Auckland apartments - questionable agent tactics

[wotstheguts]

Hi guys, I'm afraid I haven't been much of a contributor to this board, though an avid reader!

I've had some "interesting" experiences with a well-known Auckland city real estate agency lately, and was wondering if I could have your opinions on this. Basically I'm trying to buy a small investment apartment in the city but my experiences over the past two months have been pretty frustrating. A summary:

1. First apartment of interest. Another purchaser submitted an offer just before I could. The agent said I could put in a backup offer but then decided not to present it, even though it was higher than the initial offer.

2. Second apartment of interest. An agreement was reached subject to finance; however, purchase price exceeded my original budget somewhat due to an included carpark. I failed to get finance approved within the specified period, but then was able to obtain pre-approval a few days later. TOO LATE however, as in that short time it seems the decision had been made to go to auction. I asked agent if I could re-present my offer prior to auction; however, I was told that my offer would not be presented unless it was unconditional.

3. Third apartment. Agent refused to present my offer at all because the vendor "could not afford" to sell for this price (current market price according to a valuer I've spoken to).

4. Fourth apartment. Per my request, agent drew up an offer. I held off returning it for a few days (keeping the agent fully informed) whilst investigating another opportunity that came up. I then faxed in the offer but - surprise surprise - the apartment was now going to auction. Will the agent submit my offer? NO - once again, I'm abruptly informed that the vendor will not consider any offers unless they are unconditional.

Following this series of experiences I was frustrated and also suspicious, so I took the liberty of contacting the vendor of the fourth apartment directly. As I suspected, the vendor had not been told of my offer, and was extremely unhappy because he wanted all offers to be presented to him - conditional or unconditional. I then called the sales director to express my dissatisfaction with the agent. He almost choked when I told him I had spoken to the vendor directly, and said it's "none of my business".

I'm forced to conclude that it is this real estate company's POLICY to pressure desperate vendors into auctions. Auctions are clearly GREAT for real estate companies, but they tend to be very bad indeed for distressed vendors in a depressed apartment market.

I'd welcome your opinions on whether the above behaviour is ethically acceptable for a real estate agent.

Thanks!

[outspoken]

Hi wotstheguts

Is this the same REA and agency you've been dealing with on all 4 deals? If so who is it? I think we'd all like to know.

On the face of it, it seems like very unprofessional behaviour!? Have you spoken to anyone else about it yet? or is here the first time you've mentioned it?

[McDuck]

Huh?

Drop that agent now.

Problem solved.

[typhoon]

this sounds a lot like a very large agency whose sole purpose has been and continues to be, that of creating and filling a huge vendor conditioning funnel; but spinning it with high profile to look like they are the market experts. i can tell you from my experience that many city agents are anything but. like anything though there are a number of good agents around town and you just to have to put the time and effort into the relationships, discarding some and starting others, in a continuum.

sadly the above tale is not news, and they will continue to operate like that because of the false belief promulgated in this country that the agent works for the vendor. Rubbish. the agent works to get paid. before all other considerations. the present market conditions are showing this in stark relief.

the above illustrates that the agent is only presenting unco offers because they are brainwashed into getting the property to auction for profile reasons. also and not least because their chances of a no fuss take or leave it deal being put to the vendor are real high because theyve already spent several thousand.

i would suggest you give strong thought to using an experienced property finder in the market if its an investment. if you want to live there well, a property finder will still help; but you need a buying agent on your side. hope this helps

end of rant. best of luck

[wotstheguts]

Hi outspoken, well I'd like to give them a chance to reply to my complaint before naming names, but suffice it to say it's a fairly high-profile company specialising in the Auckland apartment market!

Yes it was the same agent on all four deals, but it seems the sales director supports this agent. I have spoken to an AREINZ friend who thinks this may warrant a complaint to the REINZ.

McDuck, I certainly wouldn't deal with the agent again, but I have concerns about the agency as a whole now, and if I don't use the agency it restricts my selection of apartments somewhat.

[Keithw]

I agree with Typhoon re conditioning.
I have been on the receiving end of numerous calls from no less than 4 agents from City Sales trying to get my listings but at the same time saying how low the market has gone & that its going to get worse & that auction was the only way to sell in this market as it sets the "True Market price"

Even worse is their constant talking down of anything leasehold. Their claim that all the land rents are going to sky rocket and that the apartments are worth half what they were last year because of it, & they will keep going down so I had better get rid of them now while they are still worth something.

BTW has anyone heard the outcome of the waterfront /viaduct Hilton (I think)lease renewal/ land rent review?

As investors there is a conflict with these guys.
On one hand we want to be able to pick up bargains- which these guys are producing at their auctions.
On the other hand we want the value of our own places to hold up & grow in the future.

