Conditioning by my agent

[Breamster]

Interested in the experiences of others.. We are selling home and going to auction soon..

So I had the pleasurable experience of being 'conditioned' by my agent last night, which led to some interesting discussion and reaction from him when I asked him some questions relating to the circumstances of the buyers, where he then didn't know the answers. He knew nothing (or very little) of their personal situation, aside from what price indication they were giving. The agent and buyers price indication is about 50k away from mine on a property worth around 1 million.. buyers are saying lower nines

Came away from the meeting questioning whether 1. the serious buyers are actually telling the agent honestly what the house is worth, or whether they are playing it down.. and 2. whether the agent is accurately and honestly telling me what the buyers are actually saying or whether he's adapting it to get me down to make his job easier..

When I buy property I will always tell an agent I think it's a lot less than what Id be prepared to pay..obviously don't want the agent knowing what my capacity is if I start bidding (ie why would I bid if I cant afford what I think its valued at..).. does everyone do this? and I have been misled by agent??

breamster

 

[Scott No Mates]

Live by the adage "all buyers are liars", they rarely fully disclose what they believe it is worth or what they have to spend.

Is the agent's market appraisal on the contract in line with your expectations?

Is he telling you that the buyers are below the appraisal value? ie. have you taken the agent's word for achieving an inflated price to satisfy your own ends and rejected the agents who came back with lower figures?

Is the agent a strong negotiator but has elected to use their skill/tactics on you not the buyers? It is easier to extract $ from you and get $$ out of the buyer's wallet as the commission will only vary by $1, 000 for a lot of extra effort.

Are they steering you towards a quick sale & commission rather than achieving the best result for you?

 

[marg4000]

The agent can only pass on what the buyers have told him. I would suspect very few would be totally honest, as it is in their best interests to have you lower the reserve.

Stick to your guns (so long as you have done sufficient research to have a good idea of values).
Marg

 

[Breamster]

Hi Scott. Much appreciate your thoughts, mate. The appraisal was 950-1mil on the contract. other agents were slightly lower. So ..agent is now saying bottom of his appraisal, and I'm aiming for the top of it - and I'm basing mine on comp sales, and he is arguing that market in our area has dropped off heading into Xmas - and it appears it may well have..citing only 30 groups through, 8 contracts out, 3 serious buyers 3 maybes.. Of course one would be hoping for a large handful of serious buyers in many parts of stdney at present. And hes relying heavily on buyers estimate on price. But I agree with you - buyers won't reveal their hand too much if at all. Hope this clarifies. Cheers

 

[Scott No Mates]

Breamster, sounds like the agent is trying to cut a deal before Xmas (to pay for his holiday). If he wants to cut a deal, tell him to get the serious players on the phone and put in their best offer.

Sounds like the agent was overly optimistic in the figures he used to lure you into the deal - what recent sales is he using to discount his previous optimistic sales price? Are they comparable? Have the buyers really dried up? How long has the place been on the market? Are you desperate yet? What is the average days on market for your area/this agent?

 

[JamesGG]

You mentioned that there is an auction coming up soon - when is that scheduled?

Most agents will have a pre-auction talk with the vendor with the purpose (amongst other things) to ensure that you have the right expectations on auction day. The conditioning is usually not so much to pressure you into taking the first/lowest offer prior to the day, but more so that you can recognise a decent bid if the hammer falls a little under the original expectation.

For example;
You want something around $1m.
Agent tells you market says $930k

On auction day if the last bid comes in under the $1m mark suddenly that doesn't look so bad compared to prior "offers". And so, you might prefer to take that rather than have the property pass in and remain on the market over Christmas. Low 9's is higher than what most agents would use for conditioning though; many would be throwing around figures in the 8's for this type of scenario.

Good luck with the auction either way. Maybe the agent does have a genuine buyer talking low/mid 9's, who knows? If nothing else, it is important to work out what you will/won't take before auction day. It's a hard line to draw.

