Doesn’t this conversation usually happen before the property is listed? Part of the seller agent’s job is to help value the property appropriately. Certainly there will be some wiggle room in there and they tend to go high for the inevitable low-ball offer but the price should be in the realm of normal for that area.
I know that when I got my loan the lender made sure that the price being paid was within a reasonable window. They are not going to loan me $1 million for a place that is really only worth $250,000 (because if I defaulted on the loan the lender cannot get their money back selling the property).
I would assume a seller who insisted the agent list the $250,000 property for $500,000 the agent would refuse to represent that seller (do real estate agents have to answer to any kind of ethics authority like attorneys do to their bar association?).
We met the sellers when we bought our house. But they were neighbors of my wife’s parents who had been living in the neighborhood for years. They were fucking weird. Didn’t really matter thought, since they wouldn’t be coming with the house.
They also lied about a lot of really weird shit. Like spending a ton of time in the swimming pool. Once we moved in our neighbors were like “yeah…we literally never saw them in that pool in the 17 years we’ve been here.”
I kind of figured that since the old table umbrellas they left behind looked liked they were sun-bleached in the closed position for over a decade.
There were all these little things that they never fixed and just came up with weird workarounds too.
During my last round of house shopping, I had an unplanned meeting with the owner. I’d got to the point where a deposit had been made, and I’d specified that a home inspection had to be done (on my dime). I’d lucked out on the home inspector, he was a recently retired general contractor who had spent 30 plus years in the building trades prior getting qualified as a home inspector, and was the type of person who didn’t seem to have an inner voice. The prospective house was 2 story brick construction with full finished basement, on a lot that backed onto a small ravine. The last thing the inspector did was to use a contact moisture meter on the drywall in the basement, and in the last corner he checked there was a poster, mounted on foam board, leaning against the wall. When the inspector went to tilt this out of the way, we all heard a tearing sound, and once the poster was out of the way we saw the source was a termite tunnel which had been half in the drywall facing paper and half in the foam board backing. This happened about 5 minutes before the home owner and his girl friend arrived back unexpectedly early (we had been let in by my real estate agent).
So now we have the real estate agent, the home owner, his girlfriend and I standing in the kitchen while the home inspector, sitting at the kitchen table, finishes filling out his investigation form, all the while, in a fairly loud voice, tisk tisking about how many deficiencies he’d found. At one point he looked at the owner and asked “Did you actually have an inspection done before you bought this place?” Later my real estate agent told me that the home owner had vented his ire to his agent, calling my inspector rude and unprofessional. Needless to say, I adjusted my offer by subtracting 60 thousand dollars to cover the estimated cost of dealing with the termite and basement moisture issues. The counter offer was refused, but I learned later that the house had been sold, for the same price as my counter offer, after being on the market for almost a month and a half. In retrospect, I’m glad I was turned down because even though it was a really nice property, I think the final cost of fixing the problems would have been more than 60 thousand.
All good answers but I’ll add one. In most cases there is a lot of emotion for the sellers. They are moving on, but they have special memories of being in the home. The buyers are going to try to point out defects and saying that they would have to repaint the dining room because of the awful color when the owner’s dead wife picked out the color…or commenting on a shitty construction job when the man and his father did it together, those things can cause tension.
If it all goes through agents, you and your spouse, or you and the agent can talk openly and honestly and approach it like a business deal, and when the offer is passed on to the seller, the message can be blunted.
I have met the previous owners of all four houses we have owned, but always after the deal was finalized. The first house and the third house the sellers moved a short distance away and continued to socialize in the neighborhood. In one case the couple continued to play on our neighborhood tennis team, in the other the woman was best friends with our neighbor (and favorite baby sitter) so we’d meet occasionally. The second house, the sellers had somehow left a bunch of heirlooms in the house. The wife had been deployed to one of our foreign adventures during the sale process and things were a bit chaotic for them. They came back a few months later and retrieved them. My wife gave them a tour of the garden she had put in. Our current house the husband came over to give me a walk through if the fancy gadgetry he had put in (alarm system, irrigation system, whole house audio, the outdoor hot water system, the secret garden in the woods, the induction stove). He was super helpful and so proud.
I have only met the buyers of one of our houses. I went back to give a snowblower to one of our old neighbors, and I met the new owners. I could tell they weren’t happy already. They had moved from a rural area to a suburb of a big city and found it very crowded (minimum lot size in that town was 2 acres!) He apparently had LOTS of guns. They sold again a few months later. I never told my wife that they ripped out all her plantings beds, vegetable gardens, walkways, etc. and replaced them with grass. That’s why you don’t want to talk with the buyers of sellers before the sake! She’d have been livid.
