According to Google users:
- Real estate agents are scum
- Real estate agents are useless
- Real estate agents are liars
- Real estate agents are crooks
The major myth in real estate concerns who is acting for whom. The real estate agent acts for the vendor, not for you (the buyer). In trying to achieve the highest possible selling price for the vendor or seller, an estate agent may give prospective buyers incorrect information or keep back other information that might negatively influence a sale. Clearly, people wanting to buy a property will always be at a disadvantage if they are not aware of all the facts.
How can you avoid becoming the victim of a real estate agent’s or auctioneer’s games? Your challenge is to see through the exaggeration, the ploys and games that are used, and ultimately find out what is true and what is false. Don’t rely solely upon the agent’s information; if you want to get the property for the right price you need to carry out your own research. Buying property is a ‘game’ and one in which the stakes are very high. Each state has its own set of rules for selling and buying property, and mistakes can be extremely costly for those who are uninformed or poorly advised. Unfortunately, the general public don’t always understand the games that are being played. It is not just buyers who are taken for a ride; there are many disillusioned sellers too.
One of the most common questions I hear is: “Why can’t you get a straight answer from a real estate agent?” If you think about it, agents are in an impossible situation; they have to promise owners a good price in order to get the property listing (over-quoting) and they have to quote prospective purchasers a lower price (underquoting) to get their interest in the property. Underquoting and over-quoting are two of the major issues that state governments are currently addressing in their efforts to clean up the real estate industry. But it’s similar to the young boy who put his finger in the dyke: these efforts have resulted in putting a bandaid over something that needs stitches.
Estate agents live by the motto, ‘Quote ’em high and watch ’em die’ or, in the case of auctions, ‘Quote ’em low and watch ’em go.’
With private sales and set sales, the rules change again. For example, you may offer $650,000 for a property, but because the selling agent is not the listing agent, your offer is passed on to the listing agent, who then takes it to the owners, but actually only offers them $580,000 and, of course, you are unaware of this. This is ‘secret business’ and you don’t buy the property. Owners wonder why they are not getting offers in the price range they want, even though 200 people have inspected the property. Conditioning owners to accept a lower price is part of the estate agent’s role. In other words, the agent now has to educate the owner to be prepared to accept a lower price that was originally proposed when the agent first obtained the listing.
People also ask: ‘Why can’t I buy the property? Why can’t it be simple?’ Well, do you have a house for sale? This is one of the first questions an agent will ask you when they meet you. They are not so much interested in you buying the particular property you are looking at; they are interested in the domino theory, that is, what’s in it for them in the future. In other words, they want your house that is for sale. So, if you have a house for sale, you will be in a better position with the agent as far as your offer being acceptable to the owner. My advice is to always suggest to the agent that you have a house for sale. The agent isn’t necessarily always telling you the truth, so only tell them what you can use to your advantage. The aim of the game must always be to win and buy the property for the cheapest possible price.
When you think of an agent, do not think of them as our best friend. The agent is not there to help you: in fact, you are only an instrument for them to make money. Therefore, do not tell the agent anything more than you need to. Do not tell them your family history, the various properties you have been bidding on and so on. Guess who is discussed at the sales meeting at that real estate firm the next Tuesday? The agent has claimed you in the office as their buyer. Suddenly you’re news to the whole network. Your name is put on computer files, simply because you have been talking to an agent at an open for inspection. Suddenly the whole world knows how much you have to spend. Other agents in the network stop offering you properties and, as a consequence, you only see half the properties that are on offer.
It is amazing that so many people give out their telephone numbers when asked by agents, although they have no interest in purchasing that property. Agents don’t want your telephone number so that they can ring you back if the property looks like selling; they want your phone number so that they can get your property for sale and lay claim to you as their client.
The real estate agent is one of the unpredictable factors in the real estate equation. If you look up a dictionary, ‘agent’ means ‘representative, deputy, intermediator, surrogate, broker, ambassador’. On the other hand, if you talk to the general public, they claim real estate agents are thieves, deceitful, don’t tell the truth and often don’t work very hard. As a prospective buyer, you must always remember that agents represent the opposition. They are not being paid by you and do not work for you. Yet many people believe that the agent is helping them, supposedly giving them preferential treatment over other buyers, even though the agent is being paid by the vendor. It’s like giving Dracula the key to the blood bank.
However, there are some very good real estate agents who are good at matching buyers and properties. I would say that 20 per cent of agents are really good, and of that 20 per cent, 10 percent are exceptionally good agents, who have the ability to place the right buyer with the right property. In other words, they can put the pieces of the jigsaw together. They are good negotiators, they are able to obtain the highest possible price for their clients, they use experience rather than deceit to obtain those goals, and they get repeat business and referrals from clients and even purchasers. They are aware that purchasers ultimately become vendors at some point in the future.
Successful real estate agents tend to focus on what the buyer will pay, not on what the seller will sell for. However, most agents just want to find out what price the owner will accept, sell the property and then move on to the next one. They are not interested in going the extra hard yards to secure another 5 per cent for their vendor. Then they often wonder why they don’t get repeat business.
Good agents are often the principal or director of the real estate company. If a salesperson is really good, they will be working for themselves. So, when negotiating to buy or sell property, make sure you deal with the decision-makers. A good agent will keep their clients for life and build relationships with them and their friends. Some homes sell really well and some homes don’t, and while each property has its own merits, some properties are actually ‘sold’, while some just have the door opened by ‘house ushers’. It is not difficult to hand out brochures, write down people’s names and hold an auction, but is this how a really good campaign is managed to achieve the highest possible result?
In my role as a buyer’s advocate, I estimate that 70-80 per cent of properties are sold below their true value, other than those that are sold at auction past their reserve. This can be brought about by poor advice, or inexperienced or dishonest real estate agents double dealing with clients. What is a property really worth, especially if you are going to live in it? How do you decide that it is worth a particular amount? You need to think about what the property is worth to you. I find that clients are often prepared to pay more than the numbers represent. It is one of the many mysteries of market forces at work.
When buying a property, trying to get a handle on all of these elements is the key. Many people take a lifetime to try and understand real estate; clever ones can sometimes take only weeks. But don’t be naive about real estate, do your homework.
To really understand the myths of real estate you have to be able to control the process, whether you are buying or selling, and even more importantly, to control your emotions. If you don’t have your emotions under control, you are likely to end up as the next dinner party horror story.
– David Morrell