 

[Breamster]

Thanks for all the replies, much appreciated. From reading comments and thinking back on the history of this transaction, it seems the agent and i have always have disagreed on where the value lies.. thats not to say i dont value his opinion - i do. However i also take into account that the lower my expectation is on price, the easier it is for my agent to obtain his commission. its human nature.., though i know hes been working the market hard. thus why his statements concern me. However, I still have recent comp sales suggesting 50k more than what buyers are indicating. The bottom line is it's just a really damn hard decision to make in terms of where the true market value is AND what cut off we will set... It's been an accelerated campaign with 2.5 weeks on market so unsure as to whether another few weeks over January could rustle up more and better interest..crystal ball please !

 

[The Y-man]

Hi Scott. Much appreciate your thoughts, mate. The appraisal was 950-1mil on the contract. other agents were slightly lower.

Breamster, if you had a good idea of what your propoerty is worth, wasn't that the wrong way to find an agent? Surely you should have asked "I believe my house is worth $X. Who can sell it for me at that price?"

The Y-man

 

[Breamster]

Hi Y man, i think you are absolutely right. In hindsight I prob should have been more detailed in my discussions with agent. Geez I learnt a lot more about real estate selling than I've ever learnt from buying.

 

[Breamster]

I mean I've learnt a lot more about real estate generally , from being involved in the process of selling a property, than From buying a property..

 

[see_change]

My parents went to auction ( roseville ) last saturday on the back of a one week campaign .

Reserve was 1.5 and they got 1.7

Initial estimates were 1.3-1.5 and 1.5 - 1.6 .

They had offers up to 1.5 in the week before auction.

Three serious bidders with 3 possibles in good. The under bidder on my parents house saw it for the first time on the day of the auction ....

My take on the market at the moment is there are people out there who are desperate and haven't found the right house and want clarification prior to Christmas . Those highly motivated buyers are still looking . The less motivated ones might be steping back , but the ones' you want will still be there trying to find a property assuming you have a property that will appeal to a reasonable segment of the market , and assuming you're in an area where there has been strong demand . Stock levels have been low so there is still some pent up demand.

My parents had a couple of nervous nights in the lead up and it took about 5 mins to get the first bid as everyone was waiting for someone else to start . Expect that . They had over a 100 bids and the auction went for something like 40 mins .... 1.6 to 1.7 in 1000 jumps....

Cliff

 

[NeedMoreTime]

I went to an auction in Brisbane last night to bid on a house in Holland park. There were 6 properties being auctioned and all if them got passesd in.

Four of them had no bids at all. One had two bids and the one I was bidding on had the most interest and had about 6 bids in total between me, the vendor, and another party.

If I was the agency I would been pretty disapointed in that result.

 

[wylie]

I'd be keen to know the ballpark values of the houses at last night's auction, or the link to them or street names. I'm curious to see what didn't sell.

 

[bbmick]

I went to an open last week and the agent recognized me as I was looking at a previous one of his. I told him I ended up buying one & was looking to go again. He asked what I would pay & I gave him a number that was 10% less than asking price due to this & that. I was a serious buyer, but I was an investor & know my limits - and stick to them.

Not all buyers are investors & not all buyers will research the property prices in the area.

I would look at it this way. It sounds like a possible 5% discount from your best quote. Is that really that bad? How much does it cost you if you don't sell?

 

[see_change]

Hey breamster

When's the auction ?

Cliff

 

[Breamster]

Hi Cliff

Auction was on Saturday. Unfortunately it was passed in, fell way below reserve. But it seems we have sold today for a very respectable price, so all turned out well but less than I'd hoped. More around what the agent was indicating.

Breamster

 

[MsAli]

Hi Cliff

Auction was on Saturday. Unfortunately it was passed in, fell way below reserve. But it seems we have sold today for a very respectable price, so all turned out well but less than I'd hoped. More around what the agent was indicating.

