Tuesday 28 February 2017

Home Truths: Cutting Mr Porky Pies down to size

Mark Keenan

Mark Keenan

(Stock image)
(Stock image)

So you've asked three local agents to estimate how much they can get for your house. You are variously told €350,000, €355,000 and €390,000.

The young live wire who provided the highest valuation persuades you that your house is easily worth it and he's the guy who can get it.

But he's being dishonest. He's telling you porkie pies. In reality, he thinks your house is worth €350,000 or less. I'll tell you why he's lying in a minute.

If two out of three doctors said you had cancer and one said you were fine, would you believe the latter because his news is better? No you wouldn't. But too many vendors are falling foul of Mr Porkie Pies of late. It's their own fault because they let their judgement get clouded by greed - that extra €40,000 could buy a new car or kitchen for the next house, couldn't it? Greed ensures you'll buck common sense and discount two out of three professional opinions.

It's easy for Porky because homeowners consistently overestimate the value of their property. They don't see the effects of their own wear and tear. They look to the highest single price achieved for a similar property as a yardstick rather than assess a fairer average produced by a number of recent sales. Porky loves when his vendors are a couple because it gets personal. When Mr Slick comes by with his overblown valuation, the partner who estimates highest wants to hug him and say to their husband, wife, boyfriend, girlfriend or sibling: "Ha! I told you it was worth more than that!"

Part one of his game is to rout the competition to secure the contract to sell your home. So he uses a false valuation to suck you in. When you've signed him, he shows people around for a few weeks and, of course, there's no sign of it selling. Now comes the excuses: discovery of wood worm holes in the bannisters, he didn't notice the state of the ceilings upstairs because the light was bad the first day he looked around, the dog ate his homework...

Of course, part two of his plan is to talk you down on price - right back to what that house is truly worth - maybe even below. Using his sales skills, he manages you down in easy increments: first from €390,000 to €380,000 (by 10k to generate competition between bidders) and then to €375,000 (those Central Bank restrictions are hitting us). Then to €365,000 (the market has died - must be the Budget). After six or seven tiring weeks of open viewings, he tells you he has a couple ready to bite at €360,000 - its only a small step down. You're tired of vacating your house each weekend. You just want it sold and despite the lower estimate, you're still doing well. You can take the €360,000. Now the interested party has discovered an unresolved planning issue or a leak in the roof, but they're prepared to take this on the chin for a 10k cut. Hey presto, you're down to €350,000 or maybe even €345,000. Because now your house has been on the market for too long and buyers are seeing it as 'stale'. At this point, you're fed up with the process and the spoofer, but it's too far along to call back one of the first two agents. You might even forget that their 1.25pc commission fee is lower than Mr Porky Pies' 1.5pc (reduced for you specially at the offset from 1.75pc).

So he sells your home for €340,000 (another reduction to get them to close). He got your business by deliberately overestimating your home's value. He got his higher fee. He achieved a lower price. He cost you more. He got away with it. If you did have the gumption to drop Porky late in the campaign, you can bet he holds on to most of the other vendors he has dishonestly pitched. If he gets three contracts by lying and a fee from two, he's still winning.

Porky Pies lies because he's not as good at selling houses as the other agents, who could have got you more money with their better sales skills. Porky needs to cheat to compete. So you lose again and again.

Stock is at a record low and this means larger networks are struggling to get a turnover to justify their bigger staff payrolls. Smaller agencies, on the other hand, are straining to keep a critical mass of property for sale on their books. Amidst more urgent competition in any business, a handful of miscreants will resort to skullduggery.

Very few Irish vendors will catch Mr Porkie Pies out when they need to - right at the start of the process - when he pitches you his overblown estimate.

This is how you can cut him down to size:

If one estimate is way higher than two others (you should get three before assigning your house), then be darn suspicious. He'll always be able to justify why he believes your home is worth it. So if he's so confident, get him to put his money where his mouth is and to agree to terms (in writing) that he will cut his fee in half if the sale price goes below €375,000 (based on a valuation of €390,000). Agree in writing to cut it again if it hits the lower range as opined by the other agents. And hold him to it no matter what.

If you allow yourself to be soft soaped at this point, or again at the end when the house is sold, then it's your own fault for being a cash hungry greedy guts for Porkies.

Indo Property

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