Nearly every buyer asks the question – “Why are the owners selling?” The answer to this seemingly innocent question can have far reaching effects during any negotiation process.
Buyers are always amazed how often an agent will disclose the personal details of their paying client, the homeowner. Innocuous responses such as ‘the owners are going their separate ways’ or ‘they cannot afford to hang onto this investment home anymore’.
Such responses by an agent to an inquisitive buyer are literally a breach of confidentiality to the owner.
Rarely, but sometimes you will even see the motive for selling displayed in the agent’s advertising: “Bought elsewhere – Must Sell!’ or ‘Deceased Estate’.
Properties are often advertised as ‘Deceased Estates’ because that carries an insinuation that the property must be sold now, even if it is not sold for the best price the market can offer at that time.
It is a disgusting market tactic, which shows complete disrespect for the deceased’s family. It is a low rank sales tactic, which has somehow become widely accepted as normal.
If you are ever bestowed the responsibility of handling someone’s estate, do that person the honour of refusing to have their main asset flogged off as a ‘deceased estate’.
Another common disclosure by agents is where both banks and real estate agents allow the phrase ‘Mortgagee in Possession’ to be plastered all over the marketing material. Again, the focus turns towards dumping the asset rather than achieving full market price for it. And again, it shows a complete lack of respect for the person or persons who may have gone bankrupt.
One high profile Sydney agent who is conscious about not breaching seller confidentiality uses this line to attract buyers – “Mr & Mrs Buyer: read my lips. The property will be sold. I cannot tell you why, but the property has to be and it will be sold on Saturday at the Auction’.
This is a line that he proudly tells his sales agents to use to ensure buyers turn up to the auction to bid. It is about throwing some burley in the water if you like.
The stronger the market demand for a property is, the less likely it will be that owners have to worry about their motive for selling being used against them, either by their agent or the buyers themselves.
But why take that chance by letting your reason for selling become known in the marketplace and potentially having it used against you in negotiations.
Some people feel it is prudent to avoid telling their agent the real reason why they are selling. Their thought process being that the agent cannot use their ‘must sell’ circumstances against them if they don’t know about it.
There may be some merit in taking such a position too. The one thing an agent does not want is a depressed, unenthused Seller.
If you don’t feel comfortable leveling with an agent about why you are really selling and how it impacts on your circumstances, you should find an agent whom you do trust. Many times, the seller’s motivation won’t really matter when negotiating the final transaction.
In some circumstances though, keeping an agent in the dark can backfire on the seller.
If you are bridging finances because you have already bought elsewhere, telling the agent you are relaxed and not in a rush won’t help you.
The bigger questions is not whether one should tell their agent why they are selling, but whether the agent will then tell buyers. The best way to ascertain this is to have someone ‘mystery shop’ the agent you are considering hiring for the sale of your home.
Have the mystery shopper attempt to elicit personal information about the Seller. If they are successful in gaining confidential information from the agent about the seller, strike that firm off your proposed agent list immediately.
Even though there are many competitive sales in the marketplace at present, most of the strong buyer competition is for properties under $350,000. The market has not quite rebounded to the same degree above that price point. Therefore, it is still possible that you agent may end up negotiating the sale with one buyer. If that one buyer is armed with your personal story, your position can be weakened.
There is no doubt competition affects price. Many people select their agent on the basis that the agent has a good strategy, which uses competition among buyers to maximise the sale price.
Few people select their agent on the basis of how they will handle the sale if there is only one buyer?
How do you have an auction with only one genuine buyer?
How do you negotiate the best price if you only have one genuine buyer?
These are practical scenarios and questions, which should be considered when assessing an agent’s strategy and skill set to handle the sale of your valuable asset. Whether you like it or not, an agent can win or lose you 5% on your sale price in just 10 minutes.
Make your agent keep your reason for selling confidential to avoid any possibility of weakening your position when negotiating the sale of your property.
(Source: Peter O’Malley)