Are real estate agents honest, do they bend the truth or are they just trying to do the job without being sued?
Have you ever wondered why real estate agents have consistently had a bad reputation?
In my experience of working with many different real estate agents, I have come across the good the bad and the ugly.
But let's start the discussion with the fact that they are not just money-hungry vultures looking for their next victim to sink their claws into, which is sometimes what the media would like people to think.
Now I'm not against the media as they are just looking for another story that generates the public’s interest.
But in general, estate agents are regular people working a job, doing their best to be the best in a very competitive industry.
And it is normally that one rogue real estate agent that quickly gets caught out by the ATO, or fair-trading because of the impossible to cover up paper trail.
I will admit most agents don’t have degrees and haven’t always been successful.
They have failed at many things but what they do know are real estate and people.
Some of the best real estate agents were never the best at school but found an avenue by which they could succeed.
I've found most agents are just trying to do their job, to the best of their ability without being sued.
Today because of these rogue real estate agents, the industry is heavily regulated and agents can be audited without a moment’s notice.
In fact because of the new types of lawyers out there willing to work on a “no win no fee” basis, many real estate agents are even more paranoid about saying and doing the wrong thing by anyone.
According to the law, real estate agents are in a position of a “high degree of trust” (which is funny because they have been voted one of the least trusted professions).
This is why when a real estate agent commits a criminal offence they are judged more harshly than the average person, and it is called a “breach of trust”.
When agents undertake training to become a real estate agent they are told about all the laws they can be punished by and believe me there are a lot of them!
So if a real estate agent deliberately or recklessly lies for financial gain they are playing a deadly game of cat and mouse with the authorities that will eventually catch up with them.
Most agents just want to do the best job possible for buyers, sellers, landlords, and tenants.
I know this is a common concern for buyers.
I can understand that angry and worrying thoughts, trying to find out if the real estate agent is lying about this.
On top of that, I do know of the heated discussions that happen back at home, on whether you should make a higher offer for that dream property.
I do know of dodgy real estate agents that when desperate to sell a property that will lie about having other offers on the property.
Smarter agents would say “we have multiple interested buyers” which is not illegal to say.
Agents are bound by a strict code of ethics and law that is taken very seriously by Fair Trading.
As a buyer's agent 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.
And in today's rising property market, many buyers are suffering from FOMO (fear of missing out) – being scared the market is running away from them.
They feel they must get into the market making them more likely to be swayed by the persuasive arguments of selling agents.
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
Agents who love a good auction are renowned for this.
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 on 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.
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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.
Note: 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 the point of purchase, it could save you a lot in the long run.
Some people say to hold firm, don’t look interested, don’t raise your offer and see what the agent does.
Wait for a counteroffer.
Well, what if that counteroffer never comes and there really is a buyer?
This is how many people are gazumped.
The other buyer offered more, you lose the home and get frustrated at the agent.
What is really happening here, is the buyer has a lack of negotiation skills.
Some people justify this by saying that there are other properties out there.
Well, this may be true but it may take you another six months to find that dream home.
A quick way to resolve this issue during negotiation is to purely say “are you sure there are multiple offers on this property as it is illegal for you to lie to me about this” this helps them either to correct themselves and offers them a way out (this is a great way to test the agent’s negotiation skills), or they will hold their ground and feel a bit offended.
This is exactly what happened to me and I found out there were multiple offers and it assisted me in securing the property against higher offers.
Does it cut out the lies?
I have heard stories about buyers that have made an offer and have been frustrated over a multiple offers situation.
They have gone and door knocked the vendor/seller trying to get some straight answers.
This usually ends in more anger and stress for the buyer and seller.
“Why,” you ask?
Think about the situation you could be walking into:
- The sellers are annoyed that you haven’t gone through the agent and don’t consider your offer.
- They know about your offer but are insulted that it was too low for the home they love so much.
- It could be a divorcing couple and you could talk to the partner that doesn’t want to leave (especially for your lowball offer) and they can get more emotional about keeping the property
- The seller may annoy you, or one of your easily annoyed family members, with their negotiation style and you may decide not to buy because of a personality conflict.
Keep in mind there is a reason why they have hired a real estate agent.
It is usually because they don’t want to negotiate with a buyer directly or they would be selling it themselves.
Agents do not benefit much by getting you to raise your offer.
Let me explain, if the agents get you to raise your offer by $2,000 on a $800,000 property they will only get roughly a $100 based on the average commission.
Not to mention, the office they work in gets a portion of this hundred dollars.
The agent doesn’t really end up with much especially after their spouse has got a hold of the money.
So you might be asking yourself, “What encourages the agent to make the seller more money?”
Well, that is pretty simple, the property industry is very old school in its ways and reputation can make or break an agent’s business.
I can’t tell you how many people have decided to sell with a particular agency just because they have heard from friends and family that they get the best prices for properties in their area.
It is simple as that, old-fashioned word of mouth goes a long way in a community.
Agents have a fiduciary requirement to work in the best interest of the seller, there is no hiding that.
Obviously agents are aware that the buyers they are selling to now, will start to become the sellers of the future.
It makes no sense for an agent to compromise their integrity and lie to buyers, as in a few years' time those buyers would not want to sell with them.
There is nothing more satisfying for an agent than getting a phone call, from a buyer or a seller after the dust settles, and hearing that we have played a special part in making their life just that little bit better.
Sure, some agents make good money, but people that become selling agents just for the money, usually don’t last long in the industry.