigns. If an agent really believes in these advertising methods, ask the agent 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.
“Being able to discern between professional advice and a selling tactic is the key to making the right decision”
Peter O’Malley , author of Real Estate Uncovered