Of never seen million dollar HDB apartments in heartland areas like Yishun to a record $200,000 rental for a top class bungalow in Queen Astrid Park, there is no denying that Singapore property has been exciting to watch, with property prices rising dramatically in recent years.
So, with all this excitement in the real estate market, what are the pitfalls you need to watch out for when hiring a real estate professional?
AsiaOne spoke with select real estate agents and consultants to uncover some of the sales tactics agents may employ and the “grey areas” in the business that clients may not be aware of.
1. Over-promising in a sale
To get a potential customer’s business, it’s probably understandable for agents to try to “promise” that they can achieve a goal set by the salesperson, whether it’s realistic or not.
Says Jervis Ng of JNA Real Estate: “Some agents may over promise in order to get exclusivity for the sale of a house.”
He added that sellers need to make sure their potential real estate agent has done a thorough analysis of your unit and that they are able to make a proposal on how they can get the price you want, before buying. engage an agent exclusively.
“It’s also important to be reasonable in your asking prices and to engage in a constructive discussion with the realtor so you can encourage more transparency from the realtor representing you,” Ng advised. .
The best thing to do is to try to find out more about the realtor’s background and experiences and ask to see the results of their marketing or investment skills.
“There’s nothing wrong with being motivated by money, especially when you’re a seller,” Ng shared, but if money is the only motivation, “alarm bells should start ringing in your head”.
Rechard Tan of Homely Ever After AAG also offered another tip: check past transaction amounts to see if the requested amount is reasonable.
“It’s something an agent should share with clients up front, instead of just making empty promises,” Tan said.
2. Price Tier
Price staging occurs when potential buyers actually offer a higher price than what agents tell their customers.
An example shared by Ng is how a buyer would offer $1 million for a unit, but the realtor will do it deceptively. present the seller with an offer of $950,000 to manage their expectations and make the seller more receptive to a $1 million close eventually.
“That makes the $1 million offer extremely lucrative because it’s $50,000 more than what was supposed to be the buyer’s last bid,” Ng said.
Rechard adds, “Psychologically, it works because the seller would feel like they were making a bit more money.”
This “makes it much easier to condition the seller and close the case”, although Rechard shared that it actually contravenes Council of Estate Agents (CEA) guidelines.
Another psychological tactic agents might employ is to purposely sit on your listing, to try to lower your expectations – and the selling price.
“Their practice is to let time slowly lower the seller’s expectations,” Richard said.
They would “tell the seller that there is no inquiry because the price is too high”, when they may not be actively promoting it.
3. Pretend to interest buyers
Have you received enthusiastic text messages from real estate agents claiming to have found interested buyers or tenants for your unit?
Well, as the saying goes, if it sounds too good to be true, it usually is.
Simulating buyer interest in a unit are just a few of the common tactics used in the industry, we learned.
“Most of the time, but not always, when agents say they have buyers interested in a certain unit, they don’t actually have [those buyers]“, said Rechard.
If they first secure the unit for sale, then they can put it on the market, “then the real buyers will come.”
For units that are already on the market, there’s also a tactic to make it look like it’s marketed well.
Agents can tell potential buyers that a unit is only available for two hours on a given day and cram in all appointments during that time.
The simulation of offers, on the other hand, to “test” sellers on their base price goes beyond ethical borders.
One of the purposes of presenting sellers with fake offers, usually with lower than asking prices, from nonexistent buyers, is to get a more “realistic” closing price from sellers, it has been said. learned.
This could be due to the lack of trust between agents and sellers.
“Most sellers don’t trust their agents enough to reveal their final price and more often than not this causes the sellers agent to be overly cautious with the price. They then fail to bring realistic offers to the table because they think the seller will never go there,” said real estate agent Nick Tan, co-founder of Selling Singapore.
Instead, agents and salespeople should be more direct and candid with each other.
It’s also important to keep in mind that agents make their money through sales commissions and are generally expected to fight for a higher price on behalf of the seller, Nicholas Mak shared , Head of Research and Consulting at ERA Realty Network.
“Agents will always want to close at a high price, but if the market is very tough, they will need to educate or adjust the seller’s outlook,” Mak said.
However, one way that fake offers can be detected by sellers is to insist on seeing evidence.
“As a seller, beware of verbal offers and try to make sure you see physical verification before deciding if you want to make a price adjustment,” Ng said.
Rechard added: “I would say that the client is doing everything possible to verify [if the offer is genuine], is for them to ask to see the shopper’s intent in black and white, for example via text message. But again, it can also be faked.”
4. “Show a rotten apple” tactic
If you are wondering why your unit has remained on the market for months without any movement despite several visits by “clients”, it may be a good idea to check if the agent has other properties in the area he is marketing.
“Sometimes when an agent takes your unit, it may not be with the intention of selling it,” Rechard said.
In cases where agents have a few listings in the area, they may use the owner’s unit as a “showroom” for comparison purposes, so that other customers view the other unit they have more favorably. on hand.
“People just like to compare,” he added.
5. Being “deprioritized”
There are many ways for agents to prioritize their own interests over their clients, one of them being to have a preference for buyers who have hired agents, especially when they are deals with HDB flat transactions.
This may make it more difficult for buyers without agents to get a response from sellers’ agents.
Rechard explained that some buyers not represented on the HDB market may not be aware of the procedures and the documents to be completed, which can lead to delays in the transaction.
And while it is possible for buyers’ agents to step in to speed up the process out of goodwill, generally they end up doing more work without getting paid for it.
This is why agentless HDB home sellers, or so-called “do-it-yourself buyers”, may be “deprioritized”.
Conversely, for private home owners looking to hire an agent to sell their property, agents may actually be more open to dealing with unagented buyers because that way they won’t have to share the commission.
Shared Ng: “As a seller, it is important to select an objective, transparent and fair real estate agent who does not limit their work with direct buyers only where they can receive the full commission, but also work with co agents. -broke and close the deal with the party offering the highest price.
“It’s also a reason why sellers should pay real estate agents at least a 2% market commission in order to motivate real estate agents to sell their homes for the best possible price.”
6. You cannot terminate an exclusive contract? Not true
If you have entered into an exclusive three-month contract with an agent to sell your property, is it true that you cannot terminate it halfway if you are not satisfied with the agent’s service?
It is false, says Rechard.
“A common misconception among owners is that they should wait until the exclusive agreement expires before finding a new agent.”
Exclusivity agreements can be terminated at any time if sellers are unhappy, Rechard said, “although if the agent is working very hard and meeting their obligations, I don’t see why they should be terminated.”
What sellers would have to do to initiate the process would be to email the agency with the termination request.
But Rechard warned that having too many agents may not be a good idea for sellers, as agents will only be interested in closing the deal, instead of fighting for the interests of the sellers. sellers.
Key to knowledge and protection
Mak noted that before the Council of Estate Agents (CEA) was established in 2010, there was no licensing or monitoring of estate agents.
“Some officers took advantage of this and did dishonest things, and some were reprimanded for criminal acts such as misrepresentation, conflict of interest and sometimes even bordering on cheating.”
Mak advises those intending to sell or buy property in Singapore to read the guidelines on the CEA website, as well as review past transactions of their property online on the HDB or URA website.
“The Realtors Council is created to protect consumers, so consumers should at least visit the website to see what is useful. They can also improve their knowledge of the do’s and don’ts.
“There are also checklists on what to expect if you hire an agent,” Mak said.
ALSO READ: Fragrance Group Founder’s Wife Buys GCB For $65M – And It’s Not The Couple’s First