When we bought our house (in the US) we met the sellers. I think it was when we went to sign the purchase and sale agreement. At any rate, we went there with our agent, and i was shocked that she made a derogatory comment about the odor of the seller’s supper. They were Indian (which we knew without meeting them, from their name. “Keeping theme apart avoids racial bias” is rarely true, I’d guess) and their supper smelled like Indian food. My husband and i like Indian food, and i thought their supper smelled great.
But they wanted to sell, and were quite helpful, mentioning odds and ends about the house.
Apologies. We’re never too old to learn something new. “…screwed out of a commission”?
There’s also a conversation of “I told you so…” but in the politest terms.
I would assume a property overvalued by 100% would result in the short conversation “I’m not wasting my time…”. But quite often (before the last few years) there were properties that would sit on the market for months. An obvious reason in many cases was the property being overvalued by either the broker, or the owner. A giveaway to this also is when the owner rejects multiple lower offers.
I remember watching the “real estate porn” shows on the Home & Garden channel back in the day, and several agents commented on the occasional seller who would not accept and offer that said “conditional on home inspection”. Where the market was hot enough, that worked. On the opposite end, an number of agents mentioned the tactic where the inspector would find all sorts of mundane issues and value them high, or stuff that really did not need to be fixed immediately, and the prospective buyer would use this as a ploy to knock money off the price.
If I am buying a house there is a contingency clause in the contract about an inspection. If you are not going to inspect then set aside thousands of dollars for repairs. On our house the termite inspection turned up about $4,000 in repairs and tenting the house.
The mechanical inspection turned up a lot of things. Wirring problems, no attic insulation, and other in a long list. The seller did not properly disclose the problems. Myu agent took the inspection report to a contractor and asked him to make a rough estimate and what it would cost to make all the repairs. That came to $23,000 in repairs. We asked for a $17,000 credit. I understand the seller went ballistic. His agent told our agent that he would not even give a $7,000 credit. When our agent called us and told us the response, we canceled the sale.
I think the seller’s agent had a talk with the seller, and explained that he could not relist the property without disclosing all the faults. And the seller had better to lower his price by a lot or make the repairs. Any way the seller’s agent call my agent the next day and asked if there was any way to salvage the deal. My wife and I had talked and figured that with as fast as prices were going up we may end up paying up to $100,000 more for a house like the this one. So when our agent called to let us know that their agent had called asking what it would take to save the sale we had an answer. We dropped our counter offer by $2,000 and told our agent that we were not negoating, it was a yes or no. The seller took our offer.
I figured I could fix most the deficiencies myself.
But my advice to anyone selling a property. Get it inspected before putting any property on the market. The you can sell it as is, and have no suprises come back. Or if the inspector makes mistakes you can call him on it and get the report corrected. I had to do that on the house I was selling.
I think the difference in the UK (or in England & Wales at least, it’s different in Scotland) is that the agent is simply a saleperson - they don’t have to have formal training, and they don’t have any role in the conveyancing process. Both the buyer and seller appoint their own solicitor who does all the legal conveyancing, so ‘he said she said’ doesn’t really play a part - only what is agreed and discovered via the solicitors counts.
In my last purchase, the agent was so horrendously useless that when the survey came back and valued the property less than our offer price, meaning I needed to renegotiate, the agent just blanked my calls. I ended up tracking down the seller by looking them up on the Land Registry and arranging a private conversation to renegotiate the sale price.
Here in the UK it’s customary for the prospective buyer to get a Surveyor to check the house. before making any offer.
When I bought my current house, I had the survey done. The report said the house was in very good condition, apart from the damp-proofing in one room (which was wearing out.)
N.B. The seller had mentioned this already (but of course they were not an expert.)
So we amicably agreed to get a quote from a damp-proofing firm to fix the problem, then knock that cost off the purchase price.
After I bought the house, I got the damp-proofing firm in straightaway. Since there was no furniture in the room (as I hadn’t moved in) the job went swiftly - and the firm knocked 5% off the cost.
What a UK agent does for their commission varies hugely. The upmarket people who sell mansions and estates, charge high fees but work to make the sale. The High Street agencies generally do little more than take some photos, advertise in the local paper, and list the property on websites.
