Don't be a noob first-time homebuyer: Here's how to deal direct with experienced seller agents

Just last week, I brought my car for servicing and found out that my in-car camera that came originally with the car was spoilt. The cost to replace it? A cool $1,400.

I quickly Googled the price of an in-car camera online. The average cost seemed to be around $200 to $300. Naturally, I asked why it was so much more expensive than what I can get outside.

PHOTO: Screengrab/YouTube/Chris Duke

“Well, Mr. Ong”, he began, “I can give you a couple of reasons.”

“First, did you know that third-party in-car cameras will drain your car battery?”

No sir, I did not know that.

“Second, our camera comes with a proximity and vibration sensor, that is sensitive enough to detect possible accidents or theft outside the car.”

“Third, it can record up to 24 hours in parking mode.”

For the sake of brevity here, he did go on for a few more points which I shall not mention. It was a polished presentation, no doubt.

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Now, I’m no in-car camera expert, so it was either to take his word for it or do some research myself. If I wasn’t such a skeptical person at heart, I realised how easy it would have been for me to just accept that as a sensible purchase to make.

Likewise in today’s hot seller’s property market, there are buyers out there that choose to do it alone — and that’s fine.

I understand that they may be apprehensive about trusting a buyer’s agent. It’s hard to decide who to trust, and there’s always a chance that buyer agents are trying to push you to units that are the most financially rewarding for them.

But as much as humans like to deny it, buying a home is truly a very emotional purchase, and it’s hard to leave your emotions at the door before a negotiation.

And so while most people think agents in Singapore are incompetent, the truth is that an experienced seller agent can play on your emotions and use that power to their utmost advantage — especially if you are a first-time homebuyer.

Today, let me reveal to you some of the tactics that you may encounter as a direct buyer with seller agents so that you can be more aware of what is happening. I would also provide some tips for researching your competition before getting into any negotiations.

Here goes.

The property anchor

This is by no means a 'shady' trick, but it’s certainly a very smart way of framing a purchase for you. In fact, it’s employed by companies all around the world, with one of the most famous examples displayed by Steve Jobs during the launch of the very first iPad.

During the unveiling of the product, he was going through all the bells and whistles of its features.

PHOTO: Screengrab/YouTube/SteveJobsArchive

The massive screen behind him showcased a price of $999 (which everyone naturally assumed was the price of the iPad).

At the end of his presentation, Jobs had one last announcement. Apple had done its utmost in getting the price down and will price the iPad at… $499.

PHOTO: Screengrab/YouTube/SteveJobsArchive

The crowd went wild.

And so, during the first 80 days, there were three million iPads sold (remember, this was back in 2010).

Let me relate this back to your situation. Let’s say you’ve found a listing and contacted the seller agent. You tell him you want to view the place. Great, he says, I have another in a similar location to show you as well.

He brings you to the first listing to have a look. It’s on the second floor, and while it’s in a good location, it is in quite a terrible condition. The paint on the walls is shoddy, the flooring is old, and there is an off-putting smell about it. However, you are shocked to learn that the asking price is $900,000.

PHOTO: Stackedhomes

This is a deliberate anchor to set your standards low.

In such cases, the agent doesn’t even need to say much. You’ve mentally prepped yourself that to find something decent today below $900,000 is nearly impossible. (all the newspaper headlines on high prices don’t help as well).

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Now the original place you asked to view is asking for $950,000. It is well-renovated and on a higher floor as well. It almost seems like a no-brainer.

PHOTO: Stackedhomes

Why?

Because of the negative image set in the first place, whichever places you see after now seem like a better deal in comparison. Had the agent shown you the original first, your expectations might just have been that it may not be such a great deal for what it offers.

Do your due diligence

Unlike using experienced buyer agents, you don’t have the knowledge that they have of the different seller agents in the market, whether they are reputable or known to be hard to handle or deal with.

PHOTO: Internet screengrab

One way of trying to gauge that would be through their listings on their own page. Do they have a lot of listings? Are they usually exclusive? (agents usually like to state this in the description). Look at their sales history. Are the listings regularly updated?

Here are a couple of shrewd things you can do to conduct your research.

First, when looking at a listing, you’d want to see how it is presented. Look at the photos available. Are they comprehensive or are they only showing selected parts of the house?

16 stock photos, none of the unit.
PHOTO: Internet screengrab

These are all telltale signs to pick up on. If there are comprehensive photos (showing every part of the house, both good and bad), it could mean one of two things.

One, the agent is new and still hasn’t been exposed to the ways of the industry. They are still transparent in showing everything.

Or two, they are truly an agent that is an open book — which is a good thing for you as the buyer.

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If it’s selected photos, well, you’d know that there are parts of the house that they are trying to hide. This may mean you could potentially be dealing with a more, to put it politely, astute agent.

If there aren’t a lot of photos, it could also mean the agent is quite secretive (a possible sign they are afraid of other agents coming in to steal the unit — usually only applicable for HDB and landed home listings).

Do take a look at their other listings too, is it the same throughout? Are all the listings only showcasing photos from certain angles? Or do some show everything, while others only show selected views?

PHOTO: Stackedhomes

Other factors to look at would be if the listing is exclusive. This usually means that the seller agent would have tight control over the information that gets through to the seller. In other words, you might have less bargaining power because the agent has more access to information than you.

Compare this to an open listing where multiple seller agents are involved, and they may not be privy to the latest bids immediately, and you can see clearly the advantage that exclusive seller agents hold here.

