4 sneaky real estate tricks and how to avoid them

For many Aussies, buying and selling a home may only happen a couple of times in their lives.

But what if your real estate agent is looking after their own best interest instead of yours?

Lloyd Edge, director of Aus Property Professionals: Buyers Agent, said it was important to make sure you picked the right professional to help you.

“All industries have ethical and trustworthy professionals … who are genuinely passionate and want the best outcome for their clients’ individual needs and circumstances,” Edge said.

“However, most industries also include unethical and not-so-trustworthy professionals that don’t always have their clients’ best interests at heart. Unfortunately, the real estate industry is no exception.”

Edge said buyers could incur major losses if they got caught out by someone who wasn’t keeping their best interest at heart.

“The consequences can be huge, as I’ve seen people lose money, spend their savings where they could have bought a property for better value or pay too much for a property,” he said.

“Unfortunately, I’ve also seen how it has set buyers back for years.”

Here are a few things to look out for and how to spot it from a mile away.

1. Agents who have a dual interest or additional skin in the game

“Whether it is a real estate agent or a buyer’s agent, either of them could have a dual interest in the outcome,” Edge said.

“This is where they receive not only a payment from the seller or purchaser, but they also receive another payment from a developer or marketer, or some other second-party payment from the sale of the property.”

How do you avoid this?

Edge said it was important to ensure your agent listened and understood your needs and what you were trying to achieve.

“Ask them to explain your options in detail and the benefits it can bring to you and your individual situation,” he said.

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He added that the best way to combat this was to ask directly if they would receive any commissions or payments based on the property you were looking to buy.

“You’ll know straight away, based on their response, whether they are acting in your best interests or not,” he said.

“Seek advice from an accountant and broker to understand what is possible based on your current circumstances to understand the impacts as well.

“If you feel the agent is pushing you in a certain direction and not listening to your individual needs and goals, try getting a second opinion from another agent.”

2. Misleading or deceptive conduct

Edge said real estate agents should always act in a manner that was honest and ethical towards all parties involved.

“Clients engage their services with large sums of money at stake, therefore the client should always feel they can trust and rely on their agent to be responsible and trustworthy during the entire process,” he said.

“By not disclosing all information, it can be misleading and deceiving. It can also cause problems for you later down the track, whether you are a purchaser or a vendor.”

Edge said a common deceptive technique was called ‘gazumping’.

“This is where you have an offer accepted and have signed the contract but then the agent stalls in getting the contracts exchanged,” he said.

“You then find out from the agent that you have missed out on the property as suddenly they have taken a higher offer from another buyer.”

Edge said you should also be aware of underquoting auction price guides and potential sales prices for properties.

“It is a grey area but it can be very deceptive and misleading, as the agents are often trying to drum up more interest in a property, even though they know it will sell for more than the price they’re quoting in the current market,” he said.

How do you avoid this?

Find an agent who is open, honest and transparent with you, along with all parties involved and willing to disclose all facts about the property, Edge said.

“Ensure the price is based on a reasonable estimate, according to the market, and that the location, images and features listed about the property are accurate and not misleading in any way,” he said.

3. Unofficial ‘dutch auctions’

Edge said a dutch auction was a verbal pre-auction, where the sales agent would receive multiple offers before the actual auction date.

“This is fine – if all parties are aware of what is going on, and they know they have a date by which to submit their best and final offer,” he said.

“It’s not fine if the agent uses this as an opportunity to leverage buyers in ‘one-upping’ each other to nudge the price ever-higher.”

But Edge said it was important to remember the agent worked for the vendor, not the purchaser, so they would sometimes use whatever it took to get the best price for the vendor.

“A dutch auction is not technically illegal; however, some would call it unethical,” he said.

“The purchaser can end up overpaying in this silent-auction method, as the sales agent creates the sense of urgency in fear of missing out and often does not disclose all information.

“You may never know if there is a legitimate bid from another interested buyer hiking up the costs, or if it’s the sales agent making up a bid to get you to increase your offer.”

How do you avoid this?

“Try not to get emotionally attached to the property so you can walk away if this occurs,” Edge said.

Alternatively, you can hire an independent buyer’s agent who is there to work for you, in your best interests.

4. Real estate agents that act as both sales agent and buyer’s agent

Edge said if the real estate appeared to act for both the seller and the purchaser, it could be seen as a conflict of interest.

“The sales agent should be paid by and act for the vendor only to get the best price for the property, while the buyer agent’s focus should purely be on seeking the best price and terms for their purchaser,” he said.

How do you avoid this?

Edge said you should research the type of agent you require.

“Look into the company profile, their credentials and reviews from past clients and consider your own goals and objectives,” he said.

“I recommend you review the agents’ experience and expertise, and ask to speak with past clients as well. Ensure you are comfortable that the agent is solely working for you.

“All in all, it’s important to do your own research and spend time seeking the right professionals to assist you when buying and selling property,” Edge said.

“Working with genuine experts could be the difference of tens of thousands of dollars – sometimes more – plus a lot less of your time and stress in the process.”

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