However, he believes that the industry is improving in terms of the level of education required for agents, as well as the compliance required by Government and industry regulations.

McGrath adds, "I think there's a more sophisticated agent coming into the market. A lot of people are now leaving school and university and seeing real estate as a serious career option, as opposed to just a job they might 'give a go', which it has been for a long time."

Nevertheless, McGrath concedes the industry has a long way to go, and there will be a "lag time" before these improvements are clearly visible.

Ultimately, a real estate agent is a sales person. Even for the most ethical among them, there's a whole bag of tricks they can draw on to secure a listing, and then to sell the property. Of course, some tricks are more legitimate than others. But it pays to be aware of both kinds.

Tactics used with buyers

"There's another offer"
As a buyer, being told there's another offer on the table can cause a lot of stress. Does the offer actually exist? Should you increase your own offer to stay in the game? One real estate agent we spoke to anonymously told us that when an agent tells you there's another offer, it's often purely a tactic. He says agents can choose their words carefully, so as to mislead you without lying outright. For example, you might be told, "We've had another offer," in the past tense.

"If it's not a direct lie, it could be a skew or a spin on the truth," he explains. "They probably got an offer three weeks earlier, or something like that."

Of course, shock horror, the agent might actually be telling the truth.

McGrath says, "I've heard of many buyers who have assumed that the agent is lying, only to find the property sells to the other 'fictional' buyer the next day.

"I think what you've got to do at all times is make your own independent assessment of the value, have a walk-away price, and put your best offer forward. But thereafter be prepared to walk away without any regrets."

This tactic is more common when the market is quieter. It's the agent's way of creating competition which otherwise doesn't exist. In a boom time, or in the case of a popular property, if you're told there are other offers, chances are that's the truth.

Richard Wright, buyers agent with Metropole Projects, used to be a real estate agent himself. He believes that if a property is being sold at auction, and the agent says there is a pre-auction offer, then it's probably genuine.

"Because if an agent was then to ring up all the potential buyers on a property and lose them on the basis of a fictitious offer, they then will have basically ruined the auction," he explains.

"Expecting an offer"
In a similar vein is this trick: "The owner's expecting an offer this afternoon."

Our anonymous agent says, "Of course the owner's expecting an offer! He wants to get an offer every day of the week if he can. It doesn't mean that there actually is one; but the owner's 'expecting one'. But you as a buyer interpret that as 'Oh, there's an offer coming in'."

"A lot of interest"
Buyers agent Meighan Hetherington of Property Pursuit is also a former real estate agent. In her current line of work she often comes across agents who say, "We've had a lot of phone calls about this house during the week, and we expect to have a really good turn out at the open house. I would expect that we won't still have the property Saturday afternoon."

She explains, "That puts a lot of pressure on people to make a decision during the week rather than waiting for the Saturday.

"It's a tactic. Who knows who's going to turn up at the open house? Just because you have an ad response during the week and people say, 'I'll see you at the open house,' it doesn't mean they've got any intention of turning up."

But there's nothing to stop you, the buyer, from playing hard ball. You can put an expiry date and time on your offer, so that it's no longer valid by the time the open house takes place. The agent then can't use your offer to put pressure on other buyers, and to create an unofficial auction where two buyers in a private treaty sale are effectively bidding against each other.

"A second inspection"
Hetherington is also wary when agents say someone is having a "second inspection" on a property the following day.

"Again it's putting pressure on people to make a decision," she says. "My advice to a buyer is to make the offer that they're prepared to make, irrespective of the pressure that the agent's putting on."

Hetherington also suggests, "Just as they can play two buyers off against each other, you can play two properties off against each other."

It doesn't hurt to let the agent know that there's another property which you are seriously considering putting an offer on.

"The vendors won't accept that"
Hetherington advises buyers not to be bullied by an agent who says the vendor isn't willing to accept an offer below a certain amount. She recently negotiated a purchase where the property had previously been part of a family transaction which had the property valued at $480,000. She was told the vendors wouldn't accept less than that. However, her clients ended up acquiring the property for $430,000.

"At this stage…"
When ringing up an agent to make an initial enquiry about a property, you might ask: "Is that property still available?"

And you may be told, "At this stage it is."

"That's to give the impression that there's a lot of interest in it and it may not be available for much longer," says Hetherington.

"The next thing the buyer needs to ask is: 'What do you mean by that? Is there an offer on the table at the moment? Have you been given a written offer by anybody? Have you received a verbal offer?'

Auctions

"Don't be afraid to go to auction," says Hetherington. "Just do your research and be aware of some of the dialogue that agents will use during an auction.

"For example, if the bidding hasn't reached the reserve they will pause and have a chat to the owner, and then come back out. And they say to the bidders, or people who haven't yet bid but who they think are genuine: 'Look, there are other people here who weren't in a position to purchase at auction. They're waiting for the property to pass in so they can become involved in a post-auction negotiation.'

"The idea is for the people who are willing to bid at the auction to increase their bid and buy it under auction conditions. There may or may not be other people sitting in the background, able to purchase after the auction.

"Do your research before the auction. Know what you're prepared to pay for that property," says Hetherington. "And don't let the agent pressure you above it. Because there are occasions when the seller really does have to sell at auction and they will take the highest bid that you're prepared to give them."

Underquoting

When a property is being auctioned, often a price range is quoted to potential buyers. A common practice in the past has been to underquote the value of the property in order to drum up as much interest as possible.

New legislation in some States aims to prevent this practice. McGrath believes that the new laws have pretty much stamped it out.

Wright agrees that the new laws in Victoria have improved the situation. However, he points out that some agents have found ways around the new rules. He says that the agents can name a price in the official authority document which is backed up by comparable sales data. But they can then tell the vendor that the property is probably worth more than that, and they can set a reserve at a higher price than the one recorded.

Wright has seen agents who advertise an "opening bid" price rather than a price range. However, Wright says this figure has no relation to the reserve price, or what the property will sell for.

So how accurate are quoted price ranges these days? Wright gives the following examples of price ranges given for auctions in the Glen Eira local government area in Melbourne in 2005, and their eventual sale price.

Quoted price                 Actual sale price

$330,000+                   $366,500

$360,000–$400,000    $435,000

$410,000–$450,000    $465,000

$350,000+                   $416,500

$360,000–$400,000    $501,000

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This article was first published in Australian Property Investor magazine. For a special subscription offer for Property Update readers, please click here.

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