Anyone can set up as an Estate Agent and AFAIK, they have very little legally liability if anything goes wrong. Inevitably there are crooked agents: One trick is to undervalue the property and make an immediate offer on their own account. They can then sell it on at the full price., pocketing the profit.
A problem that happens in England, especially in city properties is gazumping. This is where a seller lets the sale go forward right to the point of exchanging contracts (making the sale final) and then asks for more money. The buyer will have already invested a good deal in the exchange: They have arranged a mortgage, sold their existing property, and paid for a survey, It amounts to blackmail really as the putative buyer either as to pay up or swallow the loss and start all over again.
Gazumping doesn’t happen in Scotland because a buyer has to place a non-refundable deposit with an offer to buy.
I can’t fathom why we don’t have some kind of deposit or contractual system in place for offers. Buying a house in England is a nightmare as a result. I’ve bought in Italy and France and both times had to put down 10% at offer stage, and sign a contract which would penalise the seller if they pulled out or tried to gazump us.
As I understand in North America, an offer to buy comes with a price and conditions. If the offer is accepted, that is a contract. Saying “Nope - more money please” after that would be violating the contract. Typical conditions would be the house inspection being acceptable and a bank agreeing to provide an mortgage loan. (So one tactic the buyer could use to withdraw is to get the bank to refuse the loan). Sometimes it might include “and if we can sell our existing home”. IIRC we had to put a deposit down to display good faith as part of my offer, but I thought it was escrow and refundable if the offer was not accepted.
Not sure about UK Law over there, or North American law, but as I vaguely understand, case law over here has accepted that buyers (and sellers) may be relying on additional verbal exchanges as part of a transaction, even if the written contract has the standard disclaimer about anything not in the contract. Most places I believe there is a minimal training and exam to be a licensed real estate agent and lawyers generally tend to handle just the legal aspects - ensuring proper title exists, change of ownership on the title, sorting out the assorted mortgages and liens are satisfied and registered, and actually handling the money in escrow accounts so that nobody will just “take the money and run”.
Let me see if I understand this correctly - in England, you arrange a mortgage ( not just pre-approval) and pay for a survey, etc before you have a binding agreement for the sale. So that you might spend all that money and effort and then the seller asks for more money or even just plain decides not to sell - and you are out the money because there is no contract?
I have to ask, is there a reason why all is done before there is any sort of contract ? I understand that you wouldn’t want to be obligated to buy a property if you couldn’t get a mortgage (either because of your own credit or because the bank doesn’t think it’s worth the price you are paying) or if the inspection turned up a lot of problems - but as @md-2000 mentioned, contracts that include contingencies exist.
Yeah, I just bought an apartment (moved in the day before yesterday), and we didn’t even start talking to banks before we closed the deal. What bank would give a mortgage before they saw a signed contract?
As for surveys, that also took place after the deal - with the contract stipulating that if the surveyor found anything, the seller would have to fix it at their own expense, or we get to deduct the sum from our payment. It’s standard stuff.
The Mortgage would be pre-approval. It’s normal to start here so you know how much you can actually borrow before you start looking at properties.
Why is it done this way? Because that’s how it has been done since the only people who could buy and sell property were ‘gentlemen’. They would shake hands on the deal and leave the boring legal stuff to their respective solicitors. Of course, it didn’t always go smoothly - There is a side story in Bleak House of a neighbour who constantly litigated about boundaries and rights of way.
There have been many proposals to change the law in England to something similar to the Scottish system, but so far no government has seen fit to take it on board.
When I bought my last place it was contingent on an inspection. Since it is a condo there are less likely to be problems but the contingency was there nonetheless. Indeed, the lender demanded an inspection be done.
What I was not clear about is if, for some reason, there were problems with the inspection and I backed out would I lose my earnest money?
In Ontario, no. Making an offer requires giving the seller’s agent a deposit, but if as in my case, the inspection reveals significant defects and the deal can’t be renegotiated, the deposit is fully refunded. I did have to pay for the inspection, which was about $250, but honestly the entertainment value of the process was worth it to me.
The housing market where I live has been in an almost constant hot mode for more than a decade now, and my last real estate agent was surprised that I kept asking if there were recent land surveys available for each property she was showing me. This is because typically the sale involves the buyer purchasing title insurance, which covers things like a misrepresentation of the boundaries of the property. I ended up taking this route, the seller had a legal-size photocopy of a then 30 year old survey that was next to useless because of multi-generational copier errors.I got a new survey done as part of an application for a building permit to do some renovations, and discovered that both fences between my lot and my next-door neighbors were completely on my property.
