Understanding the real estate agent behaviours that buyers don’t like (Ep.77)

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In this week’s episode, Dave, Cate and Pete take you through:

Why would an agent leave a price tag off the listing? This comes down to understanding what is market centric for the area that you’re purchasing in. The trio reveal the reasons why the listing may not include a price tag and how this could present a hidden opportunity to take advantage of.
What is the psychology behind underquoting auctions? While this may cause endless frustrations for purchasers who repeatedly miss out, there are reasons why agents adopt this practise. The trio discuss some of the quirks of each state, what the legislation dictates, and how buyers can overcome this hurdle if it strikes.
Why do some agents talk in riddles when asked about a price tag? Ultimately, the agent does not work for you, their job is to get the best outcome for the seller. This means that you will be sometimes find yourself on the front line of many well developed, tried and true negotiation tactics.
Why is it naïve to assume an agent will negotiate exclusively with you? Whilst it may be frustrating to think you’ve put in a winning offer, only to find out hours later that another buyer has come over the top of you, this is the agent doing their job. The more people who are involved, interested and willing to purchase, the better outcome the agent will secure. Rather than being sour grapes about competition, buyers should be on the front foot, quizzing the agent prior to submitting their offer to explore how the agent intends to deal with any competing offers.
Why do agents shop around after receiving a firm offer for purchase? Encountering competition from other interested buyers is part and parcel of the home buying process. The trio share with you the tips and tricks you can use to minimise the risk of another buyer submitting a winning offer after you’ve already submitted yours.
What does it mean if an agent doesn’t ask for your offer in writing? The typical way to submit an offer, is by returning a signed contract with consideration. We share with you the reasons why an agent may direct you to hold off on submitting your offer in writing.
Why do buyers sometimes miss out on being notified when an auction property they were interested in gets sold before auction? It’s rare that this is because the agent is no good at their job. If you’re interested in a property, now is not the time to be playing possum! The trio outline what you should do if you’re interested in a property
Why do some properties get sold to someone else in a hurry, even after you’ve told the agent that you’re ready to put in an offer? The reasons are many and varied, ranging from the risk that you present, your past dealings and history with the agent or there are simply other candidates more fiscally desirable than you. The Property Planner, Buyer and Professor unpack what that means and how you can present as a rock-solid buyer with minimal risk.
And of course, our ‘gold nuggets’!

Resources:

Market update– the Property Planner, Buyer and Professor’s insights

Rent-vesting to make a comeback? With interest rates the lowest they’ve ever been and homebuyers looking at where they will purchase and what they can afford, we expect that rent-vesting will return with renewed vigour. Life is too short to live in a location where you’ll be unhappy and more people will turn to purchasing investments. It’s never been easier to find neutrally geared properties, to ensure your money works hard for you.
All capital cities have increased in the value in the last year. After the pandemic dust has settled and now all capital cities have returned to growth, all capital cities have recorded an increase in values over the last year. Perth just made it with 0.04% increase, and Melbourne with 0.7% despite the market retraction. Perth and Darwin in particular have been dragging the chain for years, due to the retracting resources market, so this is certainly positive to see. Some capital cities will, of course, go up faster than others.
Vic stamp duty concession The Vic budget has announced stamp duty concessions for any property purchases up to a value of $1M, with a stamp duty waiver of 50% for new residential properties and 25% for established residential properties. The offer will be available for contracts entered into between 25 Nov 2020 and 30 June 2021. This is another factor that we expect will drive strong value growth in 2021. Some questions are yet to be determined, for example, whether you can double up on concessions including first home buyer discounts.

