Agent games to generate interest in their auctions

I learnt a real estate agent trick to drum up interest in auctions over the last couple of weeks. While I can say I saw this coming a week ago, to have it confirmed annoyed me.

I was looking at property that was advertised as mortgagee in possession. Checked it out during an early open, it was ok. Not really something that i was looking for at the time. A couple of weeks later i get a call from the first agent, says the vendors are desperate for money and just looking for offers. So I make them a really low ball offer. I hear nothing back, and they don't return my calls. I'm ok with this.

A few weeks pass, I get another call from agent #2. They say they're really desperate for money and willing to listen to any offer. So I offer another low ball, but $25k more then my last. I hear nothing. A week later, she calls back and says if i'm willing to go unconditional they will consider my last offer. After some thought I think it's worth the risk (approx %7 yield) and make a slightly lower unconditional offer. I sign a contract, send it over and said i need an answer by the next morning at 10am (the next open house was at 11am).

So the next morning, i get a text at 8am saying that they are still thinking about it, but want to see what happens at the open house that day. I call back but get no answer. I call about 3 or 4 times over the course of the morning and around 10:30am i sent a sms saying i rescind the offer. About 10 mins later i get a call from the agent saying she's been so busy with other open homes, but asking if i'm really sure i want to rescind? I told her i didn't want my offer being used to fish higher offers, so i said i was sure. I was fretting that for a bit at the time, procrastinated for a while over it. But i thought that no returned calls or sms's for hours was certainly fishy. And if i set a deadline, i have to follow through. I actually went to the open house and no one was there. So i thought that was encouraging and worked in my favor.

So the day passes, I call the agent again in the afternoon and said i'm still willing to work out a deal. She said she needed to call people, the vendor, the agent at the open house to follow up any people and get back to me. I hear nothing for a few days and then i get a message saying that they have decided to go to auction. This basically confirmed to me that i got sucked into some game they must play a lot on peole to drum up auction interest. This also annoyed me for the fact that i had another property that i decided not to pursue because i thought i had something promising lined up here.

So, today was the auction. I had my top dollar worked out and it worked its way just over this amount (without any bids from me, 1 couple and vendor bids). I'm done i think, but was interested to see what it was for sale for. Final bid was for $285k and the auctioneer checked with the vendor. They declared they would accept nothing less than $318k. No one bid and the property was passed in. I started thinking of all the calls back and forth between the agent and I about what the vendor is saying and how they were considering my offers closely. In reality, i doubt the vendors ever even saw my offers. I question if its really mortgagee in possession. The agents had to know their expectations and just ********ted me the whole way.

I've learnt not to trust anything anyone says, but is this stuff par for the course? I honestly thought I had stuck gold for a day or two.

 

That sounds pretty much exactly like my Moorooka experience. Twice.

If you make a pre-auction offer, you've helped set their reserve.

 

I made no bids at the auction. It was vendor bids and this other couple bidding only, and that went past my limit as it was.
Sorry, was that your question? Had to re-read it a few time

 

Yes but what about the fact it was advertised as mortgagee in possession? Most people would interpret that as "Bank in Possession" which equals "most be sold"?

 

Underquoting. Went to an auction yesterday for a client, was listed with a price guide of $225k, bidding went to $240k then stalled for 10 mins while the agents stuffed around and then passed it in with a reserve of $260k. The two fhb'ers there trying to buy it were confused as was everyone else, and I told the agents to take a refresher course in underquoting legislation as they were in breach of it.

 

@DaveM it is a shame the auction wasn't filmed to document the breach ...

 

Ta. I guess the bank/lender has a minimum! But I cant see a bank wanting to hold it for much longer than it really has to.

 

The bank or mortgage owner must make every endeavour to get a fair price for the property even if means passing it in at an auction. Usually they get a valuation and are reluctant to sell below that.
Marg

 

What if the vendor changed the reserve to a higher figure on the auction day. How can you blame the agent for underquoting if you are not sure.

 

Illegal in SA, the reserve cannot exceed 10% of the acceptable sales figure in the agency agreement, and the figure cannot be varied for the duration of the agency agreement.

 

So if they got the initial figure wrong and wany to change it, they have to take it off the market and sign a new agreement to re-advertise the property?

 

Correct, but they cannot do this until the expiry of the original agreement (eg 90 days) to stop agreement churn. And if the agent fails to accurately quote figures according to legislation they also forfeit sales commission.

 

Had no idea the auction regulations were so strict in SA.

 

Had a reform in 2014 to contain underquoting for auctions and private treaty. No "offers over" etc since Jan 2014, only a single price or range, and range cannot vary by more than 10%

 

Two years later and this is similar for private treaty in NSW but not as strict for auctions. Still have to document and substantiate price claims though.

 

$240k and $267k. Maybe your scenario is how it was, but then why call me multiple times and tell him me how they're seriously considering it, sitting on it, not returning calls and basically just jerking me around. They're the ones that called called me and said that if i signed unconditional at $267k they would probably sign.

If they said thanks, but no thanks. Then just called me a few days before the auction (like they did) and urge me to register to bid that would of been the same as well.

Basically, this. I'm not questioning them turning down the low ball offers. I'm questioning why they made the vendors out to be so desperate and then baited me all the way to the end.