Today B. Vit, who’s had a few offers turned down, asks whether estate agents keep any secrets regarding who they prefer to sell to. The answer is that estate agents do have investors that they prefer to deal with, but that this is something that makes good business sense rather than being some underhand practice.
If an investor has a track record of completing quickly, paying more or is simply an investor that the agent feels will meet the needs of the vendor, then the agent is likely to go to that investor… and may do this before the property has been advertised to the wider market.
The estate agent’s job is to look after the interests of the vendor. So, in order to compete as an investor, you need to understand the vendor’s circumstances and needs and show to the agent that those needs will be met should your offer be accepted.
[01.05] The Property Ombudsman and the agent’s code of practice
[01.23] Do estate agents have preferred buyers?
[02.04] How it works when an estate agent has a preferred buyer list
[03.04] Possible reasons your offer was rejected
[04.33] How to improve the chances of your offer being accepted next time
[04.55] Thank you for watching and why not join our free training today?
So the question is…
“Hi, Rob. Thanks for sharing your knowledge for free online. I was just wondering if you could answer one of my questions please? Do the agents have any secrets? e.g. Whenever I inquire about a property as it comes on to the market, the estate agents tell me that it’s sold. Do they have any favourite clients that they give the property to? For example, one of my offers got accepted earlier in the day, and later I received a call from the agent telling me that the vendor had changed their mind, no solid reasoning. I went with a higher offer, and even that got declined. There must be something going on internally I suppose, but I’d be grateful if you could help me find the answers, please. Thanks, B. Vit.”
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1. The Property Ombudsman and the Estate Agent Code of Practise
When it comes to selling property, estate agents adhere to a code of practice that’s outlined and set down by the Property Ombudsman. This code of practice ensures that the estate agent acts on behalf of their seller and with their seller’s best interests. That’s who they work for, that’s who pays them and that’s where they get their commissions from selling properties.
2. Do Estate Agents have Preferred Buyers?
Some estate agents will have their so-called, preferred buyers. The reason for this is they will deal with some people on a regular basis. Some of those people might be homeowners and some of them might be investors or developers. Out of those people, they deal with, some they know will complete on properties on a regular basis and understand the process. They understand whether they’re committed when they place an offer and are more likely to follow through to completion. From an estate agent’s point of view, it’s simple. They know that if they deal with a particular buyer that when that buyer puts an offer on a property, they understand the background and are more likely to complete, than another, brand new buyer.
Now, that doesn’t mean that they will discard offers that come in from new buyers, it doesn’t mean that they will just favour previous buyers. It just means that there is an understanding there of how certain buyers have performed on previous deals. It is details like this that they will present when they put the offer forward to their client, who is, of course, the seller of the property.
3. Who Gets First-Refusal when New Properties Come on the Market?
In a buoyant market, estate agents and their negotiators will likely get viewings on brand new listings that come the market, before it even goes on to their main portals, Rightmove or Zoopla. This is because they understand the requirements of particular buyers that they already have on their books. If a brand new listing comes up, (let’s say a three bedroom, semi-detached house within a particular price range, in a particular location, in a particular kind of condition) they will understand which buyers from their list of potential buyers are already interested in that property. They will then call them, arrange viewings, and start the process with these clients before, as we mentioned, it even gets on those portals.
4. Reasons your offer might be rejected
So let’s say there’s a property that is brand new to the market, has had some viewings before it’s even got to the property portals, and has also had some offers because it was priced keenly. Then you have to consider the whole situation behind those offers that will have been put forward to the vendor. Also, the reasoning behind the vendor accepting that offer over another bid. This might be because that offer is more proceedable, i.e. it could be that they’re a cash purchaser instead of a mortgage buyer. It might be because they’ve been performing on other property deals, as I mentioned before.
The estate agent may be able to say, “Look, this buyer Mr or Mrs Smith have completed on these properties with us before. We know they’re serious. We know they’ve got the cash ready to purchase.” The seller and the estate agent will consider all aspects of an offer and not just take the highest offer that is presented.
5. Putting it all Together
All of this combined might mean another offer gets accepted over and above yours, and that might be as we said because it’s more proceedable, because of the terms by which it’s being purchased, i.e. the timeline (how quick it can be purchased), or by the means it’s being purchased, i.e. a mortgage compared to cash. So I wouldn’t be too worried about estate agents having secret buyers or doing deals under the table. There is a code of practice that stops that from happening and most, 99.999% of estate agents, won’t be doing any kind of backhanded deals. They will be going through legitimate sales channels. So, for you, it’s just a case of getting on and finding the next property. Sorry, you missed out on that one, B. Vit.
My advice is to try and put yourself in a good position when you’re putting your offers forward. Explain to the agent your reasons for putting in the offer and put in the effort to present it in a light that’s going to be suitable for the vendor. Understand the vendor’s reasons for sale and try and work out if they want speed over and above the highest offer. Speak to the agent and get that understanding across when putting your offer in. Hopefully, by doing this you will enjoy a better success rate.
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