Pod Insights The Property Academy Podcast Never Say These 5 Sentences To A Real Estate Agent Quotes “Mistake number one is telling the agent your maximum budget.” Unnamed speaker · 0:58 · Share this quote “If you say things like, we're thinking about starting a family and we need to be in here by Christmas” Unnamed speaker · 5:25 · Share this quote “Ask your direct question and then stop and don't say anything.” Unnamed speaker · 7:45 · Share this quote “The answer is it depends on which method of sale we are talking about.” Unnamed speaker · 12:59 · Share this quote About this episode The selling agent doesn't work for you. So, what should you say and what should you never give away?
In this episode, Ed and Andrew run through the five biggest mistakes buyers make in front of agents, and how to avoid them.
You'll learn:
Why telling the agent your budget or your "why" costs you moneyThe research-backed power of silence in a negotiationWhether you should ever bid your absolute maximum The agent isn't your enemy, but they're not your friend either. Knowing the rules is how you keep the upper hand.
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Transcript 0:08 Speaker 00 Hello and welcome along to the Property Academy Podcast by Opes Partners. I'm your host, Seb McNaught.
0:12 Speaker 01 And I'm Andrew Nicoll.
0:13 Speaker 00 And this is the show that helps Kiwis go from zero to five investment property. So you could be financially free and stick around for the next 15 minutes because you're going to learn the five phrases you should never say in front of a real estate agent. Should you actually put in your highest offer when you're in a multi-offer situation? And the most underrated negotiating tool. Now, you've got to remember that if you're a property investor and you're buying houses, the real estate agent, they don't work for you. They work for the seller. They're engaged by the seller, they're paid by the seller. You're not the client, you're effectively the customer. But what should you really say and what should you not in front of a real estate agent? What do you reckon is mistake number one?
0:58 Speaker 01 Well, mistake number one is telling the agent your maximum budget. Now, I get it. It's one of those natural things that comes out in the first 30 seconds. Like, we're pre-approved for $850,000, which sounds quite helpful because it kind of gives the agent a bit of a guide, but you've just told the vendor what your ceiling is as far as how high you could go to buy this property. And every negotiation is probably going to start or at least be targeted towards that and works backwards from your limit, not the other way around.
1:26 Speaker 00 So what would you say instead in front of a real estate agent?
1:30 Speaker 01 If they're kind of digging down into how much you're pre-approved for, for example, I'd probably say your budget depends on the property or we're looking at houses between $700,000 and $800,000, which is potentially true. It's not evasive. You're not going to sound like a bit of a dude trying to hide things, but it doesn't tell them your maximum dollar. When you were buying your house, I mean, I know you are evasive at the best of times. How would you answer that question when agents would ask?
1:58 Speaker 00 Well, if it was a house I didn't like or I didn't really care about and they asked, I'd just say, I'm looking at properties between X and Y. And I remember saying that to one agent and they were like, oh, you could buy this house. And I was like, yes, but I don't like it.
2:13 Speaker 01 So did you say that?
2:14 Speaker 00 Yes, yes, I don't buy, just tell it. It's like, you're helping them, right? Like, if you say to an agent.
2:19 Speaker 01 They're not going to trace you.
2:20 Speaker 00 I don't like this house. You've just saved them time because now you're not pretending that you're going to be a serious buyer. So I have no issue at all telling agents I'm not a serious buyer if I look at a house and I don't like it. But for the ones that I do like, I would typically say, we're looking at houses around this mark. Or I would actually typically flip it around the other way and say, I know you and your vendor have had a discussion about price. What does a good offer look like? My other favorite question is what offers has the vendor already rejected? That's my favorite one because remember the agents aren't allowed to lie to you. So if you know what offers have already been rejected, that can give you a sense of a minimum price.
3:05 Speaker 00 Having said that, there have been times where sellers have rejected an offer and I've offered less than that anyway, because that offer was ages ago. It's also got me into trouble, but there we go. Mistake number two is what I call falling in love out loud. So if you walk into the kitchen and say, oh, Deirdre, this is the one. Oh, I love it. If your partner gets out the measuring tape on the first viewing and starts measuring the couch, oh, Sheila, we could fit the good couch in here.
3:33 Speaker 01 Or Lauren did this when we were wandering around our house.
3:36 Speaker 00 Yeah, or if your kids start picking bedrooms, oh, yes, that'd be little Timmy's room and that'd be little Sally's room, all in front of the person whose job it is to get the highest price for the vendor. And the reason I suggest not falling in love out loud is if you talk that openly in front of the agent, they can start reflecting all of these things back to you to keep you emotionally engaged and try and use that as a lever to get the price up. Now, even if the price is only going up by 20, 30, 40 grand, that's 20, 30, 40 grand. Like, the reason you've got to be a bit more careful in property is we're talking about big numbers here.
4:20 Speaker 00 Now, I'm not saying that the fix is to be rude. I think the fix is to be boring. You know, I think you want to get on with your agents, right? Like, I don't see the agent as the enemy because they can.
