Don’t be fooled by phantom offers
Property sellers should ensure that any offers made to buy their homes are genuine – or they will run the risk of delayed transactions and extra holding costs.
This warning comes from Fransiska Schutte, owner of the RealNet Wilgers & Surrounds franchise in Pretoria, who says incidents of unscrupulous agents tricking sellers into thinking that a deal is done are surfacing in many areas of the country, including her area of operation.
“It is a disturbing trend and consumers not only stand to lose valuable marketing time, but can also incur extra holding costs amounting to many thousands of rands,” she says. “And in our experience it is not only unseasoned first-time sellers falling into this trap.”
She explains that unethical agents are, in effect, tricking home sellers in order to obtain de facto sole mandates to market their properties. “What usually happens is that an agent will present a fictional offer to purchase, at the seller’s asking price and with attractive conditions. The relieved seller then notifies all other agents marketing the property that it has been sold. This leaves the field clear for the dishonest agent to find a real buyer without any competition.”
The drawbacks for sellers are manifold, says Schutte. “Under the impression that the transfer is going ahead, the seller usually starts making plans to relocate and may indeed sign an offer to buy a new property. Notice to disconnect utilities may be given and removal services may be engaged.
“All these arrangements will have to be cancelled – and the chances that penalties will be incurred are great – when the agent informs the seller that something ‘went seriously wrong’ with the deal. Excuses can range from the ‘buyer’ passing away to unforeseen problems acquiring finance,” she says.
The agent will then usually produce a real buyer but the transfer procedure will have to start from scratch, with delays that may not only inconvenience sellers but leave them seriously out of pocket. And worse, says Schutte, there is also a real danger that their property will sell below market price, because listed properties have a window period of about four weeks where interest from buyers is high, after which they lose some gloss as they have to compete with new listings.
“A seller who finds himself in the unfortunate situation where a ‘done deal’ has supposedly fallen through may well find that the real buyer the unscrupulous agent then produces will offer an amount considerably lower than the listed price. And as all other agents have by then withdrawn their marketing services, the seller faces the choice between more delays as the property is once again marketed, or cutting his losses and accepting the lower offer,” she cautions.
Sellers can, however, protect themselves by insisting on a signed copy of any offer to purchase within 24 hours of it being signed. “Also make sure that the contact details of the transferring attorney are included so that you can personally check on progress – especially if and when a bond was approved and for what amount. If a bond was not granted, or if guarantees were not issued on the predetermined dates, chances are small to nil that the transaction will be finalised,” she cautions.
“And in the current difficult economic climate where roughly only 60% of all bond applications are approved, it is prudent to exercise the option of a back-up offer. If your property offers good value, a second buyer – or even a third – will in all likelihood not mind waiting out the first option – which means your prime marketing window will be used to best advantage.”
Issued by RealNet