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How to Outsmart Real Estate Agents: Tips Every Buyer Should Know!
153 Plays24 days ago
Ever wonder who real estate agents really work for? Spoiler: it's not you, the buyer. In this episode, we pull back the curtain on the real estate industry, showing you the tricks of the trade and how to avoid being outplayed. From handling vague pricing to staying calm under pressure, we'll give you the knowledge you need to avoid common traps, build rapport, and negotiate like a pro.
Ready to explore your options? Get a free assessment from the experts at Hunter Galloway: huntergalloway.com.au
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Transcript
Trust Issues with Real Estate Agents
00:00:00
Speaker
How to deal with real estate agents? Should you assume everything the real estate agent tells you is a lie? Are they parasites to be treated with the utmost contempt? Or should you go completely the other way, be completely upfront, tell them your full budget, just mention you don't have a pre-approval gosh about how much you love the property and that you pay anything to get it?
00:00:18
Speaker
Yeah, probably not that second option. But the truth is buying a home in Australia can feel like the odds are stacked against you as a buyer. I mean, wouldn't it be nice if when you finally found your dream home, there was just a sticker price on there, you like it, you're good to pay it, shake hands with the seller and it's yours. But that's not the reality. In Australia, real estate agents are the gatekeepers to nearly every home sale. And to make matters even more complicated, you've got to deal with multiple offers, vague pricing, undercoating, FOMO and prices hitting insane levels.
00:00:44
Speaker
So if you're buying home in Australia, there's no straightforward ticket price, no direct-to-sell model, and you're gonna have to deal with real estate agents. But don't worry, I'm gonna arm you with the strategies, scripts, tactics you need to handle agents confidently. I'm gonna break down the exact tactics they use, how to navigate vague pricing, handling underquoting, and by the end, you're gonna know exactly how to play the game and win.
00:01:06
Speaker
Welcome to the Buying Your First Home Podcast, your personal guide through the Australian housing market.
Introduction to Home Buying Podcast
00:01:11
Speaker
Here we tackle the big questions and the small details that come up when buying your first home. From financial prep to finding the right neighbourhood, we're here to ensure that you've got all the knowledge at your fingertips. So let's take the first step towards unlocking the door to your new home.
00:01:31
Speaker
All right, first up, let's address a fundamental question. Who do the real estate agents work for? Real estate agents are hired by the sellers and not by the buyers in Australia. This means they're legally obligated to represent the seller's best interest and strive to secure the highest price possible for their client's property.
00:01:46
Speaker
And although they need to treat all parties fairly and honestly, their prime loyalty lies with the seller. I think the understanding of this small but critical thing is really important when we're going through these strategies and tactics. Agents at the end of the day are trying to sell a property and their tactics, whether you like them or not, are aimed to sell the property. The process can feel frustrating, it can feel unfair, but don't let that stop you. You need to focus on what you want and don't worry about the agent's tactics.
Motivations and Tactics of Real Estate Agents
00:02:10
Speaker
And I'm not going to bang on this much further, but just keep in mind that the agents are always working for the seller and not the buyer. It's easy to get caught up in a friendly conversation with agent and think, well, they're trying to help me out. They want to get the sale. They'll just, I'll just give them a couple of extra facts. I'll tell them my budget, some info there, but this is where things can go wrong. At the end of the day, real estate agents make their money through commission, which is a percentage of the sale price. And the higher the sale price means the more money they potentially earn. And this is where it can sometimes get a little bit complicated because it can not only be the sale price they care about, but the speed of sale.
00:02:39
Speaker
For an agent, a quick sale is an easy sale. It means they can move on to the next listing and keep selling more properties and more commission. And as we'll cover in this video, sometimes a higher offer isn't necessarily the best offer. I've seen countless cases over the last few months where buyers have missed out on having an offer that was maybe five or ten thousand dollars more than the best next offer.
