Real Estate

Three sales tactics rife in the real estate industry and why they work

Buying a home is likely to be the biggest financial transaction you will ever make, and you’re at a distinct disadvantage. You’re an amateur up against professionals — real estate agents — versed in psychological tricks to get you excited about owning a property and paying more than you planned.

These tricks start with comparatively simple things such as making rooms look bigger in adverts by using a wide-angle photography. They extend all the way to the point of sale.

None of these tactics necessarily involve outright lying — there are laws against false and misleading conduct. But they are manipulative, exploiting the fact that humans are emotional beings with many “cognitive biases” — a perception of reality that is more emotional rather than rational.

The three most common tactics come down to manipulating your confidence in your own decisions. Close to 80 studies suggest overconfidence is one of the most significant cognitive biases influencing behaviour in the real estate market.

1. Underquote, entice the bargain hunters

You see a property in your price range that’s everything you want. You call the agent, inspect the property, then prepare for the auction. It sells for $200,000 more.

Underquoting involves deliberately advertising a property significantly lower than its likely sales price. While the prevalence of the practice is disputed, with industry representatives saying most agents do the right thing, anecdotal evidence points to underquoting being very common.