You should also look again at their other listings online too. Are they usually getting the exclusive for most of their listings? If they are, it’s a strong signal that this is an experienced seller agent, as newer agents would typically be competing for open listings.

PHOTO: Internet screengrab

Here’s my last tip for you.

Look at the number of seller listings that the agent has at that point in time. Obviously, the more seller listings they have, it usually means that they are more of a seller agent than they are a buyer agent.

PHOTO: Internet screengrab

That said, do examine closer. Sometimes, many of the listings are new launch ones (which anyone can post, it’s just a matter of how much you’d want to spend).

Next, if you really want to be dedicated to this task, you should almost be 24/7 camping on property portals as there is a lot of information to glean from it. (If only the portals showed price changes, that would be super helpful).

But generally, you’d want to have an idea of how long this listing has been there. If the listing has been there for a long time (and is still available), it could be too high a price and the seller agent may be more willing to negotiate.

And if you want to be really conscientious about it, note down the prices of the units that you are interested in, and monitor to see if there are any price increases or decreases.

Next, you should be trying to find out how long they’ve been an agent.

PHOTO: Council for Estate Agencies

This can be easily done through the CEA website, where even if you don’t have the agent’s registration number, just the name would help you retrieve the details. From here, you can see just how long they’ve held their agent license.

Even so, I’d hesitate to draw conclusions based on how many years they’ve been an agent. There are those that have been agents for 20 years, but have only done a handful of transactions each year. And those that have been agents for just three years, but have done 30 to 40 transactions in a year.

PHOTO: Council for Estate Agencies

Which agent do you think would be more relevant and savvier with what is happening on the ground today?

(Of course, I’ll have to add a caveat here that doing a lot of transactions isn’t a surefire sign either, they could also be selling nonsense).

And this brings me to my next point: If you haven’t done any prior research, how do you tell if the seller agent is experienced at the viewing itself? It’s quite simple: By the questions that the seller agent asks you.

The questions a seller agent asks you can show how experienced he/she is

Now that you are actually going for viewings, here are some tips for you to decipher how experienced is the seller agent that you are dealing with.

It’s all about the questions that they ask you. Let’s go through some of them, and what information the seller agent is possibly trying to get from you.

Question 1: How many places have you viewed already?

From your answer, the agent will be able to know how far along you are in the viewing process. If you’ve only seen one or two, you are likely to be viewing more. If you’ve seen something like 30 to 40 places? Well, the agent will probably decipher that you could already be desperate to look for a home (or that you are a very fussy buyer).

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Question 2: Do you stay around the area? Do you stay near your parents?

Asking if you stay around the area is a gauge to see how well you know the environment. Generally speaking, if you do stay around the area, you’d probably know your prices better than someone who stays at the opposite end of Singapore.

It would naturally be easier to negotiate with a buyer who is less aware of the surrounding prices than with someone who knows their stuff. As for staying near the parents, this applies more to HDB buyers, but from your answer here, the agent will be able to know if you are eligible for the proximity grant.

PHOTO: Stackedhomes

In short, more budget, more ties. Also, living near friends/family is always a very strong motivation for buyers. This leads me to the next question.

Question 3: Is this your first time buying? Have you done an IPA?

In all fairness, it is the seller’s agent’s job to vet all prospective buyers. You really don’t want to have a situation where you are about to close a deal, and realise that the buyer isn’t qualified to take a suitable loan. It reflects very badly on the agent.

And so the reason why they ask if you are a first-time resale HDB buyer is because of grants. Again, if the agent knows you are eligible for grants they know you have more leeway in terms of budget.

If you are a young first-time resale HDB buyer, the chances of you utilising grants are higher because your household income would typically be less than $14,000. From there, they would be able to have an estimate of the budget that you have, and thus, push you on price accordingly without even having to ask for your budget.

Lastly, dealing with 'fake offers'

PHOTO: Pixabay

You might get into a situation where there is a potential bidding war. Let’s say the seller agent tells you that there are multiple offers already, with the highest being $1.2 million. What’s your next move?

The listed price is $1.2 million, and it seems a little suspicious. Generally speaking, it is definitely a high-risk move on the seller’s agent’s part. Push too much, and you might end up turning potential buyers away — it’s a fine line. But it’s definitely much easier to play this game in this hot market.

So one way to sniff this out is to submit a cheque of your interest anyway. In this case, let’s take it that your maximum bid is $1.15 million. Just send it. Typically, if the agent is genuine, this will again be rejected. But if not, the agent might retreat and say something like “okay, I try for you.”

PHOTO: Stackedhomes

That said, they could then use this cheque to push up offers from other buyers, which might backfire on you — so it’s something to proceed with caution.

Final words

It’s hard for first-time homebuyers today as most of the time you are at the mercy of the seller. If it is your first time buying, you could be forced into a corner.

How do you know if you are making the right decision? What if the price is slightly higher than what you budgeted, how do you know if that is the right call? Like eBay, when the bids start getting into a frenzy that’s when the real shark fest happens.

Why?

READ ALSO: Is housing still affordable to the average Singaporean in 2022?

Because buyers become emotionally committed. In this market, I promise you, you may be tired of making offers after offers only to be rejected. You may just reach a point where you’d say, “Let’s just do it. I’m tired.”

Good seller agents will know how to maximise that opportunity. As a buyer, you’d want to find a buyer’s agent who is going to advise you to make a sensible choice. You’d want to stay rational, and know when to cut your losses.

As the saying goes:

“Your choices are made in a moment, and yet their consequences transcend a lifetime.”

This article was first published in Stackedhomes.