As a property strategist I’ve dealt with my fair share of real estate agents, and I’ve found most of them follow a very professional code of conduct, however a few agents can and do adopt certain ways of doing things and speaking with potential buyers to push a teetering sale across the line.
I’ve heard pretty much all of it by now.
So to help you out when next negotiating a property purchase, here are 8 ‘little white lies’ real estate agents might tell you…and what they really mean.
1. We have another interested party
Essentially they’re implying another buyer is waiting to pounce if you take too long to make your move, thereby playing on your fear of ‘losing out’ to ‘the competition’.
This creates a sense of urgency and can be a very effective psychological play in tipping a hesitant purchaser across the line.
While you shouldn’t necessarily dismiss the possibility that someone else is nipping at your heels, never feel pressured into a purchase because you might not be the victor in what’s possibly a fictitious battle.
A good way to determine if the agent’s story is legitimate is to ask questions like, ‘Has a signed contract been presented to the vendor?’
Remember that in real estate, there’s always another deal to be done so don’t be afraid to walk away.
2. We’ve had an offer of…
This is much the same as the above tactic, in that it can persuade a reluctant buyer to make an actual offer.
But how do you know if you’re being played?
Once again, asking if the other offer is in the form of a signed, contract of sale can indicate whether any genuine bid has in fact been put forward.
If the answer is “no”, then you’re competing with a verbal proposal at best, or a downright fabrication at worst. Don’t be backed into a corner.
3. We haven’t had as much interest as anticipated
They reel in potential bidders with guide prices that are often far from the realms of reality to begin with.
Then net them with rhetoric about sluggish market interest, providing (often false) hope that you stand to secure a bargain come auction day.
To avoid paying money on pest and building inspections when all you might end up with is the taste of bitter disappointment, do some research around the current market.
Start by asking what reserve the vendor might set on the day.
You probably won’t get an upfront figure from the selling agent, but you can measure his response against comparable sales.
You could be really bold and ask what price they quoted on the listing authority.
Having your own knowledge of the local market is a sure fire way to know when guide prices and reported buyer interest levels are in the realms of reality, or a clever ploy to increase competition at auction.
4. The vendor wants contracts signed up tonight
I would think that if a vendor has more than one eager buyer throwing offers their way, they’d be happy to wait a while and see how the competition plays out.
If an agent is applying deadlines to negotiations in this manner, you can almost guarantee they either have a personal commitment they want to get to – like a golf game – or the vendor has made no such time stipulation.
If you require more time to do your due diligence or arrange various inspections, don’t be afraid to put an offer in writing with a conditional clause, making this requirement clear.
5. The vendor hasn’t really given us a good indication of their expectations yet
Any real estate agent worth the commission they’re paid knows what their client wants, whether they’ve stated it outright on a sales authority form, or in subtle undertones during an informal chat.
If you’re getting stonewalled on this point, perhaps change your approach slightly and question what type of limit you should set yourself on auction day, given the level of interest in the property.
That way, the agent will be compelled to give you some type of figure, instead of dismissing your query with a little white lie.
6. We’re happy to present any offers prior to auction day.
This strategy can say a lot about the circumstances surrounding the listed property, including a vendor who has a specific time-frame in which to offload their home for some reason.
More often than not, agents will entice you into making pre-auction offers to test buyer interest, thereby gaining a better insight into how much the market might pay and preparing the vendor to set their target reserve accordingly.
More ruthless agents can use this information against unsuspecting emotional buyers in particular.
If you make an overly generous offer for instance, they might use this to set a higher reserve, knowing the desperate bidder will compete to meet it and either pay more than they should at the fall of the hammer, or later during post-auction negotiations.
7. You don’t need a solicitor to look over the contract
How does a real estate agent know whether the vendor’s statement (in Victoria) is accurate, for a start?
‘Buyer beware’ definitely applies to the significant financial commitment you make when purchasing a property investment.
It’s essential that you have any contract ok’d by your solicitor or conveyancer, before it becomes unconditional and you’re locked in.
8. We don’t need to include that as a special clause, the vendors will be fine with it.
While it‘s nice to think any special requests you want to attach to a contract of sale will be honoured on the basis of a verbal say-so, there are no guarantees without a signed, agreed and executed contract.
Remember, ‘He told me so!” is not a legitimate legal argument.
Neglecting to incorporate any and all requests into a legally binding, written agreement is just setting yourself up for a fall.
Ultimately, the best way to protect yourself against the possibility of an agent extrapolating the truth to talk you into a less than desirable deal is to be prepared.
Arm yourself with a good understanding of the market and importantly, recent comparable sales.
If in doubt, consider using a buyer’s agent to help translate ‘agent speak’. While it might cost you a little more at point of purchase, it could save you a lot in the long run.
Read more: propertyupdate.com.au