Breamster

Where abouts were you selling, Breamster?

 

[paulie]

I am a real estate agent

I find it interesting and a little depressing that this discussion and Breamsters dilemma is characterised by "the lower my expectation is on price, the easier the agent will earn his commission". The inference is the agent is putting their interests - commission - above the sellers interests - selling for the highest possible price.

If the agent was charging zero commission, would Breamster still have sale pricing concerns? I'd suggest the answer is yes as It's difficult to determine a properties exact value at any given time and often sellers have rose coloured glasses when considering comparative sales evidence. You all know a properties value is not a firm fixed amount, Price is fluid and is determined by what can be achieved in the current market that suits a sellers circumstances.

I do believe every owner has the right, almost an obligation to ask for a premium price to what the market is paying. But premium prices don't always happen, how long that owner holds on for a premium price is determined by their motivation to sell.

Reading between the lines, I'd also place a small bet that Breamster has some form of time critical aspects to this sale, for example has bought elsewhere.

I applaud your agent in being upfront with you on their opinion of the marketplace and likely price expectations, and at the same time not killing your dream of a premium price. I also applaud Breamster in choosing an agent they could trust enough to get the sale done, even though the price may not have been spectacular.

My 2cents

 

[TMNT]

hey paulie,

I dont know you from a bar of soap but an agent makes their money on their base salary plus a hefty comission,

in an industry where its fairly easy to get into and a lot of things not being clear cut eg what is big, what is small, what is neat, what has potential, what can be fixed with a little elbo grease

of course you are going to get a lot of cowboys,

and if bending the truth or not acting 110% in the vendors interests, is going to get you that comission, thats why they have the reputation of being as low as used car salesman.
its based on a generalisation and applies to the majority

i would bet my life, if your next 10 listings, the vendors all decided to withdraw the sale because due to bad luck or market timing, even though their price was reasonable, all the offers were slightly under,
that listing number 11, you would quote/indicate to the vendors a lower price so that if they are in teh same situation, you would have conditioned them into accepting the price.

10 comissions x $3k for example VS 0 comissions is not something to laugh at

 

[paulie]

hey paulie,

I dont know you from a bar of soap but an agent makes their money on their base salary plus a hefty comission,

in an industry where its fairly easy to get into and a lot of things not being clear cut eg what is big, what is small, what is neat, what has potential, what can be fixed with a little elbo grease

of course you are going to get a lot of cowboys,

and if bending the truth or not acting 110% in the vendors interests, is going to get you that comission, thats why they have the reputation of being as low as used car salesman.
its based on a generalisation and applies to the majority

i would bet my life, if your next 10 listings, the vendors all decided to withdraw the sale because due to bad luck or market timing, even though their price was reasonable, all the offers were slightly under,
that listing number 11, you would quote/indicate to the vendors a lower price so that if they are in teh same situation, you would have conditioned them into accepting the price.

10 comissions x $3k for example VS 0 comissions is not something to laugh at

Hey TMNT

Yup, agents are easy targets. I guess that is my gripe, we kicked a lot on this forum, rightly or wrongly.

Having just re read the thread, I am concerned over the lack of detail on the buyers inspecting the property made available from the agent ( not a good look) but I also see Breamster's previous posts indicate the chosen agent was the highest appraisal price of those interviewed. If all agents have access to the same comparative recent sales and all agents are pitching lower than the comparatives suggest, then either the market is falling or the seller has a quick sale requirement.

I'd again bet Breamster has a time sensitive sale requirement.

If you are employing an agent, you've got to trust them at some stage with the truth of your selling situation, they are your eyes and ears on and in the market. Almost all the information you need to make an educated decision is filtered through them, it's a lot of trust and a privileged position to be in.

If you don't or can't trust agents, either to tell you the truth or to put your goals above a pay day, is it any wonder you will end up choosing an agent on lofty sale price promises alone - a smooth talking high price promising shark.

just don't be surprised if you get bitten.