4:33 Speaker 01 They're a partner.
4:33 Speaker 00 They can help me get the information I need, but I also don't want to give everything away, right? I don't want to fully lift up my skirt and show them everything. I want to be polite, interested, but relatively unreadable, right? And then we can have the exciting conversation in the car. Oh my God, Deirdre, did you see where we can put the good couch in that room? You know, you could get excited, but I just suggest not doing it so much in front of the agent because then they know, these guys are really into it. We can get an extra 30 grand out of them, right? What do you reckon mistake number three is? What shouldn't you say in front of the agent?
5:12 Speaker 01 Again, this kind of goes back to the same sort of theme of just telling them too much information. So if you tell the agent why you're buying, that again, might be kind of used to pull on those emotional strings. So if you say things like, we're thinking about starting a family and we need to be in here by Christmas because now the agent thinks, well, I might be able to apply a bit of pressure here because they think that you can't walk away at that stage. And walking away, let's face it, when you're buying a property, that's, that's the power that you've got. Now, that doesn't mean you can't tell them some of your requirements because they might be able to find a property that's actually quite suitable for you. It might be that they've got another property that they've seen on their books down the
5:54 Speaker 01 road and actually it has got the things that you need and you can move in right away. Because if you say things like, well, I want a three bedroom house in these suburbs, but my budget's 500 to 600K, that kind of thing's fine. It's the emotional things, the desperation to move in there quickly or starting a family, then those are the things that might be later used against you, I guess.
6:14 Speaker 00 Now, if you flip it around, that could also be your opportunity because I like to find out the vendor's motivation. Why are they selling? Is it a deceased estate? Is it a relationship split? If they want a relationship split, maybe they want the money quite quickly. Maybe we want a shorter settlement. Maybe they've already bought elsewhere and they need to sell this house so that they can go and buy their dream home next. Well, in that case, a really good offer is one that settles on the same day that they want to buy this other property and get the money for that one. If the property's been empty for months, maybe they want the property sold quite quickly. All of these motivations you can use to help negotiate the price down or know what a
6:59 Speaker 00 good offer looks like for the seller. That is going to put you in a stronger position. And mistake number four though, of what you do in front of your agent is what I call filling the silence. And this is the big one because what can sometimes happen in a negotiation is you might ask a direct question, like, how much does the seller want to sell for? The agent gives you a short answer. It depends, we're testing the market. And then there might be quite a gap, an awkward gap of silence. And we, as humans, are sometimes wired to fill it in where we start talking and give something away.
7:40 Speaker 00 And the best thing you can sometimes do in that moment is nothing. Ask your direct question and then stop and don't say anything. And this is actually properly researched, right? This isn't just negotiation folklore. So there was a study in 2022, it was by the researchers at MIT, and they looked at silence in negotiations and they found that if there are silent pauses of at least three seconds, that was linked to better outcomes, whatever a better outcome looked like in that situation. And when they instructed people to deliberately use silence, it improved again.
8:21 Speaker 00 And look, I don't want to oversell the point because sometimes that silence can help you get more information because people are filling it. But also it can help people just think a bit differently about finding a resolution that's going to work. So be quite happy with the silence. Now, there is a popular version of this, that if you're negotiating salary or the price of a house, that whoever speaks first loses. Have you heard that one?
8:47 Speaker 01 Yes, I have.
8:48 Speaker 00 Well, that's not quite what the science says, but the practical effect is if you can use silence, like, it can actually help us.
8:55 Speaker 01 And a question worth asking before you give them the silent treatment is something along the lines of, is there anything else I need to know about this property that might impact my decision? And this one's really important and quite powerful because agents, even though they're working for the vendor, they still have to disclose any known defects and they can't withhold any material information that might impact your decision to buy that property. So if you ask for this directly and/or even if you put it in writing and then just kind of give a bit of a breather, now you've put yourself in a position where the agent might tell you something that means you can negotiate down in price.
9:33 Speaker 00 Do you know, sometimes if I'm talking to an agent or, in fact, I was at a meeting the other day, right?
9:39 Speaker 01 Yeah.
9:39 Speaker 00 And I'm a talker. I'm going to fill that silence. I'm going to blah, blah, blah, blah, blah, blah, blah. So I'm, I'm sitting there in this meeting and I'm like, I need to be silent right now. So in my head, I've got this internal dialogue going off, shut your effing mouth, shut your effing mouth. Yeah, hold your tongue. Don't say anything.
9:58 Speaker 01 Was I in this meeting with you?
10:00 Speaker 00 Oh, yeah, you were in that meeting.
10:01 Speaker 01 I know what you're talking about.
10:03 Speaker 00 Shut your mouth, shut your mouth. Anyway, then my friend said, you are awfully quiet. I was like, yes, that was intentional. But sometimes you have to do that. And I'll give you another example. I was once at this vegan fair, I think it was, or something along those lines.
10:16 Speaker 01 Back in the vegan days.
