1. It’s not just about achieving a sale
Truth: If all you wanted was a sale you could do that yourself!
Think about that. You could put a sign out the front of your home and some ads in the paper and there would be some buyers that would call you and you could sell your home yourself. The reason you would employ an agent to sell your home is because a good agent WILL sell your home for more money than you are likely to be able to achieve yourself.
The reason for this is that a third party negotiator will get more information and feedback from a potential buyer than you could get yourself and is therefore in a better position to negotiate with that buyer. HOWEVER, in many instances sellers employ an agent whose only skill is in introducing buyers to properties. If the buyer likes the property they make an offer at a price they would like to buy it for and then the seller comes back at a price they would like to sell it for and so forth until a price is agreed upon. This is fine if all you wanted was a sale however this is a process of concession and more often than not results in a sale price that is more a reflection of what the owner was prepared to accept not necessarily what the buyer was prepared to pay.
This is not negotiating. It is simply carrying out the legwork of running backwards and forwards to get contracts signed and you could hire a courier or pay someone by the hour to do this. A skilled agent will never have a buyer walking away from your property saying they would pay more money! This is not about holding a buyer at gunpoint as both parties need to benefit from the transaction, but it is about knowing that when you have sold you have achieved the best possible price.
Lesson: You should be employing an agent for their ability to get you more money for your home not just for their time.
2. Choosing the right agent
Truth: Not all agents are the same.
Do you think there is a difference between a good and a poor builder, lawyer or chef? Of course there is. And would you pay more money for a better one of any of these professionals? Absolutely! Similarly there is an enormous difference between a great and a poor real estate agent. The only difference is that in Queensland they all charge the same. You don’t pay any more to employ a superior agent to sell your home as you do to employ a mediocre one.
Truth: Every property has a reasonable price range that it could potentially sell in and a better agent will consistently negotiate prices in the higher end of that range.
Example: On a $400,000 property, that range may be as much as $40,000, even more on a more expensive home. Just take a moment to think about that. The difference to you between getting the right person on board to sell your home and the wrong person may be as much as $40,000. Even conservatively, let’s say $10,000 to $20,000. That’s still a house full of furniture, a nice car, a family holiday or a significant mortgage payment on your next home. I call that an expensive mistake if you have the wrong person working for you!
The question is “How do you make an intelligent decision to engage an agent to sell your home and know that you’ve got the best person on the job?” Too often sellers make the decision to engage an agent to sell their home based on all the wrong criteria.
The only means by which an agent’s performance should be measured is results. It’s as simple as that. Results don’t lie! Any agent can sell a house and any agent can even get a great result in a sale but a superior agent will CONSISTENTLY achieve outstanding results and this will be backed up by recommendations from the vast majority of clients that have dealt with them.
A good agent will:
- Have a very high list : sell ratio. This is, a very high percentage of what they list actually sells. An agent who sold 23 of their last 25 marketed properties gives you a 92% chance of selling your home. An agent who sold 15 of their last 25 marketed properties gives you a 60% chance of selling your home. Or worse put, 40% chance of not selling it! Let me ask you this question, “Would you allow a heart surgeon who had a 40% failure rate perform open heart surgery on you or would you go with someone who gave you better odds?”
- Have a number of satisfied past clients who will offer personal recommendations and who would use their services again without hesitation and will happily supply you their contact names and numbers.
- Have a solid and comprehensive knowledge of the sale process, buyer/consumer behaviors, and principle of marketing. They should be able to answer all your questions in a simple and logical manner.
- Have a team whose mission it is to make your sales consultant more effective by taking care of all the necessary but non-productive work that is involved in facilitating the sale of a property. This means that your agent is totally focused on doing one thing and that is finding and negotiating with potential buyers for your property. After all isn’t that what you employed them to do!
- Maintain a high level of enthusiasm the whole way through your sales process. Many agents will be excited about your home for the first 3 to 4 weeks that it is listed but if the home hasn’t sold within that time frame, it becomes too hard and your property doesn’t get the attention or priority when fresh listings come on board. You are then left with an unmotivated agent and will get frustrated that nothing is happening. A good agent will keep yours and the property’s spirits up for longer, even if the prime selling time has gone (if the home hasn’t sold quickly) and will continue working diligently and enthusiastically until a sale is achieved.
