How to beat real estate agents at their own game

What profession is the most untrustworthy? If you were to ask most people, you might be unsurprised that the majority will say a real estate agent (right after lawyers and politicians).

But why is this? Anyone who has bought a home and dealt with a real estate agent knows that there are some tricks and traps that you can easily fall into.

However, it’s essential to know that when you buy property from a real estate agent, they aim to get the most money for their client, the seller. They may seem they’re doing you a heap of favours, but they’re simply trying the get the best deal for their clients.

In this article, we’ll discuss some of the sneaky tricks that a selling real estate agent will use and what you can do about them.

Understanding the real estate agent’s point of view

When a person decides to sell their home, they’re likely to contact three of four real estate agents and decide which one is most suited to selling their home. The agents looking to secure the seller’s business may suggest that they’re better at marketing and negotiating and can use their expertise to get the best possible price.

While people are motivated by all sorts of different factors, more often than not, they’re after getting the most money for their home, and they may choose the selling agent that promises to get the best price for them.

In a house sale, you have two opposing forces, the buyer is trying to get the property for the lowest amount, and the agent is trying to get the highest possible price. As real estate agent sells homes for a living, they usually have the skills and tactics required to drive the price higher and get the buyer to offer more money than they intended.

If you understand these tactics, you can do your best to avoid the traps and choose to work with real estate agents who operate more honestly and forthrightly.

Underquoting a property

Underquoting is the number one tactic that some real estate agents will use. Underquoting is so common in the Melbourne and Sydney markets that most buyers know to add around 10-20% to the advertised price.

In the real estate industry, the old saying is, ‘quote it low and watch it go, quote it high and watch it die.’. Underquoting is a standard tool to increase interest in a property.  The idea for underquoting is to get as many people interested as possible and play them off each other to drive the sale price higher.

Real estate agents consider that if two (or more) people fall in love with a property, they’ll be willing to go over their budget to secure the sale. For example, if your budget for a home is 600K, and your initial offer is rejected, is it challenging to go over your budget a little? Most people can find 10-20K more, and real estate agents rely on this to get the highest possible price.

But why not just advertise the property at the actual price? Real estate agents are looking to attract people in a different budget range. For example, if a property is advertised at $650K, they may only get interested parties with budgets of $650-700K. But if they lower the price, they’ll also attract people in the $550-600K budget.

The selling agent isn’t too worried about the person with the lower budget not being able to afford the actual price, as this person’s job is to boost the final sale price. Besides, they’ll have plenty of other properties to show them, and as a bonus, they understand this person’s actual budget.

How to avoid issues with underquoting

When you’re looking for a property to purchase, and the price is quoted as $600,000+, you could think it’ll go for anywhere between $600,000 and $620,000. This can mean you spend time examining the property, buying a property inspection report, and getting a solicitor to work on a contract. But the property is actually out of your budget! After you find out the actual price, you’ve already done plenty of groundwork, and you think it’s too late to back out, and you end up spending more than you intended.

An easy way around underquoting is to add 10-20% to the asking price. However, you should act as if your budget is at the minimum asking price. This will make the real estate agent think they’re winning, and you’ll get a better deal than expected.

Giving vague responses to questions

Real estate agents know that to get the best price possible, they need a few interested parties to play them off each other. When you ask them a direct question, like “what is the price?” you may get a vague answer, such as, “it’s a little early in the campaign, and we’re yet to set a firm price.”. The real estate agent always knows the price, and they may try to stall you and get in a few more interested people.

What to do about vague answers

If you’re interested in the property, make this clear to the agent and request that they follow up with the sellers and provide you with an accurate price range. The real estate agent should have little choice but do what you’ve suggested.

The real estate agents may be looking for competition to help drive the price, but the sellers are probably interested in selling the property quickly for a reasonable price.

Using the fear of missing out (FOMO) tactics

FOMO can be a strong motivator when purchasing property, and real estate agents understand how to make the most out of it. One tactic they’ll deploy is to suggest there are other interested people, and they’re about to make an offer. This tactic convinces you that if you don’t make an offer soon, you may miss out.

The real estate agent may pretend to be on your side and suggest what you can do to secure the property. They may suggest you put in an offer now, and they can take it to the seller to consider. Unfortunately, this can mean you make an offer on a property when you’ve not considered all the issues or are not ready to make an offer.

How to combat FOMO tactics

FOMO can be hard to deal with as buying a property, especially if it is going to be your home, is an emotional time. Remember that the real estate agent is trying to make a sale and is not necessarily working for your benefit. If someone is interested in the property, then it’s unlikely they’ll tell you about it.

Remind yourself that this is a tactic. If you’re interested in the property, make an offer when you’re ready and do not get pressured into making one earlier than you intend. If the property ticks all your boxes, then by all means, make an early offer but don’t get tricked into offering more than you intended to keep other “interested people” away.

Overestimating the rental market

If you’re buying property as an investment, you may ask the real estate agent how much they think it is worth as a rental. However, if the agent has considered it only as an owner-occupier, they may not have put much thought into it, and they’ll overestimate its potential to keep you interested.

While technically, they’re not being truthful, and the agent has no obligation to be accurate with their estimate, so they’ll off you a ballpark figure without conducting any research. All this can make the property seem more attractive.

What to do about overestimating the rental market

Completing independent research will help you discover the actual rental value of a property. You can look for available properties in the area and their rental value.

Sometimes, a real estate agent may offer you a rental guarantee, but this is a huge red flag. If the property is so good as a rental, why would they need to guarantee it? If the property is sought after as a rental and priced accordingly, why would there ever be the need for a guarantee?

Keeping a level head at all times

While these are some tactics real estate agents use to get a sale, there are many others. The ones discussed here are the main tactics, and awareness will help you when buying property.

The best method to avoid all the tactics a real estate agent will use is understanding the current property market and having a clear idea of what you’re looking for in a property. If you’re unsure about your research skills, you can find a suitable buyer’s advocate to help you find and purchase your next property.

A buyer’s advocate is like fighting fire with fire; they’ll use their skills and property knowledge to eliminate many of the real estate agent’s tricks and tactics. A buyer’s agent will act on your behalf to secure the property you want and deliver you the best deal possible.

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