Three Common Real Estate Scams to Avoid.
The focus of many real estate agents is to convince owners to list their properties with them to sell. Unfortunately, some agents and agencies resort to some pretty unprofessional and dishonest methods to do so. Below are three of the most common real estate scams that owners fall for, over and over again!
OVER PRICING
Properties are valued according to a number of factors including the condition and configuration of the property, land size and property location, the sale prices of similar properties recently sold in the same location and similar criteria. It is not surprising therefore, that various agents will usually appraise the same property at the same or very similar price brackets. The dodgy agent will however, know this and appraise the property at a significantly higher price that the other, more honest agents. The purpose of course, is to convince the seller to list the property for sale with them. Over pricing is illegal, but slick talking agents (particularly in QLD where the scrutiny of this practise is not as strict as the southern states), regularly use this strategy to exploit property owners and list their properties. The agent will then generally want to list the property without a price, such as ‘Contact Agent’. This is because the agent knows the price they quoted the seller will be a turn off for buyers. The same agent will often encourage the seller to spend an ‘arm and a leg’ on marketing, such as staging the property and additional unnecessary campaigns in order to try and attract some interest in the over-priced property. Sure enough, after a short while on the market, the agent is then convincing the seller to lower their price expectations to ‘meet the market’ – which is the price the other agents probably all said in the first place. Definitely get appraisals from a variety of agents, but always avoid the temptation to list with the agent who says they can get significantly more for your property than everybody else. Buyers do their own due diligence and won’t pay more for a property than it is worth, and banks will not provide finance to buy overpriced properties!
WE HAVE BUYERS FOR YOUR PROPERTY
This usually occurs by a letter dropped in your letterbox (often hand-written to appear that it is a personal approach), or a phone call. The reality is, they are dropping similar notes in everybody’s letterbox and/or telephoning hundreds of people with the same message hoping to get a bite. It is regularly used by unscrupulous agents who are targeting properties managed by other agencies. Typically the agent will encourage you to list your property with them to sell because they have ‘buyers lined up and ready to purchase a property just like yours’. After listing your property with them, guess what? None of the ‘active buyers’ they showed through want to purchase your property. So your initial hopes of a quick sale are dashed, but the agent has achieved their goal – to get the sale listing of your property across to their agency. Once again, a common strategy that inexperienced sellers fall for, but is regularly used by a small number of agencies in our area.
POOR QUALITY FREE MARKETING
Free marketing can be a great thing, if and only if, it is high quality marketing that promotes your property to the greatest number of prospective buyers possible. Most ‘Free Marketing’ touted by agents is very poor quality marketing – such as standard listings on websites that many prospective buyers will never see. It is free because websites such as realestate.com.au virtually give it away, and so it costs virtually nothing for the agent to use. To sell your property at the highest price, you need high quality premium marketing. Obviously, the more people who see your property for sale, the more likely you will sell for a higher price. Similar to the over pricing scam above, the agent will not get a lot of enquiry about the property, and will soon be encouraging the seller to drop their price so the agent can flip it. It works well for the agent, but not the seller. Always sell your property using premium marketing packages that are fully explained to you, and make sure you can get it for free (like we offer)!
The three scams above are not the only scams around, but they are by far the most common scams used by notorious agents, and people fall for them all of the time. Don’t be fooled by smiling and slick talking agents who have been trained to exploit your lack of knowledge or experience, and who have a whole heap of ‘ready-made’ spiels to convince you that they are working in your best interests – because they are not. In fact, as soon as you are approached by an agent spruiking any of the strategies above, you should immediately recognise that they are trying to take advantage of you – so avoid seller’s remorse and look for a more reputable person to sell your property.