Here’s what commonly happens. You’ve got your home for sale. Before you listed it, the agent gave you an estimated selling price.

But now, weeks after you’ve signed up, things have changed.

You’re getting bombarded with low offers.

And when you express your frustration – or as happens with many sellers, you get angry, the agents say, “Don’t blame me, I’m only telling you what the market is saying.”

Yes, according to the agent, it’s the market’s fault.

But if that was true, why did the agent give you a high selling quote before you listed your home and is now bringing you low offers once your home is on the market?

The answer is simple: The agent lied to you. Before you listed your home, you interviewed three or four agents. And, like most sellers, you chose the agent who gave you the highest selling price quote (and the lowest commission rate quote).

THINK HOW AGENTS THINK

Let’s step back and try and understand how agents work.

The real estate industry is fiercely competitive. The rewards for agents who win listings are enormous – tens of thousands of dollars for, in many cases, doing almost no work.

But there are no rewards for agents who don’t win listings. No second prizes.

The surest way for agents to win listings is to overquote the selling price to sellers. And then, if the agent quotes a low commission rate the owners will sign-up with that agent.

But now the agent has a problem. How to sell an over-priced home?

Well, just as the agents lie to sellers to attract listings, they also lie to attract buyers.

WHO’S RESPONSIBLE FOR LOW OFFERS?

If you’ve got your home for sale and you are bombarded with low offers, the cause of the low offers is rarely, as the agents claim, the market.

It’s usually the fault of the agents.

As hard as it may seem to believe, that nice agent that you like so much is betraying you behind your back.

HOW TO DISCOVER IF YOUR AGENT IS UNDERQUOTING YOUR HOME.

There are two ways to discover if an agent is underquoting your home to buyers – thereby attracting low offers.

And, in case you wonder why agents underquote the price of your home, remember this: The lower the price of a home, the easier it is to sell.

1. Mystery-Shop.

Discovering if your agent is underquoting your home could be as simple as asking a friend to contact the agent and ask for a price quote.

Or you could send a friend to inspect your home with instructions to whisper – in a conspiratorial tone – to the agent: “Mate, how much do you think will buy this place?” You’ll be amazed at what you discover.

For example: Some sellers in Sydney’s Mosman were quoted $10 million by an agent. But, once they listed, they kept getting offers around $7 million. The agent vehemently denied that he was quoting $7 million to buyers.

And so, the sellers set up a fake email account. Just for a laugh, they chose the name of the Chinese President, Xi Jinping. The agent, being ignorant of world affairs, replied, “Dear Jinping, We are getting interest in the home in the range of $7.5 million.”

Busted.

Fortunately, the sellers had inserted an escape clause in the Listing Agreement which meant they could sack the lying agent – and find a better agent.

2. Find the Hidden Search Price

Every home for sale on-line has two prices. The first is the displayed price – which is often no price and just says, ‘Contact Agent’.

The second is the hidden price – only known to the agents or shrewd consumers.

The hidden price means exactly that – it’s the price range the agent entered when uploading details of the home.

The purpose of the hidden price is to control which buyers see a home.

Many agents deliberately set a low hidden price. For example, if you want $2 million, your home may show up when buyers search in the $1.5 million range. And there it is, busted again – proof that the agent is underquoting your home.

You can’t blame buyers for offering a price they’ve been led to believe is acceptable. Agents notoriously attract buyers from lower-priced markets. Their ‘buyer-nets’ catch the wrong fish. As well as hidden on-line price ranges, thousands of buyers see homes advertised in a price range or with the words “offers above”. When these buyers offer the starting or lower price (or even the mid-point price), they are met with near hostility.

And the agent keeps telling sellers, “This is what the market is saying.”

Here’s how to discover if your agent is using a hidden price to underquote your home.

a) Go to the website where your home is advertised.

b) Search for homes matching your home.

c) Enter a maximum price well above your home’s value.

d) Slowly lower the maximum price until your home no longer appears.

The last price at which your home shows-up is the bottom of the hidden price range.

So, if a $2 million home stops appearing at $1.5 million, the bottom of the range is $1.6 million.

The basic requirement when selling a home is to attract buyers who can afford your home.

Underquoting – in any form – does the opposite. Sure, as agents claim, you “attract more buyers” if you underquote. But you attract buyers who offer lower prices.

What would you prefer – lots of buyers giving you low offers?

Or one buyer offering you the price you want?

If you want the price you want, don’t let the agent underquote your home.

by Neil Jenman