00:02:57
Speaker
but they were beaten by an interstate investor or an upgrader who was able to waive their finance terms, remove their billing in pairs, and move a lot faster. We're going to come back to these strategies, but what are some common tactics you're going to see? Since real estate agents are in the business of getting the best possible deal for the seller, they're often going to use different tactics and strategies to get this outcome. Being aware of these tactics are going to help you navigate the negotiating process and protect your interest at the end of the day. Let's break down some of these tactics so you can recognize and respond to them appropriately.
Identifying and Handling Underquoting
00:03:24
Speaker
Underquoting.
00:03:25
Speaker
This is where an agent advertises a property at a lower price than its actual market value to generate interest and competition. Years ago, a favorite saying of a lot of agents is this, quote it low, watch it go, quote it high, watch it die. Now, let me be quite clear. Underquoting is completely illegal in Australia. You can report it to the Office of Fair Trading and different avenues, but unfortunately, it still exists in today's market. As a buyer, it's important to be aware that underquoting does take place.
00:03:50
Speaker
I'm not justifying it at all, but if it occurs, it's important to have a bit of a pragmatic approach to it. How do you actually spot it? The best way to spot it is doing your own research and comparable sales in that particular area. Look at recently sold properties, literally in the last one or two months to gauge a realistic price. If the advertised price seems a little bit too good to be true, it could well be.
00:04:09
Speaker
At the end of the day, the aim of underquoting is to create a bit of a bidding war driving up the final sale price. PropertySeek is a good plugin to get around this. Again, I'm going to come back to that. It shows you the listing price in the category. We're going to go through that a bit later in our strategy. Taxi number two is vague pricing. Here's where agents avoid giving you a clear price guide, often giving you really broad or non-committer language.
00:04:29
Speaker
This can be as simple as asking the agent, well, how much are they chasing? And they'll say, well, we're looking for offers over this. Are they were thinking, you know, this sort of budget? Or they might even say the price is subject to the market's conditions. This really puts the owners back on you as a potential buyer to tell the agent potentially what you're willing to pay. And they're going to suss you out and say, well, if Jaden's offering this much and they've got a buyer over here, I'm probably going to work with them. They've got more budget.
00:04:51
Speaker
Here's a good example on this property in Annerley. It's listed as offers over $1.6 million. dollars But having a quick look at recent sales in the area on same blocks of land shows that most sales for 810 square meter blocks in Annerley are selling for $1.8 million dollars plus. That's a little more than offers over 1.6.
00:05:07
Speaker
Again, research is key here. um Understanding your area and really narrowing down to your three top suburbs help you beat out on vague pricing. Tactic 3 is FOMO. Fear of missing out is a powerful tool agents can use to create a bit of a sense of urgency. They might tell you there's other interested buyers or that offers are imminent to press you into making a quick decision. I had some clients that recently contacted me. We've helped them with their pre-approval and they're ready to go. They'd found the perfect home. It was a 60 year old unrenovated Queenslander.
00:05:34
Speaker
ripe for a bit of TLC. They'd been looking for six months solidly and this home ticked all the boxes. They thought it was within the budget, put their offer into the agent. The agent was doing a best in finals offers by 5 p.m. Friday. They spent days agonizing on you for how much to offer, what the sort of conditions should have been, and where they were going to be. The agent kept hustling them saying, well, there's another offer here, you better be quick, you're going to miss out, put your best in final foot forward before it closes. In the end, the property sold for almost $300,000 more, the advertised range.
00:06:01
Speaker
and way over my client's budget. Agent was able to drive up the price without having to put the property up for auction. The best way to avoid FOMO is trying to stay calm and sticking to your budget. Again, do your research, work out what you think the property is worth, add a bit of buffer there and just be prepared to walk away. The next one I see is pre-auction offers.
