Agent wants to buy it

[Harry75]

Hi all,

mother inlaw is selling a house for a deceased estate, first agent gave her a rediculous expected price, but against my advice went ahead with listing. after 3 months on the market and no real offers they suggested lowering the price by 80-100k to "meet the market". anyway i introduced her to an agent that i had previously delt with and found to be quite good. so she listed the property with this guy at a more reasonable price and he recomended to put the house up for lease which she did. 2 months later still no offers.

today she says to me that agent has aproached her to buy the property himself, but would like to buy it on option terms. should she be suspicious at all with no interest and now his offer?
i'm not to familiar with this method of purchasing so if some one could give me a quick run down and a few negotiating tips for her that would be great.

another querie i have is in regards to the sales commision, would it, or should it be waived under these surcumstances and if not should i be so bold as to ask for a cut considering i introduced him in the first place?

thanks in advance all input appreciated.

 

[Perp]

today she says to me that agent has aproached her to buy the property himself, but would like to buy it on option terms. should she be suspicious at all with no interest and now his offer?

Wary, yes.

i'm not to familiar with this method of purchasing so if some one could give me a quick run down and a few negotiating tips for her that would be great.

Does he want to buy the property, or just an option? If the option is a conventional option which gives the agent the right but not the obligation to purchase the property, then I have no idea why your MIL would take the property off the market in such a situation. If he pays her an option fee of, say, $5K in order to have the option to purchase for $500K sometime within the next 12 months, how will she feel if it gets to a year down the track and he says he doesn't wish to proceed with purchasing? I wouldn't have thought that a satisfactory outcome for her; I'm assuming she needs/wants it sold.

another querie i have is in regards to the sales commision, would it, or should it be waived under these surcumstances and if not should i be so bold as to ask for a cut considering i introduced him in the first place?

I should think the commission should be waived, but I'm not an expert on the conventions in such a circumstance.

And no, if the commission is still payable, you can't get a cut; only licensed real estate agents are entitled to be paid commissions.

 

[Propertunity]

Your Q has 2 parts. The first part relates to how an agent must behave in order to purchase a property that they have as their own listing, which I will answer first:

In NSW, the Property, Stock and Business Agents Act NSW 2002 provides that a seller’s agent has a duty of disclosure when they find themselves in a situation where there is a conflict of interest. e.g. Section 49 prohibits an agent for the sale of property to obtain or be concerned in obtaining a beneficial interest in a property without providing the necessary disclosure.

Section 49 disclosure is broad and extends to close relatives of the agent. It also extends to structures such as corporations, trusts and partnerships, with which the agent or a close relative is affiliated.

An approved form available from the NSW Office of Fair Trading must be used in order to satisfy disclosure requirements. The form requires a brief description of the nature of the interest to be obtained and to needs to be signed by the vendor – as a means of giving their consent to the information being disclosed.

Additionally, no real estate sales commission is payable to the agent (when he/she is purchasing the property under the conditions above). It is also important to get a separate independant valuation done to make sure that the price paid is 'market value'.

The second part of your Q relates to the purchase of an "option to purchase" the property. This is normally done in order for the purchaser to obtain development approval for what they have in mind to do with the property. If they discover it cannot be done (i.e. no council approvals forthcoming) then they can withdraw from the purchase and merely forfeit the option fee paid to the vendor.

If you decide to accept this kind of conditional sale, just make sure that the option fee you are paid justifies having the property off the market for a length of time (specified in the Option Contract by mutual agreement) typically 9 - 12 months or longer.

You would be well advised to seek the services of a good property solicitor before signing any of the above so that you can be fully informed of what you are doing and the possible ramifications of such.

Regards, Alan

 

[Steve Basin]

Hi all,

mother inlaw is selling a house for a deceased estate, first agent gave her a rediculous expected price, but against my advice went ahead with listing. after 3 months on the market and no real offers they suggested lowering the price by 80-100k to "meet the market". anyway i introduced her to an agent that i had previously delt with and found to be quite good. so she listed the property with this guy at a more reasonable price and he recomended to put the house up for lease which she did. 2 months later still no offers.

today she says to me that agent has aproached her to buy the property himself, but would like to buy it on option terms. should she be suspicious at all with no interest and now his offer?
i'm not to familiar with this method of purchasing so if some one could give me a quick run down and a few negotiating tips for her that would be great.

another querie i have is in regards to the sales commision, would it, or should it be waived under these surcumstances and if not should i be so bold as to ask for a cut considering i introduced him in the first place?

thanks in advance all input appreciated.

Hi Harry75,

I would be highly suspicious, especially getting no interest at all.
I think both agents are not doing an effective marketing campaign for you. The key to selling any property are based on 3 fundamentals:

1. Price
2. Marketing
3. Presentation

Price:

you need to price your property at market value. Price it to high, no one is going to call. Price it to low, and you will get lots of interest, but the downside is you will sell it at a bargain price.
The key is price it a little over market value, to take into account some possible negotiation.

How to price?
a. own research
b. get an independent valuer.

it looks like the agents have not set the correct price right from the beginning. Before the agent had placed the house on the market did they show you comparable home that sold in your area, to come to your asking price?

Marketing:

If no one knows, no one will call. How effective are they doing their advertising.
In the most basic form;
a. is the property listed on one of the major real estate sites
b. does it have lots of photos and detailed description of your property

Consider, placing your own ad on the internet with lots of photos and your description of the property.
Also take a few line ad in the major newspaper with the link to where the property is listed on the internet.
With all enquiries going to the estate agent.

Presentation:
Is it well presented. At the bare minimum is it clean and not cluttered.

From what your saying there is fundamental flaws in either the pricing and/or the marketing.

Every property has a buyer and every property will sell. Your mother in law once bought that house, right?

I would first go back to the basics, and find an proper real estate agent. If you cannot terminate the contract, you can always sit out the length of the contract without selling the property. After that your free to start from fresh.

Seek legal advice on this matter.

Finding an agent?

One thing you can do...

Talk to lots of people in your area that are happy with their estate agents. A tip would be, to go around your area, and look for all for sale sign boards house, especially those that have a sold sticker on them. Ask the owners, about their experience with the agent, where they happy...

Whatever decision you make in the end, think it through carefully, seek legal advice because you don't want to have regrets later on.

 

[neK]

Sounds sus to me.

I would get another agent.

An agent wont buy the property out the kindness of his heart. They obviously see value in it, so they want to buy it, possibly do a quick cosmetic reno and resell it for a quick profit.

It wouldnt surprise me if the purposely didnt try very hard not to sell it. I've said it before and ill say it again. Selling agents are the scum of the earth.

 

[Harry75]

Thanks for the replies, will have more info from MIL over the next few days, will keep you all posted on any developments.

cheers, Harry

 

[mystery]

I've said it before and ill say it again. Selling agents are the scum of the earth.

That's a bit harsh neK.

I've been buying and selling property since the early 1980's, and I have dealt with many professional real estate agents in that time. I've also come across some that are not so good.

The good ones I keep in mind for future reference in case I want to sell a property. The devious ones I don't mind dealing with as they often disclose details to the buyer in order to get the sale at all costs, ..... this can be useful in negotiating a low ball deal.

Real estate agents both good and bad are part of this business .... We just need to learn how to get the most out of each. If you know your market and do your own research and DD, you will soon know if the agent is talking BS. Just work out a way to take advantage of it.

Labeling them all "the scum of the earth" is unfair to those that actually do a good job for their client.

Mystery