We’ve all heard that saying, “Buyer beware.” But nowhere does that caveat count as much as when you’re a homebuyer. The last thing you want is to buy a house that collapses the day you move in. Admittedly, that’s not a common occurrence, but it illustrates a point. You wouldn’t want to move into somewhere that’s dead centre in the middle of a drug-dealing neighbourhood. And you certainly wouldn’t want to commit to a lifelong debt only to realise your neighbours are the Hells Angels. Again, we’re exaggerating any likely outcome. You’d do your homework before signing a contract and letting the cool-off period expire. However, could you rely on the real estate agent selling the property to clue you in about any unseen shockers? Just how far will a real estate agent go to sell a house? What kind of underhanded tricks would they pull on the homebuyers?

We wondered about this ourselves. So we researched the dirtiest tricks that real estate agents pull on homebuyers. To be sure, they have a whole playbook of white lies and cunning stratagems to lure you into a deal. If you’re planning on entering the property market, you’ll want to know about these wiles so you don’t get burned. Remember, the real estate agent isn’t working for you. If they’re a shrewd agent, then they’re working exclusively for the owner of the house being sold. But if they’re one of those rotten apples that fell out of a barrel, they’re working for neither party. This is the type of scoundrel who is working purely for themselves. Nevertheless, as the buyer, you’re the fish dangling on the hook. If it’s down to you or the seller getting hornswoggled, you can bet your grandmother’s sacred recipes it’ll be you. What should you know?

Underquoting To Homebuyers

Underquoting is to the real estate business what measuring blood pressure is to a doctor: routine practice. They have a saying, “Quote ’em low, watch ’em grow; quote ’em high, watch ’em die.” It sure would be unexpected for the agent to quote a few large over the vendor’s price. Perhaps somewhere in the annals of the property market, it’s even happened once or twice. But not often. And for good reason. It would defeat the purpose. So what is underquoting and how do agents go about it? Underquoting is a ploy to attract as many potential buyers as possible. The more possible homebuyers there are, the more the competition drives up the price. So, a discrepancy arises between the price quoted by the real estate agent and the final sales price. Or rather, when the quoted price is lower than that which the vendor is willing to consider.

Underquoting is illegal in most Australian states. It is an offence under the various fair trading and consumer acts to mislead buyers. The law insists that homebuyers be provided with enough information to decide whether they can afford the house. An agent has a range of around 10% that they can allow for negotiating above the price agreed by the vendor. Likewise, it can’t be the price of any written offer already rejected by the seller. Violating the act can result in huge fines and the surrender of any commission made on the sale. All information relating to the sale must be disclosed wherever a buyer is being enticed to buy the house. If the seller decides they want a higher price, that must then become the advertised price. The agent is responsible for making sure the predicted sales price is reasonable given the market and other variables.

The Old “We Have Another Buyer For This Property”

An oldie but a goodie. Watch out for old people. “We have another homebuyer interested in this property.” It’s invariably pollywaffle. The agent has his reasons for pulling this old chestnut out of the fire. The vendor may be getting restless or feel that there hasn’t been enough feedback on their property. They haven’t gotten enough offers, and the owner’s patience is wearing thin. When an interested buyer does come along, the agent plays this old song, hoping to entice excitement for the property. Other reasons might be that their exclusive authority period is looming. No agent is keen on losing their property listing to another agent as that’s a big bye-bye to their commission. When confronted with this strategy, the buyer should ask directly if a contract has been signed and given to the buyer. Most agents won’t lie about this since it is checkable with the vendor’s solicitor.

The Vendor Wants The Contract Signed Tonight

Vendors are rarely in a hurry to close out their contracts in a mad rush. They prefer to leave a window open to competing offers. When an agent pressures a buyer this way, they invariably have ulterior motives. One might be that they’ve received an amazing offer and are afraid the buyer might change their mind. Then there’s the possibility they have a hot date that night and don’t want to be interrupted by late-night negotiations. Many agents argue this helps them achieve the highest price for the vendor. Yet, by setting “mid-day” or “6 pm” deadlines, they’re unfairly disadvantaging other buyers. A buyer who legitimately can’t be rushed should add a clause in their contract along with a firm offer. Don’t let the agent muscle you away from making an offer. However, vendors prefer a sure thing. An unconditional offer in the same ballpark as yours will probably win.

We’re Happy To Present Advance Offers To Buyer before The Auction

Be wary when you hear this from a real estate agent because it’s probably a fib. The vendor would need a solid reason to accept offers before the auction happens. They might have a deadline by which they must settle the property, or their financial situation is tight. However, in the majority of cases, they’re dangling bait. They are testing the buyer to see what kind of offers they will make before the auction. You may inadvertently give them an insight into your budget, at which time they may cross you off a list. Ultimately, though, the agent is determining the kind of offers to expect on auction day. This information helps them advise the vendor on setting their reserve price. They might deliberately set it high. This might lead the homebuyer into a trap. A generous and emotional buyer may be duped into paying more than reasonable market value.

Don’t Trust The Agent With Legal Matters

An agent may try to get the homebuyer to sign a contract before their legal representative has looked it over. The agent might tell the homebuyer that “it isn’t necessary.” They may say something reassuring like, “It’s a standard contract; everything is fine.” If the buyer signs a contract under these circumstances, they’re making a colossal boo-boo. The agent is making the supposition that the buyer has already agreed to the requirements. Moreover, they cannot guarantee that the buyer’s lender will approve the title. Under no circumstances should a buyer entrust a real estate agent with legal matters. For a start, they’re working for the vendor, not the buyer. And they don’t have the legal authority. They’re not the vendor’s conveyancer or solicitor. Likewise, the buyer must ensure that all their requests are included in the contract. Then they must be signed and agreed to. Afterwards, it is too late.

Conclusion

Real estate agents will do what they think is necessary to clinch a property deal. If you’re a seller, it’s comforting to know your agent has tricks up their sleeve to secure a sale. You wouldn’t enter court over a serious matter if your solicitor lacked a creative streak. That’s the kind of loser guaranteed to bring you a negative verdict. Similarly, the property market is a tough negotiating ground. The homebuyer wants to pay the least they possibly can. A good real estate agent is only working for your best interests. It becomes a case of “buyer beware” for the homebuyer. They’d be lacking due diligence if they weren’t properly advised beforehand of what might occur. Everything is dependent on the quality of the real estate agent. If you’re selling your house and need an agent, Perfect Agent will find the perfect agent for you without charge. Contact us.