Negotiation Strategies with Agents
00:06:20
Speaker
You might have found the right home, it's going to auction, and a week or two before the agent calls you and says, hey, Jayden, we're accepting pre-auction offers. How about you put a little offer in and see if you can get it before the day of auction? What they're really saying is, hey, Jayden, I'm trying to suss out the market, work out your budget and gauge what the maximum price we should set for reserve is.
00:06:37
Speaker
There's also a secondary point that they won't really tell you is that the sellers are only going to accept a pre-option offer r if you do auction conditions. That is, you waive your finance and waive your building and pass, which can put you under pressure to kind of quickly do your building and pass inspection a few weeks out from auction. Here's how it'll usually go down. You might receive an email from the agent saying the vendor was seriously considering offers before auction. They might ask you to submit your best offer if you're serious.
00:06:59
Speaker
And off you go. You'll send your offer to the agent. Well, the agent might say, well, you're among some of the best offers, but it's difficult to estimate and we're waiting for everyone else to respond. Agent might come back and say, well, there was unfortunately another offer that was higher than a whisker and you just missed out. You might have moved it back and forth, increase your offer. Then the agent might come back and say, well, actually, the sellers have decided to proceed to auction. All the agents done there has received the top three or four offers from you, someone else and someone else to try and gauge what the seller should put their reserve at.
00:07:26
Speaker
Generally, the seller's only going to accept a pre-option offer if it's something way above what they're expecting. All right, so that's what you're going to see, but how do you counteract some of those strategies? Well, I'm going to take you through some negotiating strategies to successfully beat or win the real estate agent game. My first piece of advice is build rapport. Now, I was only kidding about the parasite comment. I was obviously from Reddit. It's not my opinion. I have a lot of agents that are friends. So when you're buying a property, though, burst impressions do matter and just being nice to the agent can go a long way.
00:07:55
Speaker
There's nothing wrong with showing genuine interest in a property and asking questions to find out more information. Realistically, if the agent likes working with you, they're going to be more inclined to advocate your offer. Even if you tell them a bit of background, yeah, my kids and I have been looking for a home for the last six months. We've missed out on this one. We've missed out on this one. We're looking for a family home. I think this one would suit us.
00:08:12
Speaker
That can help go a long way with sellers in the current market. Keep in mind though, as per my first tip, the real estate agent works for the seller. You don't want to be going away and giving out your full budget saying, well, actually, we're quite stretched at $800,000 when the seller might know, well, we want $900,000 or $1 million. dollars But at the end of the day, building a little rapport with the agent, even smoothing them to a degree, can help you put your offer towards the front of the pack.
00:08:36
Speaker
My next piece of advice is comparable sales. Recent sales are the gold standard in helping you work out what the property is worth. This is as simple as going on real estate or domain, pressing the sold section, putting in your suburb and looking at sales in the last three months. You want to look at the same bedrooms, the same land size or if it's a unit, same bedrooms and bathrooms and working out what you're potentially going to pay for this property. Try and keep a emotion out of this. You need to look at the properties, look at the types of improvement.
00:09:01
Speaker
If the home you're looking at is very original, has old bathrooms and look at similar properties like that, there's no point comparing it to a brand new home. And the count is true if you're looking at something that's been recently renovated. There's no point comparing it to a 100 year old home. These sales are going to give you a realistic idea of the property's value. Again, once you've identified those comparable sales, adjust for differences such as land size, condition, location to make a reasonable and informed offer.
00:09:23
Speaker
Number three, identify weaknesses. No property is perfect and during inspections, pay attention to any flaws in the property or areas needing repair. These weaknesses can be valuable when you're negotiating, allowing you to justify a lower price. Honestly, if it's the right home, be that annoying person. Turn on every switch, open every cupboard, try the oven, test it on and off because at the end of the day, once you bought it, you own it. It's going to be your problem. Checking all these little things can help you justify any discounts after you've got the plates.
