Real estate agents can inadvertently set buyers up to bid against themselves, creating a significant challenge for emotional buyers who often miss out on their dream homes.
It’s easy to get swept up in the excitement of finding a property that seems perfect.
Agents are skilled at highlighting the positives and building hype, which can pressure buyers into feeling they must outbid their own limits. In the heat of the moment, you might stretch your budget or make impulsive decisions, believing this is your only chance. However, if there were no other buyers, the seller would likely have accepted your initial offer and this can sometimes take time for a seller to realise the worth of their property.
Agents often encourage buyers to increase their bids, leveraging the fear of missing out. This tactic can lead to emotional buyers entering bidding wars, even when it’s unnecessary. Many buyers don’t realize that agents primarily work for the vendor, aiming to secure the highest possible sale price. This misalignment of interests can obscure the true value of a property and make it challenging for buyers to make informed decisions.
Here’s how agents can create pressure and lead buyers to overbid:
- Inflated Sense of Urgency – Agents may exaggerate the demand for a property, creating a false sense of urgency even when there are no other interested buyers.
- Counter Offer Manipulation: Some agents will claim that the seller has issued a counter offer, pressuring you to increase your bid without giving you time to consider your options.
- Misleading “Offers Over” Listings – When properties are advertised with “offers over,” agents often expect buyers to offer above that threshold, even when a lower offer might still be accepted.
- False Competition: Agents may inform buyers that another offer is imminent, suggesting that if you increase your bid to a certain amount, the vendor will accept it. Even if that’s the case, they may later come back and say the vendor is countering.
- Emotional Manipulation: By emphasizing the fear of missing out, agents can push emotional buyers to make impulsive decisions, leading to higher bids.
Why This Happens
Real estate agents are legally obligated to work in the seller’s best interest, aiming to achieve the highest sale price. For buyers unfamiliar with the market, this misalignment of interests can make it challenging to navigate negotiations effectively.
Additionally, purchasing a home is a rare experience for most people, leaving them unprepared to handle complex bidding scenarios. Without prior knowledge or a strategy, emotional buyers often fall into common traps set by seasoned agents.
Negotiating is a skill that takes time and experience to master, and for many, the process of buying a home is a one-off event. Most people will only purchase one property in their lifetime, making it difficult to navigate the complexities of negotiations effectively. Without the right strategies and insights, emotional buyers can find themselves trapped in a cycle of overbidding and frustration.
Understanding these dynamics is crucial for anyone entering the property market. By being aware of how agents operate and the emotional tactics they may employ, buyers can approach their home search with a clearer perspective and avoid common pitfalls. It’s essential to remain grounded and well-informed, ensuring that decisions are based on facts rather than fear.
Frequently Asked Questions
1. Why do buyers often overpay for properties?
Buyers overpay when they’re influenced by emotional decisions, agent pressure, or misinformation about competition. Agents might create urgency or exaggerate interest in the property, leading buyers to stretch beyond their budget.
2. How can I tell if I’m being pressured to overbid?
Signs of pressure include claims of imminent offers, repeated counteroffers without evidence, or a sense of urgency created by the agent. Be cautious if the agent emphasizes fear of missing out rather than focusing on the property’s actual value.
3. What is “false competition,” and how does it work?
False competition occurs when agents claim there are other interested buyers or imminent offers to make you bid higher. This tactic is designed to create urgency and raise your offer unnecessarily.
4. What does “offers over” mean, and should I always bid above it?
“Offers over” is a strategy to set a low starting price and encourage higher bids. However, it doesn’t mean the seller won’t accept lower offers. Always assess the property’s market value before making a bid.
5. How do I avoid getting emotionally attached to a property?
Focus on facts and your budget. View multiple properties to avoid fixating on one, and consult with a trusted advisor who can provide objective insights.