- Have an active buyer management system that records and qualifies buyer enquiry and systematically markets current property listing to this database. Most potential sellers think that all agents would have such a system however the reality is that very few agents do this effectively and the vast majority of agents have no structured process or system for recording buyer enquiry. Be sure to ask any potential agents to explain exactly how their database works and how your property will benefit from exposure to it.
- Offer honest and objective advice about putting your home on the market and will offer this advice BEFORE you have made the decision to sell. The trust is that there are risks involved in selling a home and many costly mistakes can be avoided with the right advice. At the point of listing a property, many agents will tell you what you want to hear to list your property and may withhold important advice that could discourage you from putting your home on the market until you are in the middle of a sale process and are committed to selling.
Many potential sellers will choose an agent to sell their home based on convenience, a feeling of personal obligation and for other ‘gimmicky’ reasons that are convincing but really make no difference to their chance of achieving a great price. These include:
- The agent who tried to boost our expectations and quoted us a high price
- The agent who has the most ‘experience’ or has been around the longest. Experience or time in the market alone are poor indicators of success. Fifteen years of doing it wrong isn’t going to do you any favors.
- The agent who has the highest profile, the most ads in the paper or the most listings in the area. Perceived activity is one of the most misleading reasons to choose an agent. There are plenty of agents that carry lots of listings but only sell half of what they list. Similarly there are many agents that sell lots of property but achieve mediocre results for each sale because they are too busy to properly service each client.
- The agent that we bought the property from that we really like but know we got a great deal. These agents are great to buy through and bad to sell through.
- The agent who has the most convenient office location. Office location makes zero difference to the agent’s ability to sell your home as buyers do not walk into real estate agencies looking for properties;they call off advertisements and signs when they see something that may appeal to them. If a property is marketed well, an agent can sell a home in any area.
- The agent we feel obliged to give the property to because they: Are a friend or family member, Have been keeping in touch the longest, Are a really nice person
Although these seem to be good reasons it doesn’t necessarily mean they are the most qualified person for the job.
Once you’ve found an agent that you are comfortable with and have confidence in, STICK WITH THAT AGENT UNTIL YOUR PROPERTY SELLS. Many sellers switch agents if the property hasn’t sold within a short time frame, wanting to ‘give someone else a go’.
However if your original agent is doing everything that could possibly be done and if you are happy with their ability to negotiate, their market knowledge and ongoing enthusiasm, then there is no more that another agent can really offer. The reality is that some homes are just going to take that little bit longer to sell and if you keep plugging away, you will get there.
3. The truth about price
When thinking about selling your property it is important to have a reasonable idea of what price it can achieve in the current market. Many owners believe that it is the agents job to tell them what their home is worth and that that opinion of price dictates what that particular agent can sell their property for. This belief commonly leads prospective sellers to engage an agent to sell their property largely based on the opinion of the price given by the agent. This often results in misleading opinions of value from agents who ‘over-quote’ to entice sellers to engage them to sell the property.
What's my home worth?
To this end an agent’s opinion is quite often the least reliable estimation of value and should only be taken seriously when backed up by evidence of recent sales. Even then, agents can still be wrong.
The truth is, you could get a handful of agents and a couple of registered valuers to look at your home and on a $500,000 property the difference between the lowest opinion and the highest opinion could be as much as $100,000. So who’s right? No one can accurately and consistently guess values and you will never know exactly where your property sits in terms of price until you start getting the feedback of qualified buyers.
Ultimately the market determines value and the best judge of value is an active and educated buyer in the current market. You see, when a buyer sees your property they immediately compare it to perhaps a dozen or more other homes that they have inspected recently, as well as those they have seen sell. Whereas an agent, can only compare your home to other homes they are currently selling and they may not currently be selling anything that is similar to your property, so there is very little depth to their comparison. They may then look to past sales to get a comparison, however a sale of more than a couple of months ago is obsolete as the market changes and values are set by property that are selling TODAY!
