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Buyers Beware! Five common tricks real estate agents user – Buyers Agent Tips from Bryce Holdaway

Transcript 00:00 Today I want to talk about, from the buyers’ perspective where they should be beware of 00:05 some of the sneaky tricks that real estate agents employ to get more money out of them 00:09 to pay more because ultimately, what we need to understand is that the real estate agent’s 00:14 job […]

Transcript

00:00
Today I want to talk about, from the buyers’ perspective where they should be beware of
00:05
some of the sneaky tricks that real estate agents employ to get more money out of them
00:09
to pay more because ultimately, what we need to understand is that the real estate agent’s
00:14
job is to get a premium price for their client, who is the seller.
00:20
So if we take a step back when someone is deciding to sell a property, quite often they
00:25
might get two or three agents into their living room to decide whether or not which of them
00:31
would actually sell the property on their behalf.
00:34
So they are all doing a sales pitch and one of the parts of the pitch is the agent saying,
00:38
“Well, I would get you the best price because I can negotiate really well, I can market
00:45
really well and I can attract the most amount of buyers to your property so that I can achieve
00:50
that end game.”
00:51
So it is important that the buyer understands this because quite often they don’t see that.
00:56
So then when it comes to market, they are trying to get the property for the cheapest
01:00
price possible but their opposing side is the real estate agent.
01:05
So it makes sense that the real estate agent is going to employ some tactics to do that
01:08
but the buyer should really beware of those.
01:11
And the number one, without doubt a sneaky trick that real estate agents employ is underquoting.
01:17
Now, if you think about Adelaide for example, they would give you a price range, call it
01:22
$650,000 to $690,000, chances are you are going to buy it between $650,000 to $690,000.
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But in Melbourne or Sydney for example that’s not the case.
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Quite often it can be 10% – 25% below where the actual property would go.
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Now the real estate agents has a saying, “Quote it low, watch it go.
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Quote it high, watch it die.”
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So they actually have an incentive to create competition because if two people are fighting
01:47
for a property, they can get that premium price that they have promise the vendor in
01:50
the listing presentation.
01:52
So if they quote it nice and low, they can attract more people, ideally from a lower
01:57
price bracket and bring it to auction or even a private sale and get them fighting it in
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a battle of the fittest and who has the deepest pockets and who is actually going to win on
02:08
the day.
02:09
But why is it a sneaky tricks for the buyer?
02:11
Because they can easily led to believe if it was $650,000 plus, they may reasonably
02:17
be able to buy it between $650,000 and $670,000 but ultimately, it’s probably always going
02:22
to go for $670,000, for example.
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The poor old buyer gets a building inspector, get the solicitor to check the contract for
02:31
them, they invest a lot of emotional capital into the purchase but from Day One they were
02:36
never in the hunt.They’ve spent money on all of these services and they have also spent
02:40
some of their precious time.
02:42
So the Number One sneaky trick that a real estate agent does is underquoting.
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A kind of a lead on from that is the second sneaky trick that they do is when you ask
02:52
them, “What’s the price is?” they stay very very vague on the price.
02:57
They may say something like, “It is the first week of the campaign, we haven’t had many
03:01
buyers through so we are just gauging what the market is willing to pay.”
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But they know very well where that price band is because they told the vendor in the lounge
03:12
room during listing presentation so they do know the answer to that but they stay vague
03:17
for a reason.
03:18
Again, because they want to create maximum competition so don’t be surprised if you ask
03:23
a real estate agent a direct question and you don’t get a direct answer because it’s
03:28
their job to try and stay vague to create some more competition.
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The third sneaky trick that often comes up is they use the tactical fear of loss.
03:39
As soon as they know that you are slightly interested in the property, it’s amazing how
03:43
quickly there’s another buyer.
03:45
In fact, there’s actually another buyer who has just shown some interest or it might be
03:49
as simple as, “Hey you know what, I know you like this but I’ve got another buyer coming
03:53
through this afternoon for their second look.”
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And it creates this feeling of missing out.
03:59
So it taps into the emotion, it taps into your fear of loss and therefore you may be
04:04
prepared to pay an emotional price for the asset.
04:07
So my advice on that one is don’t necessarily fall for that tactic because chances are there
04:12
might be another buyer but equally, it might just be a tool that the agent is using.
04:18
So a way to arm yourself from that is make sure you are rock solid on knowing what the
04:22
value should be because if you do find the property that you like, you can act quite
