Recently, I got thinking about the many tactics a real estate agent uses to obtain the highest and best price for their client – now there is nothing wrong with this because they are exclusively employed by the vendor to obtain the HIGHEST AND BEST PRICE for their client. However, as buyers advocates, we work for the buyer and our job is to read through all the jargon and obtain the BEST AND FAIREST PRICE FOR THE BUYER. So although we normally save these little ‘tid-bits’ exclusively for our client’s – I’d like to share with you a snippet of what we see and deal with every day. Consider these points and use them to your benefit the next time you are negotiating!
1. When an agent tells you, “you can’t submit an offer before auction”
This is false. All written and verbal offers must be presented to the vendor, this is a legal requirement of the agent under the Estate Agents Act. Agents often don’t want to take prior offers when it’s an auction campaign since better for their personal promotion and increases their presence in the market. In addition, if your offer is higher than the lowest point of the quote price then the agent is obliged to increase the advertised quote range to align with the offer submitted.
2. Inflated reserve price advertised after auction or advised at pass in negotiations
Often an agent will advise you of a reserve that is higher than the ‘real reserve’. This gives the agent somewhere to move between the reserve and above, rather than going back to their vendor with a price at or below reserve, which they may be less inclined to take particularly after a failed auction.
3. Watch out for agents asking if you have bid at other auctions
This is the agent qualifying you, they are aiming to find out how genuine you are and how much money you have. If you have bid before and they know the property they will know how much money you have up your sleeve and this will determine how hard they push you in negotiations – this is particularly common where a buyer has been through numerous opens with the same agent or agency.
4. When an agent asks, “have you sold your home?”
They are doing 2 things. Establishing if you are a potential listing, and establishing your urgency. If you have sold a property and you are constricted by time and this will give you less negotiating power, this is the information the agent will use when trying to obtain a higher price of better terms for their client.
5. If you have submitted an offer and the agent asks you, “would you like first right of refusal?”
Well of course you would, but by saying so, you are telling them you have more money – you will never buy the property on that offer!
6. Agents will often tell you there is another offer coming in on a property (when this is not the case)
This again is to establish urgency and to get you to put your highest offer forward. A good advocate will be able to establish if this is accurate or not – I can’t tell you how as I have to keep some things to myself!
7. Bidding against yourself
Yep it happens! Imagine that you have just had the property passed into you, you walk inside the home and your sitting at the table with the agent to commence negotiations, you may or may not believe this but there has been many a home buyer who has immediately increased their offer, effectively bidding against themselves. This is common amongst first homebuyers. You must establish what the vendor’s reserve price is and if you have any competition before establishing your tactic. If you were the last bidder then consider why.
8. After a passed in auction agents will often tell you there is another buyer waiting outside
Strangely many buyers think they are better having a property passed into them rather than being part of a transparent auction, your wrong unless you are a professional negotiator. One thing the person who the property is passed into is often told is that, “there is another buyer waiting outside to negotiate if they don’t pay the vendors reserve price”. I encourage you to walk out the front and have a look for yourself.
Not only do I know these traps exist from buying property but I know they exist from my days of selling property. Never forget who the real estate agent is engaged to work for and what their job is. Keep in mind, real estate agents don’t get paid for opening houses, the key is in the negotiations. They are trained negotiators, there are tactics involved and you must apply similar tactics when buying if you wish to achieve a fair result.