One of the things that really irks me about the real estate industry is the games real estate agents play with buyers.

As part of our service to our sellers, we assist (or coach) our sellers when they are purchasing their next property in negotiating the best possible outcome for them and we assist them in analysing the properties that they’re interested in to determine what value we believe is fair and equitable.

Right now, we have a number of our clients dealing with many different agents in many different areas and the lies they’re being told is just out of control.

If you follow my blogs, you’ll have a pretty strong idea that I’m not an agent that likes to auction properties unless we’re in a booming market and we’re very confident that there will be huge competition between buyers with very little stock on the market – under these conditions, an effective auction can achieve an outstanding result.

But in a market where there the buyer numbers are limited and there’s a reasonable amount of comparable stock on the market, many agents seem to use the process to manipulate the sellers’ expectations and do anything they can to obtain a sale.

Here’s an illustration of this point that happened to one of our clients only last week…

Our client (I’ll call him “David” for the exercise here but that’s not his real name) inspected a property in an inner-city suburb of Brisbane and was very keen on the property.

It was going to auction but for a strange reason, the auction was postponed for 2 weeks (I say ‘strange’ because the agent informed David that the auction was postponed because there was “a huge amount of interest”).

I would have thought that if an agent postponed an auction, it is usually for the opposite reason but perhaps I’m missing something here.

Leading into the auction (one week prior), David was encouraged to make an offer as he was prepared to make an offer that was completely unconditional in all respects.

He signed a written offer of $1.3 million.

At this point, he asked me to do some research on the property and I won’t go into a lot of my research but the one thing I noticed about the listing online was that the agent listed the ‘silent price’ at $1.75 million.

For those that don’t know, a ‘silent price’ is a figure that an agent must place into the ‘back end’ of a real estate portal so that the property appears in the correct search criteria to enable the right buyers to see it.

Many agents will load the ‘silent price’ a little less than what an owner is seeking (due to the fact that a lot of buyers will exceed their budget and also because the property will hopefully to represent value to willing buyers) but it is highly illegal for an agent to load a ‘silent price’ that is more than 10% lower than what an owner is expecting to achieve.

In saying this, it is very hard to police and many agents break this rule with blatant disregard.

So, here’s where the games began for David.

After making his offer, he heard nothing back from the agent – not a word for several days!

He was legitimately keen on a few other homes and he wanted to know if he was wasting his time or whether his offer was being seriously considered.

He finally heard back from the agent and was told that the owner wouldn’t accept the offer but that his offer was “the highest so far and he was easily in best position to secure the home”.

Naturally, he and his partner were very excited.

They gave up looking at the other homes that suited them and focused all their attention on this home.

He was informed that the owners were retirees and were desperate to sell it (given they built the home 20 years ago and paid next to nothing for the block, I suspected that this was a lot of tripe, but David was hopeful).

I told David that I suspected the owners were wanting at least $1.8 or $1.9 million for the property…perhaps $2 million but he had his sights set on the fact that he must be close because of what the agent told him.

He was prepared to pay a little more for the home but certainly nowhere near $1.8 million.

I told him that I thought he was likely wasting his time and that the agents were playing him.

Auction night came and the property was passed in without a bid…and he was registered to bid if the moment had arisen.

Surprisingly, he was told to wait at the auction (as their other properties being auctioned at the same time) and after another hour, the auction kicked off again with competitive bidding.

Again, it was passed in and David made his highest offer which was $1.56 million.

He was told that there was another buyer that made an offer of $1.7 million (subject only to 7 days finance) and he was asked to increase his offer.

He suspected that this was also a load of tripe as the agents at the auction didn’t seem to chat to anyone else about this home except him.

They asked him again to put his offer in writing which he did.

I was on the phone to him during this process and told him that I didn’t believe that there was an offer of $1.7 million as any seller with half a brain would wait for an extra 7 days for another $140,000.

Meanwhile, there’s no doubt that the agents were working as hard on the other end at bringing down the expectations of the seller quickly.

We advised David to withdraw his offer formally at 9:00 AM the next morning and he was told that if he did, the other buyer would likely buy the property…and David did withdraw the offer.

More than a week has passed and now the property is still on the market, listed at “By Negotiation”.

What annoys me about this sort of behaviour is that David was given false hope that he had a chance of purchasing this home (actually, more than a ‘chance’ as he was told that his offer was the highest – a really stupid thing for the agent to say as it tells the buyer that no-one is prepared to pay more at that point…so the buyers naturally ask themselves “Have we offered too much?”)

They had their heart set on owning this home and had hours upon hours of their time completely wasted when they could have spent that time looking at other properties in their price range.

Many agents will present offers that are much lower than the owners’ expectations (such as $1.3 million) prior to an auction so that the owner is ‘conditioned’ to consider an offer a little bit higher (such as $1.56 million) when the pressure of the auction is at boiling point.

But clearly, their offer was being used as a tool to bring down the expectations of the seller…which likely hasn’t worked as the ‘silent price’ is still set at $1.75 million.

And here’s another kicker…out of sheer co-incidence, I had another client mention to me only yesterday that they just made an enquiry on this same property…and they were told that the highest offer to date was $1.5 million – so much for the $1.7 million buyer!

It’s games like this that give agents a bad name and it’s why I don’t particularly like the auction process.

If this is what it takes to sell a property under the hammer in the current market, I’ll just stick to the private treaty process thank you very much!

Until next week, Happy Listing, Happy Selling…and (hopefully) Happy Buying!