9 sales tactics to be aware of when buying property
Whether you're looking to buy a property or selling off one of your existing ones, it's likely that you're going to be transacting with a real estate agent at some point during your buy or sell journey.
What sellers and potential buyers need to remember, to most real estate agents, you’re a transaction. That’s right, and you would do well to remember whether they are selling to you or selling for you, the faster they can get it off their books, the quicker they can move to the next listing.
And in their quest to sell quickly, agents provide cheeky auction quote ranges and use tough negotiation tactics. Here are some common sales tactics used by real estate agents to create FOMO among potential buyers.
1. “We’ve got another buyer on this property”
Sometimes this is true, but often agents will suggest this to a buyer if they feel that the buyer is stalling on making a decision and they need them to move a little bit faster.
The reason that an agent may try to create a sense of urgency may be because the vendor is unhappy with the offers so far, or it may be that the agent’s exclusive authority period is coming to a close and they fear losing their listing to an opposition agent.
Buyers should never dismiss the agent’s warning that another buyer could be interested in a property, but there are a few things that they can do to safeguard against being played.
They should ask if a contract has been signed and presented to the buyer. While some agents may be willing to lie about this, it’s a direct question and it’s more unlikely that an agent would lie about something that a buyer could cross-check with the vendor’s solicitor.
The vendor’s solicitor’s details are contained within the contract of sale. The buyer should also take note of the number of days that a property has been on the market.
If the property has been on the market for 50-plus days, it’s likely that the exclusive authority is coming towards its end.
2. “We’ve had an offer of X”
This tactic is similar to ‘there’s another buyer’. Sometimes an agent will use it to incite a higher offer from a buyer who has indicated their budget while conversing.
The key to understanding whether this is a fact or sale tactic is to ask the agent if the offer was a formal offer on a contract.
If the answer is no, it means that the offer was perhaps a verbal offer. Just because a buyer might suggest that they’d be willing to pay a certain price does not constitute an offer. Be clear with the agent about whether their ‘offer’ is genuine or not, “if it’s not on a contract, it’s not an offer. End of story.”
3. “The vendor would like the contract closed out tonight”
No vendor wants their contract closed out quicker than it allows for all competing buyers to have a chance at putting in their offers (unless they are genuinely desperate).
Some agents will argue that this method achieves a higher price for their vendor, but for those who shut out genuine buyers by applying an unfair time horizon, may also be shutting out better offers.
If, as a buyer, you genuinely need time to complete your due diligence, put a clause into the contract and make your offer firmly. Don’t let an agent push you away from making a fair offer.
4. “We’ve got buyer interest in the vicinity of X-Y”
This is a famous Melbourne auction tactic used by the local agents and it falls foul of Victoria’s underquoting laws.
Auctions are typically underquoted and the agents put on a farce all the way till day of auction, that the property is likely to sell for less than its true value to attract large number of attendees looking to snatch a bargain.
There are a few tips for counteracting this ridiculous tactic.
First and foremost, contact loansHub and request that we do a free pre-auction valuation on your behalf.
To get some factual information from the agents, thoughtful questions can make the difference between a broken heart and a sensible purchase. A good question to ask would be:
· “What reserve are your vendors likely to set on the day of auction?” Most agents will be tight-lipped about this but they rarely LIE about a false figure. They’ll typically tell you that they haven’t discussed reserve with their vendor
Just remember – an agent will be less likely to speak frankly with you if you are being loud, intimidatory, rude or insensitive to the presence their other buyers who are in the room. If they know you are genuinely interested, they’ll be likely to assist you with a bit more truth.
5. “We don’t really know what the vendor’s expectation is yet. They haven’t told us”
Every agent knows what their vendor would like. Every agent is required to let the vendors know what the likely selling range will be for their property.
You can ask the agent a direct question in this case: “If I am interested in buying this property on the day, and taking into account the other buyers who may be bidding, what sort of limit do you suggest I set to have a strong chance at buying the property?”
6. “We’re happy to present any offer to the vendor prior to auction”
Unless you have specific reason to believe that the vendor would prefer to accept a reasonable offer prior to auction, DON’T take this bait.
Such reasons could include a situation where a vendor has a specific date that they need to settle the purchase by, or they have a tough financial situation placing pressure on their timing to sell.
But in most cases, agents who are managing auction campaigns ‘test’ the buyers by enticing them to present offers. It gives the agents a firmer idea of where the likely sales range will be and it helps them prepare the vendor for setting their reserve on auction day.
The worst thing that can happen is that an agent will get an insight into a generous and emotional buyer who could stretch beyond reasonable market value.
In this case, they could deliberately set a super high reserve so that the property passes in to this unsuspecting buyer and the agents then have the opportunity to negotiate an even higher price inside.
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7. “Our vendor is a genuine seller”
Any vendor who spends money on a marketing campaign is a committed and genuine seller. Some vendors are greedier, some have unrealistic expectations. Regardless, they are genuine.
The only time a vendor is not genuine is either when their circumstances for selling change, or if they pitch a sky-high selling price with the intention to only sell if they get a ridiculously good offer.
8. “Don’t worry about getting your legal representative to overview the contract before you sign. It’s a standard contract. It’s all good”
How would an agent know whether the title is as the buyer believes it to be, or if the conditions in the contract are acceptable for the buyer’s circumstances? And how would the agent know if the buyer’s lender will accept that particular title?
The saying “buyer beware” means exactly that. Don’t trust agents with legal matters.
9. “Don’t worry about putting that request in the contract. We’ll be fine, no worries”
There is only one time where you are guaranteed to have your requests honoured … and that is when they are signed and agreed to in an executed contract. Relying on the agent’s word post-sale can be problematic.
Negotiate all of your terms when you document your offer and agree on your contract items. Don’t waive any of your rights, especially the finance approval and building & pest inspection clauses.
Retrofitting requests and neglecting to incorporate them into a contract will only lead to a financial heartache for you, while the agent simply moves on with the listing. Transaction done.
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This article does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.