Learning real estate agent tricks...

[pooky]

Hi all,

A small story here. Was in Rotorua a few weeks back and came across a house which was pretty good, in an average up and coming area.
It was advertised for auction, but I got in touch with the real estate agent and had a look. No worries.

It was advertised with the wording 'provisional reserve under $150,000', so being a blunt person, I asked how much under $150 were they thinking about. Pretty much got a non-answer on that, which amounted to 'as close to $150 as they could get'.

I put in an offer for $130 on the spot and the agent 'admitted' that they had had there property caravan through and they all tallied it out and thought the average selling price would be respectable at $140,000. That was handy, because I had set that as my top end figure.

So I get home, he faxes the bits through, I submit the offer and wait.

Get a call back an hour later, advising that the offer is too low, and really they are looking for something nearer to high 140's and they weren't interested and apologised for giving the impression of getting a counter offer as it was up for auction, and if I wanted it, I'd basically have to go high 140's. I should've asked, but I don't think the offer was even presented, just a quick phone call to the vendors.

I was not impressed, smelt a rat a mile off and said I might turn up at the auction. Basically I was being driven up slickly, and not a happy camper was I. If I was sharper, I would have said a few other things as well, but maybe next time.

Postscript: Got a voicemail 2 weeks later advising there were several offers but I could still get in there if I wanted. Having been told my offers would be a waste of time, and that the auction was still on, why should I bother?

Several questions:

1) If a house is to have an auction, can an offer put forward be counter offered at that time by the vendor?

2) Do real estate agents basically get an offer from you, fudge it to get rid of you, then use it as a bargaining tool to advise other buyers there is more interest an we cant accept less than this amount. Is that creative or sneaky?

3) Advertising 'provisonal reserve under $150,000 automatically focusses your mind on the figure being near that mark (which is a nice trick). But is it sneaky (like the famous 'buyer range $180,000 to $220,000 mark, only to find they want $240,000.)

3) Barring rude words, what would your reply have been to the arguement 'I'm sorry I led you down the garden path, we are really looking for more and can't present this as it will be rejected.'

Or am I learning the fine art of real estate-ology, buyer side?

[drelly]

I don't put in offers on properties that are going to auction. I don't see the point. I guess their perspective is that anyone who is willing to put in an offer will probably turn up to the auction anyway.

[ibuycashflow]

My understanding is that all offers must be presented but I suspect that is not the case.

Agents like to "feed the greed" and there are a lot of tricks to do this. The one I liked the most was using fake bidders in an auction. I was invited to bid on a house because the builder had started another project and was upto his neck in debt and needed to sell. I looked at the house and set my top price without telling the agent of course.

At the auction I opened the bidding, which I don't normally do, and straight away the bidding got into a frenzy and bingo, my price limit was reached still going up in $5k increments and when they looked at me for a further bid I just shook my head.

Suddenly the agent comes running over, just give another $1000 and you'll be able to negotiate with the vendor - I gave another $1000 but all other bidding immediately stopped - what does that tell you.

Cheers
Jeff

And the builder didn't need to sell either, he sat on it for another 6 months and still took less than his reserve but more than I was offering

[fudosan]

I agree with Dave. In the past I have tried offers with paid building inspection before auctions and decided it's just a waste of time. As the vendors have spent money to have the auction, it is highly unlikely they would sell it before the auction for anything less than their expectation. That means it's unlikely I can get a good deal.

[Fritz]

Re: Learning real estate agent tricks...

Pooky,

here goes.

1) If a house is to have an auction, can an offer put forward be counter offered at that time by the vendor?

The vendor can accept or counter at any time as he is in control over the listing price, method, and for how much it ultimately sells. The only thing you get signed up for is the time frame ie 30 days exclusive after auction, or 40 days all up exclusive. Pick up Neil Jenmans 'don't sign anything'.

The agents have beeen told the reserve price is quite high (or worse, unrealistic) or they 'bought' this listing with a high price and now have to make good on their price and they were simply trying to budge you up. But generally the lights should have come on afer they budged you the first time. Once they have enough offers they may go along the lines of 'look vendor, here are the offers, you have to come down'.

One thing though, the agency could have been blatantly incompetent, and if you suspect your offer has not been presented, get the solicitors address (on your S&P) and formulate a nice letter to them c/o the vendor outlining what has happened to you along the lines, I was told it would be below 150K, I made an offer of x, they told me to sod off.

This can open the eyes of a vendor who may have given no such instructions and really wants it sold for 170K, or would have taken your offer.

2) Do real estate agents basically get an offer from you, fudge it to get rid of you, then use it as a bargaining tool to advise other buyers there is more interest an we cant accept less than this amount. Is that creative or sneaky?

All of the above and then a million more. Sneaky, creative and can be illegal. Add to your list using your low offer to crunch down the vendor. His expectation may be 170K. Information is the key here.

3) Advertising 'provisonal reserve under $150,000 automatically focusses your mind on the figure being near that mark (which is a nice trick). But is it sneaky (like the famous 'buyer range $180,000 to $220,000 mark, only to find they want $240,000.)

This Price band has been tried and deemed illegal. Again, there was a Palmi woman who wanted to buy a house from memory advertised band 70-90K, she offered 70 and got rejected only to find out they wanted +100K. With lots of backwards and forwards she got real pissed off and it ended up I believe in a hefty fine and they suspended a license.

3) Barring rude words, what would your reply have been to the arguement 'I'm sorry I led you down the garden path, we are really looking for more and can't present this as it will be rejected.'

What is your time and mental state worth to you??? Move on. Make a mental note. Sometimes the vendor comes round, sometimes the agent gets better, sometimes pigs fly.

Or am I learning the fine art of real estate-ology, buyer side?

Definately.

However, I would avoid this agent like the pest. He wasted your TIME. Get another one. There are a few decent ones out there. Once you find them hang on to them.

On the note of making offers before auctions, I have no pre-conceptions. It has worked for me before, during and after auctions. What you believe will work, will work. Just go and kiss some more frogs (houses).

Happy hunting, and watch out for those low flying pigs.

Fritz.

[Julian]

Sounds a bit like a game of chess to me. A good stategy may be to attend the auction at your preset bidding range. If it gets passed in wait a few weeks and if they still haven't sold submit an offer well below your highest bid.

Time has a funny effect on some vendors. You may end up purchasing the property for less than you intended to pay at auction. Always remember there are plenty of other properties out there. Remember that the party with the least desire for the deal to happen gets the better deal.

Julian.

[whitt]

I agree a worth while book is Neil Jenmans. He goes into depth some of the methods of auctions and sales.
With the knowledge of the process you can be better informed when placing offers.

[pooky]

Hi everyone,

To all of you, thanks for the replies (and I'll eagerly read any more.)

Definitely getting a hold of that book and adding to the collection.

Don't fear for my mental state...I figured quickly that there were 60,000 odd other prospects (houses) down there, so i'm not panicking.

Onwards and upwards.
Pooky

(must be my shortest post ever)