So to get the best feel for values put yourself in the buyer’s shoes and go shopping. Be an educated seller. Go and look at homes that are currently selling your area, attend any auctions, call to get the price when you see a sold sign on a property and educate yourself. Only rely on the opinion of an agent you can trust and make sure that opinion is substantiated.
Lesson: Engage an agent based on their skills and abilities to negotiate the best price for you not on what they think the home is worth. Quite often the agent who gives the highest price is the one who is least qualified to get it and a good agent can easily sell your property for a price that is well in excess of what they may personally think it’s worth.
4. One agent vs many
“Should we list our property with one agent or a couple of different agents?”
This is a frequently asked question and one that opens an interesting debate. It is a common belief that by listing your property with a number of different agents, you give the property exposure to more potential buyers and subsequently a better chance of selling. The truth is, that provided you have made a good decision in selecting an agent to sell your home, you will have a much better chance of achieving a premium sale result, by employing proven marketing strategies with one agent as opposed to having two or three or more agents trying to sell your home.
Reasons not to engage multiple agents:
The control of information in the negotiation of a sale is of paramount importance to achieving a premium price. With multiple agents representing your property you simply don’t know what is being said to potential buyers and how this affects the negotiation process. There is no accountability.
Buyers are looking at properties through many different agents and when a smart buyer sees a property listed with multiple agents they will choose to buy the property through the agent that will get them the best price. This makes it almost impossible for the stronger negotiator, as the buyer would rather buy through the weaker agent. You need to have the hottest buyers dealt with by the most skilled negotiator, as a better negotiator will sell your property to the same buyer as a weaker negotiator would for more money!
Human nature dictates that an agent will spend the majority of their time and energy trying to sell the properties that give them the best chance of getting compensated. The probability that an agent will sell a property also being sold by a number of different agencies is significantly lower than if an agent has sole rights to sell the property. Therefore open or multi-listed properties get the least attention or priority, especially from the more skilled agents who will usually have plenty of sellers willing to give them sole rights to sell their home. Why would a highly skilled agent spend significant time trying to sell an open listed property that gives them a 25% chance of being compensated when they have many opportunities to sell properties that give them a 90% chance of compensation? The flip side of this, is that quite often the agents who will spend significant time trying to sell open listings are the less qualified agents who don’t have any exclusively listed properties and will take anything they can get. The question then is “Do you really want these agents representing your property?”
A multiple-agent sale process encourages competition between agents to sell your home. As much as many sellers think this is a positive thing, it actually works against your best interests as the agent is more concerned about selling your home before the other agent so they get paid, than they are about making sure that the property is being sold for the highest possible price.
An agent is in a much better position to negotiate the best price for you when they are dealing with and have control of all potential buyers. It can become very messy when you have 3 potential buyers being dealt with by 3 different agents, as most of the time these result in a conflict of advice when each agent is trying to protect their right to earn the commission on the sale.
Example: There are two agents that each have a potential buyer for your property. The first agent has just obtained an offer, while the second agent says he is likely to get an offer from his buyer in the next day or so. The first agent wants to earn a commission and doesn’t want the other agent’s buyer to purchase the property, so he tells you that his buyers requires an answer to the offer by 5pm today or else he will withdraw the offer and buy another property. You need to sell your property and to save losing a buyer you accept the offer from the first agent, only to find that the buyer from the second agent would have paid $10,000 more. The reverse side of this situation is that the first offer is a good one that is acceptable to you however the second agent doesn’t want you to take it because that means he will miss out on a commission, so he tells you that his buyer is going to make a better offer in the next day or so. Because you want the best price you wait for the offer from the second agent to find that he never makes one and in that time, the first buyer sees another home that they like better than yours and they go and buy that one… leaving you with nothing!
These types of situations would not occur if both buyers were being dealt with by one agent. The truth is, if a property is marketed well, the hottest buyers in the market will go to the agent that is handling the sale of the property to inspect it. If you have a skilled and experienced negotiator working for you, you will achieve a better result nine times out of ten having one agent versus the scattered and uncontrolled manner in which the process will be handled if you use multiple agents.
We hope you have found this information useful and if you have any questions please don’t hesitate to call or email