Show notes

Why would an agent leave a price tag off the listing?
QLD – legislation they don’t need to put a price tag if it’s via auction.
VIC – sometimes it says contact agent
Understanding what is market centric for the area that you’re purchasing in.
There is a bit of art, it’s not always a science. Property is unique (most of the time – high rises excluded). Agent is representing the vendor and they are trying to get a better price, the price tag is left off so the beauty is in the eye of the beholder.
Have to go to extra effort to contact the agent and it’s probably more expensive.
Cutting out part of the market or the lazy part of the market or people looking for a bargain.
Competition could be diminished because of this as well, so if you’re a buyer, you could have less competition – take advantage of it.
Private treaty – you expect a price point or price guide, which gives you a closer understanding of what the vendor expects. But with auctions and Melbourne market being auction king, it can be like the magicians magic trick – divert your eyes and you miss. Not having a price tag on there, it keeps it more pure, it means people have to do the work that they should do anyway, look at the comparable sales, rather than relying on the third party who’s trying to get you to pay as much as you can.
It is a market place – randomly determined values by a group of people
What is the psychology behind underquoting auctions?
Quote it low and watch it go, quote it high and watch it die.
If a property is over quoted, if the vendor is conservative and says that they want this price, people look at a listing and assume that it will sell at the top or above, particularly here in Melbourne. You can lose buyers because you’ve put an accurate expectation there, because they’re assuming that you’re like everyone else.
In VIC an auction quote is presented as 3 comparable sales on statement of information, if those comparable sales are not comparable, they can get away with underquoting. If the quote range is low, they’ll attract lots of people. Everyone will see that there’s competition, lots of groups growing through, when buyers love a property and they see there’s lots of people getting in, they’ll find a way to get more money.
SA – trying to extinguish underquoting. If there’s an auction with a price of $500,000, the reserve cannot be more than 10% above that. But at least you know, at $550,000 they have to sell. But that can be set on the day, all of a sudden the price tag puts it out of their grasp.
Why do some agents talk in riddles when asked about a price tag?
Agents paid by vendor, fiduciary obligation to work for the vendor.
What is the lowest that they’ll go, they’ll be doing a disservice to the vendor if they just tell you.
It would be if an agent asked a buyer’s agent how high the buyer can go.
The agent is helpful, but they work for the seller.
They’re tippy toeing because they want to help you buy the property, but they don’t want to give away their cards because the vendor is paying them to get the post possible result.
It is a craft for a negotiator to get the best possible result.
The agent may be friendly, helpful, lovely, but they’re not on your side.
They want a great result to make the client happy, have a price tag out there that makes other vendors say wow that is a great price and they want the vendor to be a walking billboard for them.
Why is it naïve of a buyer to assume an agent will negotiate exclusively with them?
A negotiation will always run at its highest speed and get the best result, where there are multiple buyers involved. The agent needs to get as many people involved as possible, and that’s them doing a good job.
Why do agents take a firm offer and ‘shop it around’ to other interested buyers?
What does firm mean? An offer on a contract – you’ve signed it and there’s consideration attached – cheque or transfer by EFT. Once the agent has the contract, the agent will go out to any interested parties out there, to say that they have an offer, do you want to jump into the mix? You can try to minimise the ability for others to get involved by putting a time limit on your offer, but you don’t want to burn the offer by doing so as well.
This could be a text saying that if I don’t hear from you, this property will be sold by 5pm, could be an invite to a boardroom auction, could be that we have this offer, let us know if you want to beat it.
Will they let the other buyers know the price? If it’s an auction, yes. If it’s a private sale, they may not.
Is there competition? How long will it take to wrap this up? Does the competition have the same conditions I’ve got? The best way to go about it is by asking great questions.
How do you determine the time frame? How long have we got and how long will you let others know? They may say that the normal process is 24 hours. If I can give what the vendor is asking for, I’d like to close the offer in 3 hours, sometimes the agent won’t do it. Sometimes you can say that there is another property that you are going to submit an offer for if you are unsuccessful.
What would you do when someone is trying to negotiate a purchase, and show it’s a serious offer and the agent says, ‘no don’t worry about it, I’ll take it verbally’?
May be that they already have a signed offer, and you’re the buyer who is throwing their hat in the ring through the consultation process. If they are dealing with many clients giving an offer, they may just ask for a verbal or offer via text, for them to get the contract signed with the highest bidder.
The agent knows that the price you are offering is nowhere near the vendors expectation.
Why register for an auction but not make a bid?
People register to have a squiz, or they think they’ll have a go and they lose their mojo or didn’t do their research and undervalued the property.
If you are the highest unsuccessful bidder, you get first option to negotiate with the vendor.
If the property passes in, you can incorporate a condition for subject to finance.
What happens in a fast paced market and looking to purchase quality property, Melbourne and Sydney are the biggest markets with the most competition, so negotiations are fast paced and more intense.
Why do buyers sometimes miss out on being notified when an auction property they were interested in gets sold prior to auction?
The agent is rubbish and not doing their job – rare and less likely.
The buyer was not clear with the agent that they were interested. Don’t play it down, leave your phone number and tell them that you are interested. Please send me a contract and please keep me posted, if you play possum, you won’t know about it, you’ll just see the sold sticker.
On top of that, the agent may not tell you about other opportunities that have come onto the market.
Why do some properties get sold to someone else in a hurry, even after you are telling the agent that you are ready to make an offer?
You hear about these stories every now and then, sometimes an agent will sell a property to someone who represents more fiscal value. Eg: a trade in, a downsizer or an upgrader – they will get another listing from that buyer. Often people who are buying for the first time may get passed up for this reason.
If someone is easier to deal with or nicer to deal with, getting an agent offside is not in your interests.
If agent does not like your terms – high risk or not a strong buyer (eg: finance conditions).
It is not the real estate agent who gets the best price for their vendors that makes the most money, it’s the agents that sell the most properties, that means they are getting transactions done faster and more often.
Be nice to deal with and strong to deal with, you are a rock-solid buyer with minimal risk.

Cate Bakos – The Property Buyer’s Golden nugget: how to navigate the price conversation with agents, if you’ve done your homework and you’ve reverse engineered your search, pick out a couple of properties that have recently sold that you liked that were in your price point. Have a chat with the agent on how they feel this particular property stacks up to the ones you’ve chosen. You can then have a conversation with the agent to see if they feel the property is comparable, superior or inferior. You would then get a good idea of what the agent is thinking and the vendor.

Peter Koulizos – The Property Professor’s Golden nugget: you need to select your real estate agent. There are two categories, agents that you like to buy from and agents that you like to sell through.

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