00:09:49
Speaker
I've even had clients that have had the property on the contract subject to finance and building a pest, done the building a pest report and found out, well, the roof has, you know, hail damage or issues on that and being able to negotiate the price after building pest inspections done. Keep that in mind because every dollar is going to matter for you once you own that property. Next tip, put it in writing. In real estate, verbal agreements, what you say out loud doesn't count for anything. Make sure you put every offer, counter offer, and ingredient point offer in writing. I case recently where a friend of mine bought an apartment and had agreed with the real estate agent, hey, like we're going to keep that table out the back, right? There was a beautiful wooden oak table that was on the back deck that he thought was going to come with the property. The agent verbally said, yeah, mate, like that's definitely going to stay here, no problems at all.
00:10:30
Speaker
After settlement, he went and checked out the home and lo and behold, the table was missing. The agent said, oh, sorry, mate, it wasn't in writing. It wasn't in the contract. There's nothing I can do now. As much as that sucked for him is a good lesson to learn. Everything needs to be put in writing. And lastly, be prepared to walk away. I think this is where investors always have a bit of a leg up on owner occupies or people buying homes to live in is that they're always prepared to walk away. If the numbers don't stack up, see you later. I'm going to find another one. There's always another property around the corner.
00:10:56
Speaker
It can be really hard when you're emotionally invested, you've taken your kids to the property, they've picked out rooms, you've started looking at the neighborhoods, you've met the neighbors across the fence, you feel like this is going to be your home forever. At the end of the day, if you can't afford it, if it's not going to work, you have to reassess and look at the next property. Or if it goes for much more than you need, that's when you need to be prepared to walk away. Remember, there's always other options and this mindset gives you a bit more confidence and a bit of an edge when you're negotiating.
Benefits of Hiring a Buyer's Agent
00:11:21
Speaker
And if you're feeling like this is too much negotiating with the real estate agents, having to deal with inspections, all that sort of stuff, there is also the service of the buyer's agent. They work on your behalf. um Unlike the seller's agent, a buyer's agent works for you, the buyer, they've got your legal interests represented and they can help you with negotiating, doing the research and getting the home for the right price. Listen, at the end of the day, it can feel really hard if you're in a hot market.
00:11:43
Speaker
It can be all stressful and overwhelming when you're dealing with a professional negotiator, a real estate agent on the other line that ultimately is working for the seller, the other party. Like I mentioned, it can feel like the odds are stacked against you as the buyer and you're not sure what to do. It can feel really frustrating with all these games. At the end of the day, you don't want to lose your house because you're too concerned about the games you think the agent's playing. There's really no winning in that game. If they sell the house to someone else to move on, the agent's not going to be thinking about your impressive bluffing moves.
00:12:07
Speaker
At the end of the day, you want to be polite, honest, and firm with your responses to the agent. They're going to respond in kind because they're going to prefer to sell to someone that's a bit simple, logical, and straightforward to work with rather than someone to be too tricky in playing with all these tactics. Really, the point is to make you aware of what is out there. It's not to say all agents are bad. There's definitely some really good agents that are going to work and help you out potentially more than others, even though they're working for the seller. It's just being aware of what is out there, some of the tactics that are used in the current market, and ways to combat that.
Research Tools for Home Buyers
00:12:35
Speaker
Like I mentioned, some really good tools that you can use a property seeker on Chrome. So that shows you the advertised price range. So save for those properties in Annalie, it says it's advertised between 1 to 1.5 million, at least to give you a bit of an understanding on where they're advertising the property in the range. And even price study, another one that shows the price per square meters, how many views the listings had, and has a couple of quick things like walk score to compare the properties.
00:12:56
Speaker
At the end of the day, you can have all these different digits and gadgets, but research is going to be key. Understanding the recent comparable sales of what's sold in the area in the last three months is going to help you work out what they want for the property. Buying a home can feel complex, but that's where we can help you out at Hunter Galloway with a home for home buyers across Australia. We're mortgage brokers based in Brisbane. We help people all around Australia. If you need help with finance, hit us up at huntergalloway.com.au. And until next time, I'll see you guys.