12 REAL ESTATE SECRETS
What sellers and buyers seldom know.by Neil JenmanReading Time: 3.5 mins apxIf home sellers and buyers were better informed about real estate, they’d get a much better result when they…
by Neil Jenman
Reading time: 3.5 mins apx
Please BE WARNED: Most people who sell a home these days get badly conned.
They pay thousands of dollars in unnecessary expenses; plus, they undersell their homes.
All because unethical or ignorant real estate agents influence them.
And yes, this applies to most people. Around 90 per cent of home sellers are ripped off by today’s agents because most agents do the wrong thing by most sellers.
If you think this claim is overly-dramatic or it can’t possibly be true, then I urge you to do just one thing – check it out.
But first, consider this: Real estate agents are now the least trusted of all professions. They rank below car salespeople and politicians – with something like 95 per cent of the population saying they don’t trust agents.
So, why can’t more people realise that 95 per cent of sellers get ripped off?
The real estate industry is five times more valuable than the stock market. And yet, unlike the stock exchange, real estate is like a lawless land with most sellers being ruthlessly conned.
Agents – most of whom qualified as agents by having a pulse – can earn as much as ten thousand dollars an hour. There are young agents in their twenties and thirties driving flash cars and earning a million dollars a year. And snorting untold quantities of cocaine.
The big word in today’s real estate world is GCI. It stands for Gross Commission Income. It’s how agents measure their success. Yep, that’s the main focus among agents – how many dollars can they fleece from naïve and trusting home sellers.
It’s enough to make any honest observer feel physically ill.
The first rule, when selling your home can be summed up in three words: DON’T GET CONNED.
And there are two more three-word messages you need to burn into your mind before you put your home for sale. First, don’t sign anything – until you are 100 per cent sure that you are not being conned. And second, don’t pay anything (that means nothing!) until your home is sold and you are happy with the selling price and the agent’s service.
It doesn’t matter how nice an agent seems to be or what wonderful things they say, what matters is what they do. Or attempt to do. Because, hopefully, you are not going to let them con you.
Show me 100 sales made by ten different agents today and I will show you 95 home sellers who’ve been conned.
And the sad part is that many sellers never realise they’ve been conned.
Primarily, there are three ways to know if an agent is conning you.
Consumer advocates call it the ‘Advance Fee Scam’. In today’s real estate world, most agents ask most sellers to pay money before their homes are sold. Or, they sneakily have a ‘pay later’ scheme with an affiliate company (often known as Campaign Agent) where sellers are effectively slugged the equivalent of 50 per cent interest.
Almost all agents expect sellers to pay for “marketing expenses” the cost of which has now reached absurd proportions – thousands of dollars.
In addition, a growing number of unscrupulous agents are now introducing other charges on naïve sellers. These charges are so ridiculous and are such an obvious rip-off, it’s amazing that more sellers don’t object. As one distressed consumer advocate commented: “These rogues will soon be charging homeowner for their groceries and gym memberships.”
These advance fees are payable regardless of whether your home is sold or not.
Sure, it’s outrageous. Australia is the only country where the advance fee scams are common. In all other countries, all costs are included in the commission which is only payable once a home is sold.
And that’s the way it can be here. If you are strong enough to demand it.
If the agent refuses, get another agent. Do not weaken.
If you really want to see how brazenly you are being conned by a real estate agent, just do what most sellers never do – read their agency agreement before you sign it.
If you sign this agreement ‘blind’ (i.e. without reading it, you are certain to be conned). Just stop. Always read what you are asked to sign.
And then look that nice agent in the face and say, “Do you really expect me to agree to these clauses?”
If you sign an agent’s agreement without deleting all their nasty clauses, you are giving complete control of your home to the agent. Why would you trust your biggest financial asset to a member of the least trusted profession?
The biggest and most hidden cost of selling a home today is the amount by which most homes are under-sold.
Oh, sure the price you are offered might seem high, maybe higher than you expected.
But is it the highest price? In most cases, no.
The most common place where homes are undersold is with public auctions. Agents who say that auctions are the best way to sell your home for the best price are either dishonest or ignorant. [I have been making this claim for year. If false, why has no agent ever confronted me about it? Because it’s true. Auction is a certain way to under-sell a home, often by hundreds of thousands of dollars. If you doubt it, read my book, ’88 Reasons Why You Should Never Sell Your Home By Auction’.
So, how do you prevent yourself from being conned when you sell your home?
Simple. Just follow three rules.
FIRST RULE: Never pay any money in advance. And never agree to pay any money – especially marketing expenses – before your home is sold.
SECOND RULE. Read the Agency Agreement and delete all the nasty clauses. Better still, insert some of your own clauses to protect yourself.
THIRD RULE. Be sure that your home is being sold at the highest price that any buyer is prepared to pay. We call this the BHP – Buyers Highest Price. Most homes are sold at the lowest price the sellers are willing to accept. And whatever you do, don’t auction. It’s an incredible fact but despite their untrue claims most agents are hopeless when it comes to negotiation.
If you would like to read a booklet ‘The 42 Rules of Modern Real Estate Negotiation’, you can download it here.
And finally, make sure that any buyer who makes an offer for your home signs what’s known as a Buyers’ Price Declaration. You can view a copy here.
Be strong. Follow the simple advice in this article. Do not allow yourself to be conned.
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