When buying property, choose your friends wisely
When buying property, it's worth knowing whose side of the fence the real estate agent sits on and how to compete on an even footing.
Despite the cautionary advice we have all heard about the real estate profession, there are many occasions when participants are still taken by surprise and even feel betrayed by the actions of agents.
So, it bears repeating: an estate agent represents the vendor and is not the prospective buyer’s friend nor confidante.
That’s not to say one should caricature agents as sneaky and untrustworthy. Most are professional, but you can only blame naivety and inexperience if you end up feeling betrayed by an estate agent because they sought an advantage for their client from something you let slip.
Now while it’s important not to be overly trusting, that doesn’t mean going into lock-down mode. Keep the channel of communications open and active.
If you like a property, it is in your interest for the agent to know. Otherwise, they could sell it – and this happens frequently – without you being given the chance to make a counter-offer.
Take control of the discussion with an agent from early on in the sales campaign.
Ask pointed questions of the agent, questions like; What’s the quote range (if it isn’t listed in the sales material)? What comparable sales have been used to determine the quote? How many other parties are interested? In what price range is interest sitting? What is the vendor hoping for?
Your questions can cut out much of the game-playing and allow you to ascertain whether you are a chance with a property.
It also takes the initiative from the agent and reduces their opportunity to probe you with their own questions designed to reveal your budget such as; What other properties have you been looking at? (your answer: oh, this and that) Or, more cheekily, What’s your budget? (your answer: oh, it’s pretty broad).
From the agent’s answers and tone, it is often possible to gather a sense of whether they are expecting the final price to fall within the quoted range or sit well above it.
Make a note of the answers you receive because you should repeat many of the questions later in the campaign, as the process can reveal a shift in the agent’s level of confidence.
Research is crucial
Your own research will also help you validate or mark as dubious an agent’s claims.
Your efforts must be a combination of keyboard and shoe leather research. Collect the weekend auction results, analyse recent sold prices on the real estate websites and attend lots of auctions and open for inspections in your target area.
Don’t be too hard on yourself if these efforts don’t immediately deliver a return.
Realistically, most buyers misread the market initially and it often takes one or two unsuccessful attempts to purchase before they wise-up to the rules of the game. But your objective must be to truncate this education.
You may even find that your homework will eventually allow you to turn the tables on an unscrupulous agent. There’s nothing more delicious than starting a negotiation with an agent after a property has been passed in to you comfortably above the top of an absurdly low quote range and then hearing – not unexpectedly – that the owner’s reserve is much higher again.
This is when the disconnect between the quote and the vendor’s higher reserve gives grounds to ask questions about judgement and ethics and subsequently corner an agent into agreeing a price that is substantially below what the vendor ideally wanted.
Agents, beware the wise buyer.