The fast-moving changes to interest rates and adjustments to property legislation has made the past few months challenging to navigate. As Federal and State Governments continue to play economic roulette with the property market, we're seeing more sales agent tricks bubbling up. The latest one is the 'phantom other buyer'.
While this little tactic has always been in operation, we saw a nasty new version of this sneaky trick first hand during the purchase process last week.
This story has lots of detail so I will try to provide a summary that covers off the essential points. By way of background – the search was based on finding a very specific property in an area that's highly coveted and difficult to buy into due to low supply – people normally buy into the area and rarely sell.
After a few months running a detailed search, a property came up that seemed to be a great option – for the benefit of clarity we'll call this property 'Property A'. My clients loved Property A, so we organised a viewing in the first week of the property's release.
Unfortunately, the vendor's price expectations were quite high and we believed it was overpriced so we moved on to other options.
Three weeks later, I noticed the guide price for Property A had dropped by $100,000 – the original guide price was $1.5M to $1.6M – now it was listed as $1.4M to $1.5M. This made Property A a much better option, so I went back to the agent.
And that was the start of the looong negotiation with the sneaky twist. Here's how it unfolded.
After noticing the change in the guide price I made a quick call to the agent. I reminded him we had viewed the property a few weeks before, and made an initial offer. I started low so there was a few discussions throughout the day. We finally cut to the chase and the agent 'hinted' a deal could be done around $1,440,000 to $1,460,000.
I confirmed we could come up to $1,450,000. The agent confirmed he would take this to the vendor (you know . . along with the other solid offers I had made during the day that the agent said he had discussed with the vendor). Agent came back 30 minutes later = "Great news! The vendor will sell at $1,495,000." Phhffft. What a waste of a day. It was clear we were absolutely being played, so I thanked the agent for his time and walked away.
2 pm – Agent calls back = vendor has reconsidered. Will take $1,450,000. I won't tell you my thoughts at this point. To the agent though, I confirm I believe we have a deal but need to double check back in with my clients. Advised I would need an hour.
2.40pm – Finally catch my clients by phone after they ducked out of work meetings to take my call. We discussed the situation and re-confirmed they would be happy to purchase at Monday's price of $1,450,000.
2.45pm – Agent sends me a text. A 'new' buyer has come forward and has offered the vendors' target price of $1,495,000 and the vendor has accepted. Ugh. I totally smelt a rat (and knew for sure I was dealing with one). At this point I was still on the phone to my clients so I told them the news and ended my call with them so I could call the agent.
2.50pm – Called the agent and he confirmed buyer just 'turned up'. Sure they did.
2.55pm – I go back to my buyers. They're disappointed and we discuss the option of going back with a better offer. As we talk it through, I explain I think it's just a little too suspicious. So we hold on any further action and focus on another property we were considering – Property B.
10am to 2pm – negotiating on Property B and getting close to a solid deal. My buyers now have had time to think things through and becoming increasingly appalled at the agent's behaviour on Property A. They consider calling agent for Property A to give him a piece of their mind, but we stay focused on Property B.
5pm – I receive a call from agent for Property A. What a surprise . . . the 'new' buyer didn't sign the contract on Property A. Agent says if we "act quickly" vendor has confirmed we can buy for our price of $1,450,000. Ugh – again.
We ended up moving ahead with the purchase of Property A, but the buyers were not impressed with the selling agent. I bet if I spoke to the buyers of the last ten properties this agent sold, I would find they all had a similar shonky experience.
If my buyers had gone with their first instincts when the agent called with the surprise 'new' buyer, they would have paid more than they needed to for their dream property.
By stepping back and thinking through the practicalities of the situation, it meant we could see the situation for what it was – a totally unprofessional tactic by this unscrupulous agent.
Always buy yourself time – particularly if you know the property isn't going to move quickly. If a property really is exceptionally popular, you will have plenty of other signs. For example – the property won't be advertised three weeks after the initial listing with a major drop in the guide price : – ). A truly popular property will normally be sold by the three or four week mark unless it's listed for auction.
Walking away is a strategy you can use – we walked away numerous times during this negotiation and each time, the agent blinked first. No . . . walking away isn't always the best approach, but remember it is an approach you can consider if a property has been on the market for a few weeks.
Help is here if you want it
Author : Debra Beck-Mewing
Debra Beck-Mewing is the Founder and CEO of The Property Frontline. She has more than 20 years' experience in buying property Australia-wide, and is skilled in helping buyers use a range of strategies including renovating, granny flats, sub-division and development. Debra is experienced in identifying tailored opportunities, homes and sourcing properties that have multiple uses. She is a Qualified Property Investment Advisor, licensed real estate agent and also holds a Bachelor of Commerce and Master of Business. As a passionate advocate for increasing transparency in the property and wealth industries, Debra is a popular speaker on these topics. She is also an author, podcast host, Editor in Chief of Property Portfolio Magazine and participates on numerous committees including the Property Owners' Association.
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Disclaimer – This information is of a general nature only and does not constitute professional advice. We strongly recommend you seek your own professional advice in relation to your particular circumstances.