Who can you trust in the property industry?
For some people, real estate agents rank in their top 10 most untrustworthy people — but who else is playing the game?
Blogger: George Raptis, director, Metropole Property Strategists Sydney
Buyers are liars and sellers are swindlers: True or false?
I’ve been in the real estate industry a very long time — at least, long enough to know how the game works.
Purchasing property is a game made up of two teams: buyers and sellers.
Sitting between them is usually the umpire, otherwise known as the real estate agent.
For some people, real estate agents rank in their Top 10 Most Untrustworthy People, up there with car salespeople and cold-callers offering free iPads along with a too-good-to-be-true phone contract.
Their job is to be the referee between the buyer and the seller — finding the perfect property for the buyer whilst working to get the best price for the seller — but they’re often regarded with more than a small measure of caution.
Why? Because their motives and ethics are not always clear.
That said, there are rules to the game that can help you to navigate the process of buying real estate.
The only downside is that unfortunately, not everyone is aware of them all.
Many buyers don’t understand that real estate agents have a legally binding contract with the seller, not the buyer.
Their job (and their moral obligation) is to get the best price for the property to fulfil their contract.
I’ll say this again, because it’s vitally important: a real estate agent’s ultimate interest and loyalty lies with the seller, because they have been contracted to sell the property for that owner.
Once an agent has secured the listing to sell a property, they must make every attempt to sell it for the best price they possibly can.
How do they sell it for the best price?
By showing the property to potential buyers who are a good fit for the home.
Sure the prospective purchaser is also a customer who they hope will buy the property, but their interest is first and foremost in getting the best outcome for the seller, who pays their commission.
The misconception that a real estate agent is impartial and is working just as hard to land the buyer a great deal as they are on selling a property has left a sour taste in the mouths of many buyers.
They walk away from the bidding process feeling hard done by and frustrated at missing out. And more often than not, the blame falls squarely on the ‘greedy’ real estate agent.
In turn, this has led to a largely false impression that agents are untrustworthy and dishonest.
The truth is that in the majority of cases, they will work with both parties to find a home for the buyer and a sale for the seller.
And while they must fulfil their contract with the seller to assist in selling their property for the best price possible in the prevailing market, from a pure perspective of logistics, they need buyers in order to do their job.
However, the snowball effect of this growing mistrust has led to the birth of a term known commonly amongst real estate agents, but not widely known to the public.
This saying is…
Buyers are liars.
The term is a little misleading (and probably offensive, if you don’t know what it really means!) so let me explain.
When buyers are looking to purchase a property, they usually have a checklist of criteria they’d like to tick off for their ideal purchase.
Whether they’re shopping for their own home or an investment, they generally know their preferred locality, number of bedrooms, land size and required features and fittings.
They’re also being guided by their own budget, meaning they have a maximum purchase price in mind.
Real estate agents do their best to show buyers properties that fulfil these criteria.
But what agents tend to see is buyers who change their minds on their budget and property needs continuously, or who hold back telling them what they really want or their true budget, leaving the agent confused about what the buyer really wants.
Thus, they come to the conclusion that “buyers are liars”.
Why are buyers behaving this way?
The surge in suspicion of real estate agents has led to buyers feeling that they can’t be honest and upfront when searching for a property.
The word ‘liars’ is a little erroneous, but it’s a catchy little rhyme.
And it does express how real estate salespeople feel when they can’t point a buyer to the right property, because the buyer is playing their cards too close to their chest.
What’s not generally known is that the real estate industry is heavily regulated and frequently audited.
These laws have been instituted as a result of the perception that agents are ‘swindling’ buyers and using unethical tactics.
And the good news is that they ensure that agents are all too aware of the need to keep things above board and legal.
If you’re looking to purchase property, for yourself or as an investment, a good way to circumnavigate the confusion is to appoint a buyer’s agent.
They kick the goals for you, finding the right properties and taking care of the negotiations all the way through to the final settlement. They act on your behalf and because they are expert players in the real estate game, they can help you find a good deal in the market.
I’ve found the best buyers agents are ex-selling agents, so they know how to deal with them and level the playing field.
