BY PETER O’MALLEY
When it comes time to sell, many
people will select the agent on the
price they quote and the fee they
charge. How much do you think our
property is worth and how much do you
charge? And the good news is, if you
want an agent that will quote you a high
selling price and low commission rate,
you will find one. Actually, you will find
plenty.
As a property seller, if you felt that all
agents would offer the same level of
service and all buyers would be
prepared to pay the same amount for
your property, you would rightly choose
the cheapest agent. But the reality is,
not all agents will offer the same level
of service and not all buyers will offer
the same price for your home. In a
snapshot, the cheapest agent is the
agent who leaves the most money in
your pocket after their fees and
expenses have been deducted from the
sale price. An agent who charges 1%
or $10,000 on a million dollar property
sale is cheaper than the agent who
charges 3% or $30,000 on the same
sale. The 3% agent is only cheaper if
they achieve a price of more than
$1,020,000. In theory, this is very
simple – select the agent who leaves
the most money in your pocket. In
reality, the property seller needs to
make value decisions about the agents
before the property is listed, before the
agent has begun marketing the home
and before the agent has begun
negotiating.
The seller is in the
unenviable position of having to put a
value on a service in advance of the
service being delivered. Whether you
like it or not, when you employ an agent
to sell your home, they are negotiating
your financial future. The right agent is
an asset and the wrong agent is a
liability.
Putting a value on the agent
The best way to weigh up agents fees is
to put a value on what they do. Draw up
a checklist of what constitutes value in a
real estate agent. It is common to think
an agent comes along & lists your home,
makes a few phone calls, finds a buyer
and
gets
paid
a
commission.
If real estate were that easy, it would not
have such a high attrition rate. Real
estate agents have two roles, find
interested buyers and negotiate the
highest price/best terms from each buyer.
If the agent can achieve this without
putting stress on the seller, even better,
ie. even more valuable. 80% of all buyers
now conduct their property search on the
internet. Another 10% will be passive
buyers that are on the agent’s database
or call agents when they see a signboard
on a house they like. Finding buyers is
so simple there is now almost no value to
it. Any value subscribed to finding buyers
is not in the strategy, but in the time
invested by the agent.
Negotiation
If consumers make a mistake when
selecting an agent and deciding upon
fees, it is that they underestimate the
importance of negotiation in the process.
Most agents spend excessive amounts of
money looking for buyers and then use
flawed negotiation strategies such as
public auction to close the sale process.
It is during negotiations that agents
become an asset or a liability to your
campaign. Whilst you may have felt
good when you found the cheapest
agent at the time of listing, that good
feeling won’t last if your soft cuddly
agent is negotiating your financial future
with a hard-nosed buyer. Many buyers
make an opening offer to see how the
agent reacts.
Many are pleasantly
surprised at the response or the
information that falls out of the agent’s
mouth. In these instances, the seller has
a massive liability on their side. The
agent.
Ironically the best way to test an agents
negotiating ability is to ask them to cut
their commission rate.
The agent’s
response to being asked to drop their
fee will give you a sense of how the
agent handles price objections. Do they
just roll over and say, “OK, sure that
seems fair”? or do they hold firm with
strength, pride and belief that their track
record of quality service and results
demands they are worthy of a fair fee.
When you ask an agent to reduce their
commission rate, you are witnessing the
agent negotiate their own money. In
watching the agent negotiate with their
own money, ask yourself, do you want
them negotiating with your money? If
the answer is no, don’t hire that agent at
any commission rate.
People are surprised to learn that you
can decide to become a real estate
agent on a Sunday and be legally
qualified to sell houses in just over a
week. The pathetically low entry level to
the industry means that it is littered with
people that should not be there. It is the
home sellers job to work out who they
are and avoid listing with them.
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