10:17 Speaker 00 Back when I was vegan. And I had a friend with me. Her name was Lucilla and she was a, I think she was Brazilian, actually. And she considered herself a negotiation professional. Anyway, we're looking at these like glasses frames. Right? Because I was like, oh, these are quite nice. Quite like these new glasses frames.
10:35 Speaker 01 It's not what I'd expect at a vegan show.
10:37 Speaker 00 Yeah, I know. I don't know why they were vegan. Anyway, they were like $300. And I was like, this is quite nice, but they're a bit expensive. She's like, if I can get them for you for $200, would you buy it? And I was like, yeah, go on. So she goes up to the seller and she's like, and she says to me beforehand, now you're going to have to say nothing. Just let me do all of the talking and don't say anything. So it's like, okay, this is interesting. So she goes up and she's like, I wonder if you could do us a bit of a deal. We really like these, but we came in and we didn't want to spend any more than $200 at this show today. Would you take $200? And then she says nothing. Anyway, the seller says, oh, well, they're very good glasses.
11:21 Speaker 00 But, um, oh, yeah, I mean, they're really worth the $300. Um, um, and Lucilla's just still looking at her, right? She's like with a bit of a smile on her face. And the seller goes, uh, yeah, okay, why not? Anyway.
11:35 Speaker 01 Okay, why not?
11:37 Speaker 00 There was nothing. And so anyway, we go over to start paying for it. And then as she's processing the transaction, the seller says to me, oh, you know, did you actually come in with $200? And I said, oh, well, you know, blah, blah, blah, blah, blah. Anyway, and I can see Lucilla there looking at me being like,
11:53 Speaker 01 Shut up.
11:53 Speaker 00 Shut the F up. Anyway, she gave me a talking to after that as well. Because she's like, the transaction was not done yet. And I just, I just love that story because I remember it like it was yesterday.
12:06 Speaker 01 And you saved $100.
12:07 Speaker 00 But the silence was very useful. And it was interesting watching this lady talk herself around being like, well, I don't want to. And, you know, these are very good glasses and blah, blah, blah, blah. Okay, why not? So silence, very, very useful. The fifth mistake is bidding up to your maximum in the wrong kind of sale. And what I mean by that is there are some sales processes that are a bit more competitive than others. So you might have an auction where everybody turns up, all the buyers, you're putting your hand up to bid. You might also have a multi-offer situation where there are a couple of buyers who are interested in purchasing a property. And you each get given a form, a multi-offer form, where you put down your best offer.
12:52 Speaker 00 And people say you should put your best foot forward, but should you actually bid up to your absolute maximum? The answer is it depends on which method of sale we are talking about. And there's actually some real economics behind it.
13:07 Speaker 01 Yeah, at an auction, you can go to your true maximum, if you're comfortable doing so, because you're only going to pay one increment above the second highest bidder, as long as the property's on the market, right?
13:19 Speaker 00 So as if it's met the reserve.
13:21 Speaker 01 Yeah, yeah. So, so as you go, you're going to watch other people dropping out and that's going to tell you something. Now, at a multi-offer or an auction where the reserve hasn't been met and now you're going into negotiations or a tender, you pay exactly what you agree to. Now, the problem with this is you could be $30,000 above the, the second highest bidder, right? And you don't know that. It's not transparent anymore. So theoretically, if you, if you want to try and get a good price, you're probably not going to pay your maximum budget at that stage because the maximum budget could be well above the rest of the market.
13:55 Speaker 00 And so what the economic theory says is shade a little below your max, but it does also depend on how many buyers there are. So from an economic perspective, this is all Bayesian economics. You don't need to know that, but I just wanted to sound fancy. Show you that I actually went to university and learnt something, mum, is that the more buyers who are in the market, the closer to your maximum you would pay. And it kind of makes sense, right? If you know there are 20 people at a multi-offer, you're like, okay, this is going to be quite competitive. Maybe I do put in a bid that is quite close to my maximum. If there's only one or two other people, maybe you don't worry so much about it because there aren't going to be as many backup buyers.
14:34 Speaker 00 And so it's just to say, the price you bid kind of depends on what the sale process is.
14:41 Speaker 01 I think the key message here to take away is that you don't want to show all your cards to your agent, but they're not your enemy. Just remember, they do work for the vendor, so they're not your best friend either.
14:50 Speaker 00 And in the last 15 minutes, you've learned the five phrases you should never say in front of a real estate agent. Should you actually put in your highest offer if you're in a multi-offer situation? And the most underrated negotiating tool. Right, let's wrap it up there, but please don't forget to rate, review and subscribe to the podcast. Really does help us get the message out to more people.
15:15 Speaker 00 Thanks for listening to the Property Academy Podcast. I'm your host, Seb McKnight.
15:18 Speaker 01 And I'm Andrew Nichol.
15:19 Speaker 00 We're going to be back again tomorrow with even more daily strategies, tactics and insights to help you get the most out of the new selling property market. Until next time.
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