Truths & Tricks Of Real Estate Agents
Hello Haus founder Scott Aggett runs through some of the common tricks used by estate agents.
Buyers are coming back in droves to the property market as Coronavirus eases in Australia. It’s been a busy few weeks for Hello Haus in Melbourne, Sydney, Northern NSW, Gold Coast, Brisbane and Japan. Whether they can smell blood for a bargain, or they think the worst is over post Covid-19, many eager buyers want a spot on the property ladder as it takes shape for the next wave of capital growth.
But game playing and outright lying by agents is a consistent theme I’m seeing in my dealings with estate agents across the country, all in an attempt to make sales.
Twice this week in Sydney I had agents tell my client one story – and me another. So many mis-truths they couldn’t remember who they told what to! In one scenario, the selling agent made specific mention of “an offer they already have” to try and get us to a price level that made it easier for them to close the sale.
Inside the issue with a real-life scenario
This problem is greater than two rogue agents – it’s a major issue and common practice in the property industry. I know because I was on that side of the deal for 20 years as a real estate agent.
Here’s a real-life story of how it plays out:
- A Sydney couple saw a property this week listed at $1.9 – 2m.
- Agent told them at the open home that “Vendors are moving interstate, we have an offer already at $1.9m, you’d need to pay more.”
- The hopeful buyers then engaged me at Hello Haus to handle the negotiations on their behalf.
- I rang the agent and was told a different throwaway line: “It’s a divorce, we have a $1.9m offer, just give me $1.91m and I can close the deal for your client.” He ended the call with, “Just give me whatever offer your clients want to make and I’ll take it to the vendors.”
- Alarm bells where ringing in my head at this point. If you already have an offer at $1.9m, why would you welcome any offers below that? Makes no sense.
- I offered $1.825m on the buyer’s behalf. Vendors rejected it and countered at $1.9m. No mention made of the existing $1.9m offer.
- Hello Haus pitched for $1.86m. Owners refused it, saying they won’t budge from $1.9m. Again, no mention of any other buyer or current offer.
- I increased to $1.87m as our “best and final offer”. The agent refused it, said it’s not even worth putting the extra $10k to the vendor as they simply won’t accept it. His exact words? “They are playing games.”
Frustrated by the process, we walked away to focus on purchasing another home nearby for our clients. The listing agent reached out weeks later to say they had a new offer and “You’d have to pay over $1.9m to secure it”. We politely declined and the vendors accepted the $1.9m. Over this 6-8 week period, there was no real buyer offering $1.9m, however, they finally talked someone else into paying that price.
The games they play
The issue the agent had is that his vendors were not willing to sell below $1.9m.
So he invented an offer at that level to try and skip past any buyer hoping to pay less, by convincing them of a strong and genuine offer that needed to be trumped.
You see the game playing here?
The agent tells the buyers there is an offer to create a floor in the pricing. This gives other buyers fear that someone else wants to buy it as much as you do, playing on human emotion. It simultaneously creates false competition, putting pressure on you to make fast decisions and ultimately pay more than fair market value.
This is a sales trick and it is used deliberately by the selling agent.
I’ve seen this regularly over my 20 year career as an estate agent in Australia
Agents have so many takes on baiting a buyer to pay an inflated price or to act faster to help close the deal. Have you ever heard these lines?
- You’ll need to pay “X” because we have another buyer who has indicated they will pay “Y” but are just finalising their finance or building report.
- We have a verbal offer from this buyer and are just waiting for it on contract. You’ll have to race in and sign above that level to be successful.
- My vendors have agreed to sell to another buyer for “X”. If you can match that offer or beat it with a higher price or better terms you can secure the home.
Let’s be brutally honest for a moment – this is mostly BS.
Should you decide to sit on your hands and not make an offer, the property remains for sale. The agent simply calls you and says, “Good news! The buyer that made that previous high offer has not been able to get finance/lost their job/bought another home instead etc.”
The buyers feel like theirs was a genuine offer and may retain their interest in buying that property but are now under a false sense of what the market value may be.
The problem for buyers is that this type of dialogue during a negotiation is so second nature to a lot of agents that they are now expert bluffers. And when you are highly emotional during a property purchase, you perceive much of what is said as truth because you fear missing out on the property.
Twisting fact and fiction
The twisted thing is that I have pitched to potential sellers as an estate agent during my career only to be told, “I’m listing instead with ‘X agent’ because we purchased through them and we know we overpaid. I want them to do that to the next buyer and get us the highest price.” It can be a vicious circle of lies from both sides of the sale.
I know my triple-layered expertise as an agent, buyer and negotiator will help you get a fairer deal and keep the agents honest along the way.
Purchasing a property is likely to be a major life decision. Choose an expert to help you get the best result, rather than chancing it – and avoid being a ripped off statistic.