04:26
quickly so that you can make sure that you get it but don’t necessary fall for it each
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time because they real estate agent is using that for a sneaky trick to get you to pay
04:35
more.
04:37
The sneaky trick number four is when you ask a real estate agent as a property investor,
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“How much do you think this property will achieve in rental?” and often they have this
04:48
blank look, “Ooh.. about $500 a week.”
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And maybe it’s the first time that they even thought about that question because they may
04:55
be thinking that it’s going to be an owner occupier that will buy it and you might be
04:59
relying on $500 a week but the reality is the market is only paying for $430.
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So the sales agent is incentivised to make the property look really great.
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So you need to do some independent research to make sure you know exactly what does rental
05:15
estimates should be and another part of that is if they offer a rental guarantee which
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says that, “When you settle on this property, we will guarantee that you would get your
05:24
$500 a week.”
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That should be a big alarm bell.
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If you are buying a property that is in demand by the locals and at fair market value, there
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should be no need for a rental guarantee.
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So you got to ask yourself, if they are offering one, why is that?
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Straight away you should be unpacking that and try to find out behind the veil what’s
05:43
really going on and what is incentivising them to offer a rental guarantee when the
05:48
market should just be working for you in it’s normal operation.
05:54
And the last one, number five, is be careful of the pre-auction offer.
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If the real estate agent thinks that the buyers are liars and most buyers keep their card
06:06
close to their chest and don’t tell them how much they are willing to pay, what the agent
06:11
is incentivised to do is get you to make a pre-auction offer so they would at least know
06:14
where your interests are at but they may have no intention or whatsoever on selling prior
06:20
to auction.
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So if you going to make a pre-auction offer, you need to understand a lot more information
06:25
about the vendor’s motivation.
06:27
Because even if the vendor is motivated to sell prior to auction, the agent may not be
06:32
because you think about it.
06:33
It’s free advertising for them, it’s street theatre to actually go through the auction
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and quite often the neighbours would come and watch the auction in place.
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So therefore if the agent performs well as an auctioneer and they get a great result,
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they may get their next listing from the neighbour, the guy down the road or two streets away.
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So they are highly incentivised to actually go to auction.
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If you are going to make a pre-auction offer, you need to understand the vendor motivation
07:00
very well and understand that it might just be what the real estate agent is using to
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tease out how much you are prepared to pay because they might come back to say, “Actually,
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the vendor just wants to take this to auction now but they do know how much you are prepared
07:12
to pay.”
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So there is a few little sneaky tricks that the real estate agents would employ to get
07:17
more money out of you and if understand what’s going on, you can be in a better position
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to make sure you don’t fall for those tactics.
07:27
Now the way you can guard yourself against those tactics, as I say it all the time, it
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know your value.
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If you know your value is, you are not going to be seduced by what the real estate agents
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is telling you and you if you don’t know your value, then employ a professional.
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Go get a valuer who can value the property for you and tell you what it’s worth.
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Go find a real estate agent who you know who doesn’t have the listing and you can talk
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to.
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They may have actually missed out on the listing and they are quite prepared to tell you how
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much you should prepare to pay.
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Or of course, talk to a buyers agent who does this everyday and they know the tactics that
07:57
the real estate agents is going to employ and they don’t fall for it.
08:01
So hopefully, there are a few tips there for you to, “Buyer Beware” and understand what
08:06
the sneaky tricks are that the real estate agents employ to get more of your money.

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