Feel like a rabbit in the headlights? The tricks first home buyers should guard against

By Johanna Leggatt

Be vigilant when real estate agents try to create a sense of urgency, or make vague, indistinct statements. Photo / File
Be vigilant when real estate agents try to create a sense of urgency, or make vague, indistinct statements. Photo / File

You know the agent in the really nice suit, driving the European car and asking you questions about what team you support?

The one that seems less like a snake oil salesman and more like a mate you could have a beer with at a barbecue?

He is not your friend.

He may be a nice guy, he may even be a genuinely ethical agent, but at the end of the day he is working for the seller and not you.

And if you're a first home buyer, ill equipped to deal with the sales tactics of an experienced agent, you are primed to be ripped off.

"First home buyers are like rabbits in the headlights," said practising Australian agent and founder of Agent in a Box Craig Heppell.

"Most of the agents are ethical, but there are some who will sniff first home buyers out and take advantage."

CREATING URGENCY AND FEAR OF LOSS

According to Andrew Blachut, the director of Australian agent-assisted private sales business Property Now, agents exploit two emotional hotspots: urgency and fear of loss.

"They will create urgency by saying that this area is going up and if you don't buy something now you will miss out altogether," he said.

"Or that if the home doesn't sell soon, the buyer is thinking of taking it off the market."

Urgency is inextricably linked to engendering a fear of loss, Mr Blachut said.

"Fear is created by suggesting to the buyer that another offer is on the table," he said.

"In this case, buyers need to ask when the offer was made, how much it was for and whether the vendor is accepting it.

"If the agent will not give any details of the offer, you are within your rights to say that if he or she cannot be a little bit more specific, you are not prepared to take it (the supposed offer) seriously."

VAGUE AND MISLEADING STATEMENTS

Vague, indistinct statements are the staple trade of some agents.

According to Mr Blachut, agents will sometimes declare that another house nearby sold for a "record the other week".

"You need to ask what they mean by a record, was it a record for the house because it was the first time it was ever sold?" he said.

"Or they will say that the area is about to be rezoned by council and in a few years you could fit 16 houses on the block.

"Well, that may not be the case and even if it is rezoned, there is a lengthy council approval process."

Mr Heppell said agents will often list price ranges in a way that is deliberately opaque. It is not uncommon in Melbourne, for example, to see a home listed from a certain price "and over", which can be extremely misleading.

(This practice is outlawed in NSW, where a distinct price range is required).

"It could be that the vendors have outlandish expectations and what they want is quite a bit more than the starting price, but the lower starting point helps attract greater interest," Mr Heppell said.

Mr Blachut said buyers also need to look out for "rental appraisals" by agents who suggest the investment property could be rented out at a certain figure (it may be much lower).

TRICKS TO GUARD AGAINST

Then there are those agents who take sales tactics and negotiation techniques to new lows.

Australian investor Nathan Birch has a fair degree of sympathy for agents and thinks many of them get a bad rap, but he has also come across a handful of bad apples.

"I was dealing with an agent who did not disclose that a house had an active termite infestation," he said.

"We only found out once we paid for a building report."

He also recently overheard an agent in a cafe lying to a potential buyer about being at an open home with lots of people wanting to make offers.

Mr Blachut said some of the more audacious tricks of the sneaky minority include asking friends and relatives to attend open homes and gush over the home's attractive features, as well as dummy bids at auctions.

"The agent may place a friend who knows their reserve in the crowd to push a price higher or even to lowball an offer to condition the vendor," he said.

"It's illegal but there is no doubt it happens on occasions."

So how should buyers guard against unscrupulous agents?

The best approach is to watch for the overly talkative agent.

"You start to get a feel for agents after a while, and the overly talkative agent who does not fill in any of the gaps in your knowledge of the property often has something to hide," Mr Heppell said.

"Look for agents who ask about your situation, who shut up and listen."

Mr Blachut said the golden rule to dealing with agents is to be vigilant.

"Only believe what someone tells you if you can see and prove it," he said.

- news.com.au

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