[whitt]

3. Third apartment. Agent refused to present my offer at all because the vendor "could not afford" to sell for this price (current market price according to a valuer I've spoken to).

Agaisnt the rules, they have to present all offers. follow it up.

[Green Fish]

I agree.

Bypass the agent, by copying everything to the owner. The agent can bellow and moan until the cows come home, but there is nothing that they can do about it. (But the agent is still entitled to commission, unfortunately.)

[watchful]

The big issue here is having a conditional offer only. With apartment sales, the best way to go (for you and the vendor) IMO is presenting unconditional offers. Better for you as the price should be very negotiable due to a lack of eligible purchasers (due to bank lending criteria on small apartments) and better for the vendor as they know they are not dealing with another tyre-kicker.

The agent is not doing her/his job by not presenting offers to the vendor however they are probably just tired of dealing with a multitude of conditional contracts and purchasers not able to obtain finance.

Had this feeling when we privately sold a small apartment a few years ago. A young purchaser fell in love with the place and we cringed when we saw the S&P agreement had the conditional on finance clause. Luckily for us the banks were a bit looser with credit then and the sale went through. Not sure if it would've been the same result today however.

If you have the finance, go in with a low unconditional offer. A lack of pre-approved purchasers and some desperate vendors could mean a good result for you.

[MoatMaster]

I agree that you should lodge a formal complaint with the REINZ - this policy is unacceptable.

Alot of vendors are under enough stress already and the option to avoid further stress of an an auction (& associated high costs involved) could well be enough incentive for them to consider your terms.
Would also think that as lending criteria can change overnight, depending on financial postion it could be wise to at least include a finance clause, particular if looking in the apartment market.

[wotstheguts]

Thanks very much for all your comments.

Naturally if I was in the position to present unconditional offers I would consider that, but I'm not. I have a 40% deposit and considerable equity in other properties. Nevertheless, I've found that although my bank will "pre-approve" finance for my purchase, they still require a valuation in the current environment. So conditional my offers must be.

Having said that, agents from Bobergs, Harcourts, and Barfoots have had no problems presenting my conditional offers, and I've had very pleasant dealings with them in comparison. (In fact, Harcourts have tonight obtained vendor's signature on a conditional offer I recently made, so I need to organise a valuation!)

I've written to the principal of the company in question and pointed out the above issues; will post an update when or if I hear back from him.

Thanks again for your opinions and thoughts.

[mortgage broker]

Hey buddy, I can understand your frustrations.

But sometimes when there has been a cost to market, an auction where all offers would be unconditional, you can not expect to tie up the property before auction. What if there is an unconditional offer just before the auction. I guess you could make an offer after the auction has ended, who knows you might get a better deal after an auction has proven the lack of interest.

[wotstheguts]

Hamish, thanks for your comment. I guess my main issue was that the agent knew I was interested in the property and had an offer ready to sign and send in, but she didn't inform the vendor of this and pushed him into auction before I could submit my offer. THEN she told me the offer had to be unconditional. It's not like I sat on the offer for weeks; it was about 4 working days while I investigated another opportunity.

I've received a rather venomous response from the agency, CitySales, which I attach below. I'm happy to report that I've signed a deal with Harcourts, who certainly were easier to deal with and obviously have far more integrity than this bunch. For those who read this, the agent I dealt with at CitySales was Judi Yarak.

Read and enjoy!

Subject: RE: CitySales
Date: Fri, 13 Mar 2009 11:30:37 +1300
From: [email protected]
CC: [email protected]

Despite your statement that: “I’m not new to real estate” you obviously have no concept of Agency.
We do not work for you and we do not take instructions from you.
The fiasco of events you unashamedly describe has moved me to put you on our banned list of “lookers”.
We cannot afford to deal with people who are in fact trying to bully our clients into offers and we certainly don’t have the time to be involved in transaction after transaction going nowhere.
You may attend our OPENS and you may bid at our Auctions but any other attempt at purchasing will only be conducted my Sales Director, Mike Richards or myself.
Your allegation describing us as “dishonest and unethical” is noted and deeply resented.
Bayleys, Barfoot & Thompson and Ray White also operate in this market and you may find them easier to deal with – we don’t know, but try them.

MARTIN DUNN

[revdev]

Was a rather barbed reply wasn't it? What sort of tone did your original letter take Wot?

Cheers,
G

[Green Fish]

I suspect that Mr Dunn is annoyed about the time it takes to draw up an agreement and "present" it.

But he, and every other firm, should note that this time-consuming procedure need not occur. Why can't the agent simply pick up the mobile and tell the vendor that X has offered $Y? I'm sure that the vendor would prefer that, rather than going through that half-baked "presentation" nonsense.

We all know why they do it, but they can't complain if it takes up a lot of time.