Would this ever happen?

HouseBuyer77

He was telling me he has a few people who have bank details on file and any property that comes up for sale that is suitable for renting then they will pay cash for! So how is a FTB supposed to compete with this? If you're a seller and a cash buyer offers the price you're selling for then it's a no Brainer!

You compete by paying more. As above professional LLs need to ensure the yield is good, someone with a lot of cash (or ability to borrow lots of cash) who's investing heavily into rental will be seeking to get properties cheap. If they're continuously outbidding FTBs who are willing to pay a bit more they'll loose money fast.

Now it's possible you have some unscrupulous agents who have a file of investment buyers who will manipulate things in their favour when there's a property they're interested in (a agent would prize a quick, simple sale to one of those people over the small extra comission, but probably far more work, an FTB could bring). Perhaps they'll do things to put off other buyers (talk down the property, be awkward about answering questions, only offer bad times for viewings), perhaps they'll outright lie and ensure only the investment buyer is able to get an offer in.

Note that an agent simply letting investment buyers know about suitable properties as soon as they appear is not manipulation. It's simply being a good agent, some vendors will welcome a quick simple sale. Provided they are also doing their best to get other offers in and achieve the best price.

The law can already deal with these kind of things either via vendors suing agents for contract violations through to investigations of serious criminal fraud, depending on how much manipulating the agents do.

Though I doubt much investigation is done into these matters. Personally I think many agents dealing with both sales and rentals incentivises dodgy behaviour. Far better for them when they get a nice property to quickly sell to a friendly investment buyer that will use them as a rental agent than to someone who intends to live there (or indeed rent out but manage themselves). They might lose a bit of comission of a lower sale price but reap the rewards of continuous rental fees (especially when they can charge a couple of hundred quid every 6 months to reprint a contract with changed dates). I think some investigation and potential legislation into this area would be very worthwhile.

AdrianC

HouseBuyer77 wrote: »

Now it's possible you have some unscrupulous agents who have a file of investment buyers who will manipulate things in their favour when there's a property they're interested in (a agent would prize a quick, simple sale to one of those people over the small extra comission, but probably far more work, an FTB could bring). Perhaps they'll do things to put off other buyers (talk down the property, be awkward about answering questions, only offer bad times for viewings), perhaps they'll outright lie and ensure only the investment buyer is able to get an offer in.

In that situation, of course, the person losing out is not the potential owner-occupier buyer, but the vendor - since only a small subset of the potential market are given the chance to purchase, restricting the sale price.

But that would be easily avoided by any half-interested vendor, simply by watching to see if the property IS marketed half-way competently. If there's a suspicion that the EA is talking the property down, a simple mystery-shopping friend can reveal the truth.

HouseBuyer77

In that situation, of course, the person losing out is not the potential owner-occupier buyer, but the vendor - since only a small subset of the potential market are given the chance to purchase, restricting the sale price.

But that would be easily avoided by any half-interested vendor, simply by watching to see if the property IS marketed half-way competently. If there's a suspicion that the EA is talking the property down, a simple mystery-shopping friend can reveal the truth.

Well I'd say both are loosing out, the potential owner-occupier because they're artifically prevented from getting in the market and the vendor because they're getting depressed prices.

As a vendor you can avoid this by keeping an eye on things as you say. But how many actually do?

I'm not trying to drum up some grand conspiracy theory but the incentives are certainly there for such behaviour, as is the opportunity. I wonder how much of it goes on?

AdrianC

HouseBuyer77 wrote: »

Well I'd say both are loosing out, the potential owner-occupier because they're artifically prevented from getting in the market

Except they don't have any kind of "right" to get in the market in the first place. If they've not bothered to register with agents to be informed early, then other potential owner-occupiers ALSO have an advantage over them.

As a vendor you can avoid this by keeping an eye on things as you say. But how many actually do?

Indolence and disinterest never works in your favour in life.

HouseBuyer77

Except they don't have any kind of "right" to get in the market in the first place. If they've not bothered to register with agents to be informed early, then other potential owner-occupiers ALSO have an advantage over them.

I'm simply saying they need a fair playing field. One where registering your interest with EAs and being more proactive in your searching (not just waiting for EAs to come to you), gives you a leg up, is perfectly fair. One where EAs have lists of preferred buyers they try their absolute best to sell to by specifically disuading other interested parties and manipulat the vendor into ignoring them and where those lists are unknown and only accessible to prolific investment buyers less so.

Indolence and disinterest never works in your favour in life.

I quite agree. But how many vendors are sufficiently proactive to prevent this bad EA behaviour?

Again such dodgy deals may be very rare (I'm sure such arrangements happen occasionally) and have no real effect on the market, but it's hard to say that for certain.