3 Golden rules for dealing with real estate agents when buying
Do you get nervous when it comes to dealing with real estate agents when buying? You twitch? Babble? Reveal personal info you’d planned to keep hushed?
It’s hardly surprising. They don’t always play by the book, after all.
The truth is, most agents are nice, reasonable people with professional reputations to uphold. And the truly great ones understand that buyers are just as important to them as sellers. But, like most industries, there are also some occurrences of dishonesty and intimidation. So, it’s hardly surprising many people feel daunted about the prospect of dealing with real estate agents when buying.
The good news is, there are a few steps you can take to boost your confidence and strengthen your negotiation stance.
Here are 3 Golden Rules to keep in mind:
1. The real estate agent represents the vendor, not you.
An agent’s goal is to get the highest possible sale price for their client. Your goal is to secure the lowest price. Don’t be fooled into believing the real estate agent is your new best friend (no matter how wide their smile).
2. Knowledge is power.
Most real estate agents work for a commission so the higher sales price they secure, the more money they make. Sometimes they use sales tactics that can be a little underhanded. This is why knowledge is power. Research and understand your market including similar property sales in the area and you won’t be so easy to manipulate.
REALas can help with our realistic price predictions, which average 5% off actual sales prices.
3. It’s a business transaction.
As a buyer, it’s easy to become emotionally attached to a property, especially when you’ve found your dream home. But emotions are dangerous when negotiating such a significant transaction. After all, getting the right deal plays a big part in your financial future. If you’ve presented your best offer and you weren’t successful, walk away and move onto the next property. Let your emotions get the better of you and you risk paying an over-inflated sales price.
The top 8 questions to ask a real estate agent
So, with your 3 golden rules tucked securely at front of mind, you should feel more confident when dealing with real estate agents. But what questions should you ask them about a property that’s peaked your interest?
1. Why is the vendor selling?
Understand the vendor’s reason for selling and you may strengthen your negotiating position. If they’ve already bought another property or have to move overseas, for example, they have strong motivation to sell.
2. How long has the property been on the market?
If the property’s been on the market a long time, it may be an indication it’s overpriced. A property usually sells within 6 weeks. If it fails to sell, there’s usually a reason behind it.
3. What are the settlement terms?
Come settlement day, you’re expected to pay the balance of the purchase price and take possession of the property. The settlement period begins from the day you sign the contract. 60-day settlements are the most common, but you can also negotiate for 30 or 90-day settlements (if the vendor is flexible).
4. Are there any property defects I should know about?
A vendor is legally obliged to reveal any defects that may affect your decision to purchase a property. Unfortunately, it doesn’t always happen this way. If you’re serious about a property, it’s not a bad idea paying for a building inspection – while they won’t reveal small faults associated with things like appliances, they should highlight any major structural defects or hidden problems that could be costly down the track.
5. Can I have a copy of the property sales report?
A property sales report will reveal whether the price is justified by showing a comparison of similar sales in the area.
6. Does the property have any serious interest?
If you’re keen on a property, you want to know what your competition’s like. The problem is, an agent may overplay or underplay the level of interest to suit their agenda. Another way to gauge the level of interest would be to ask how many Section 32s have been requested or whether any building inspections have been carried out.
7. What’s the vendor’s reserve price?
While a vendor doesn’t have to reveal their reserve price, it’s worth asking the question. Keep in mind, it’s illegal for a vendor or agent to quote a price lower than the reserve – this is what we call underquoting. While the sales price can soar well above the reserve if a property is in hot demand, knowing the reserve in advance will mean you’re better prepared for auction.
8. Can I have a copy of the contract?
This is a legal document providing important information about the property (including building permits, covenants, zoning restrictions etc.). Ideally, you should hand this over to your conveyancer or solicitor so they can identify anything unusual.
As with most things, experience and confidence come with practice. Once you’ve bought and sold property a few times, you get to know the game a little better. The most important thing is you should never let yourself be bullied or manipulated into making a decision you’re not comfortable about.
OVER TO YOU. Do you have any handy negotiation tips to share when dealing with real estate agents?