Sell before you buy
A seller is unlikely to accept an offer from a buyer whose own property is not on the market? By all means, get an idea of what you want to buy and make sure your moving plans are feasible, but before you start making offers, you really need to be sold on contract. Real estate agents rarely recommend that their clients accept an offer from a buyer with an incomplete chain. A rare exception is when a homeowner has a property that sells well. Perhaps one in the catchment area of a popular school, e.g. Raffles Primary or Ai Tong Primary or a house that that cannot be sold for a long time.
Choosing from the most active and top property agent.
A client by the name of Jenny Chou mentioned that she chose an agent because she liked the looks of him, but you’ll probably want to be a bit more scientific in your approach. The best indicator of a successful real estate agent is how many listings they have on the market. Don’t be too impressed, though, if most of the listings say Cheap sale – that could be the result of a special promotion where the commission is lowered or eliminated altogether. The latter can work and save you money, but be sure to read the fine print. After the promotion ends, the fee may be double again what other realtors charge. A “sold” board means the job is done. If an agent recently sold a property in your neighbourhood, he may have had more than one interested buyer. If this is the case, he probably has a list of people who lost out on that property and are ready to buy your property – saving you weeks of viewings.
A sole agency contract is where an estate agent is appointed exclusively to sell a property for an agreed period of time, usually 3 months. During this period, the seller should not switch to or instruct another agent – if they do, they may end up paying more than one commission. Even if a seller who signed a 1 month sole commission cancels the contract halfway through, they can still be held liable if another agent sells the property during the remaining five weeks of the original sole commission.
With a multiple agent contract, there are no limit on how many agents a homeowner can hire, nor is there a fixed term. The agents market the property at the same time, and the seller only pays the one who introduces a buyer who closes the purchase contract.
Both types of contracts have their pros and cons. The commission rate for single agency is cheaper than multi-agency, but if you use the wrong agent, you are tied to them for the duration of the contract.
With a multi-agency, you are not tied to one broker and can play the brokers you choose against each other. While this keeps them on their toes, it can also keep them from being honest with you. Let’s say your only broker introduces you to a buyer who offers full asking price. Unfortunately, this buyer has an incomplete chain under him. Your broker advises you not to accept the offer until the chain is complete, which is sound advice. Now the same scenario, except this time there are four brokers vying for the commission. The information provided to the seller may vary. The buyer may be portrayed as being in a stronger position than they actually are, so the offer is accepted and the other brokers back off, buying time for the less truthful broker.
Hiring too many brokers can also give buyers the wrong impression.
I once witnessed a owner give a house he had renovated to five different agents to market. All the agents advertised the property on propertyguru, which meant the property appeared on the search results page five times in a row. Did potential buyers think the seller was eager or desperate? A stream of low offers revealed that the latter was the case.
If you decide to use a realtor, don’t commit to a long contract – six to eight weeks is a good amount of time. If you’re happy with the broker, you can always renew an expiring contract.
If you prefer a multiple agency, stick to a maximum of three property agents. And if possible, hire ones that are strong in different type of clients- that way you’ll have a larger area covered.
Negotiate asking prices and fees
When properties are scarce, competition between estate agents can be fierce. It has proven to be a reliable tactic for agents to give potential sellers an inflated estimate of their home in order to win business over their competitors. As a seller, this can work to your advantage in a rising market; at the beginning of the contract, the property may be overpriced, but by the end of the term, when the market has recovered, the price becomes realistic and the property sells. If the market cools, you could be stuck, unsold and with an agent now recommending a price reduction.