Looking for a new property to buy or rent can be an exhausting experience.
Having a trusted real estate agent by your side can help substantially, but unfortunately, not all agents will have your best interest in mind. Without expert knowledge on the home renting and buying process, it’s easy to become confused or get taken advantage of.
Whether it’s capitalizing on your emotions, your knowledge of the market or even your sense of urgency, read on to find out how real estate agents get you to spend more money.
1. Playing with the quote
When given a price range, you may assume you’ll be able pay the smaller amount versus the larger amount. Underquoting, however, is a common method agents use to entice buyers to consider more expensive properties.
“By providing a price range, a realtor is essentially getting the buyer to commit to anything in that range,” says Jennifer Harder, the founder and CEO of Jennifer Harder Mortgage Brokers. “Say you are told that a property will sell between $500,000 and $550,000. You may think that you can pay the low estimate. But in reality you are already setting yourself up to pay the maximum.”
Harder explains that this can be tricky for the buyer because once they fall head over heels in love with a property, that $50,000 is easier to give up.
2. Claiming a property is exclusively listed
If you’re new to the world of real estate, you may be fooled by a sense of urgency. According to Harder, some agents will claim that they have exclusive rights on a property and that it is not on a multiple listing service (MLS) yet. This then triggers emotions from the buyer and may make them spend more than they have to.
“It will make a buyer want to act quickly and impulsively, possibly paying a premium, because they are afraid once a property makes it to an MLS, other buyers will jump on it and the price will skyrocket,” she says. “In reality, the agent probably has no such exclusivity agreement. So there’s a good chance the home is already attracting other attention they don’t want you to know about.”
3. Manipulating comparable sales reports
One common to-do when shopping for a new home is to look at what other homes in the area sold for. Harden says that some real estate agents use that as an opportunity to get you to spend more money.
“Many buyers would think that checking out the median sales price of nearby homes is a good place to start. The problem is that many unscrupulous agents have a habit of cherry picking the highest-selling listings in the area before they show a buyer the comparable sales report,” says Harder.
Using this trick, Harder says that the buyer is left with a false impression that they are getting an amazing deal, when in reality they could be overpaying.
4. Ending with negotiation fatigue
Brokers know home buying is exhausting — and they may try to capitalize on negotiation fatigue to get you to spend more money.
Avi Sinai, owner of HM Capital, says that some agents and brokers use subtle wording like, “you don’t want to lose this one” or “it will take at least another month before we see a property like this on the market,” to get you to lock down a property.
“Some agents create urgency out of nowhere and push their clients to accept less-favorable terms to close the deal,” says Sinai. “I’ve seen clients who accepted terms they previously resisted, just to end the process and move on. It’s called negotiation fatigue, a real thing agents and brokers tap into to earn a quick commission.”
5. Ignoring your budget
Some real estate agents get home buyers to spend more money by showing them beautiful properties that are above their budget. According to Daniela Andreevska, the marketing director at Masvisor, a real estate data analytics company, this tactic is actually extremely common.
“One of the first things which an agent should establish with a new buyer customer is the budget which the buyer can afford,” says Andreevska. “However, some agents would still show their leads properties which are beyond their budget.”
Since home buying is a very emotional process, Andreevska says that some agents rely on customers to fall in love with properties despite their price tags. “It actually works because more expensive houses are likely to be bigger, nicer and more luxurious,” says Andreevska.
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