by Neil Jenman
Reading Time: 5 mins.
In the early 80s, my closest friend was a sassy young Jewish girl from Bronte. Her name was Janey Benjamin.
Janey admired a rising Irish rock star, Bob Geldof.
She called him “that beautiful man”.
Fast forward to November 19, 2007. Bob Geldof was in Brisbane pushing for Australia to give more help to impoverished nations. He described Australia’s percentage of GDP to international aid as “Embarrassingly pathetic”.
Turning his attention to then Prime Minister John Howard, Bob Geldof asked an uncomfortable question, “Is 99.5 per cent not enough for you?”
A similar question could be asked of most of today’s real estate agents. Especially when it comes to agents who charge commission PLUS advertising costs. Such a rip-off (known as VPA) is uniquely Australian.
Most home sellers can’t pick the difference between good agents and bad agents. Good agents are those who place sellers’ interests first. Bad agents are the opposite – they place their interests first.
Good agents have a pay-only-on-success policy.
Advertising (or “marketing”) expenses are mostly obtained through a sleazy system called VPA – Vendor Paid Advertising. Bad agents love VPA. Good agents largely reject it.
There is almost zero justification for charging upfront advertising costs.
When it comes to advertising money, agents profit in many ways; but thousands of sellers – many of whom can least afford it – lose thousands of dollars when their homes fail to sell. It is highly unethical for agents to profit from the losses of their clients especially losses caused by the agent’s negligent advice.
For many years I have written extensively about why VPA is unethical.
At Jenman Support, we search the nation looking for agents who offer a pay-only-on-success method. We insist that sellers be protected from the scourge of VPA.
Some agents mistake our demand on behalf of sellers to mean that agents can never charge advertising expenses. That is not what we are saying.
There are two important parts to how we protect sellers from VPA.
First, we do not want sellers to pay for marketing costs unless their homes are sold.
Second, if a home does not sell (for any reason) the sellers must not lose thousands of dollars.
Of course, as often happens with well-qualified, and “motivated” sellers (agents love those two words), most home sellers do sell their homes.
So, agents, once you have sold a home and your sellers are happy, you can charge marketing costs (either in your commission or in addition to your commission).
I am often accused of being tough on agents.
But I never say that an agent who does a good job does not deserve to be well paid.
I believe in the adage: “A fair day’s pay for a fair day’s work”. I do not believe that agents should profit from the losses of sellers.
And if some agents are too uneducated to learn that premium advertisements that cost thousands of dollars each are both a rip-off and completely unnecessary then here’s a tough statement: Sellers should not be punished for the stupidity of agents.
All home sellers should shun all Australia’s greedy and stupid agents. There are beautiful agents. And now I am going to tell you what it feels like to find one.
Danny Gurney is a sales agent for Leo & Co based in the Brisbane suburb of Newmarket. The principal, Leo Gurney, is Danny’s brother. Leo has been a client of The Jenman Group since 1991. L stands for loyalty.
Over the years, we have recommended Danny Gurney to hundreds of sellers in Brisbane.
Recently he was competing to list a home in one of Brisbane’s best suburbs. As often happens, another agent was competing for the same home
Let’s call the other agent Fred.
The home was worth around $2.5 million.
The sellers wanted an agent aligned with Jenman. Danny Gurney rightly said that Leo & Co is a Jenman Approved agent. He follows the Jenman Approved Codes of Ethics and Client Care.
Fred said that what many agents say. He said his agency “followed some of Jenman’s methods”. He then added, “Jenman’s out of touch in the modern real estate world.”
“Out of touch”?
How so?
Fred wanted money in advance for advertising. Not much, he said. Just $2,500. The balance could be paid on sale.
Danny wanted nothing in advance.
Danny won the listing.
A few weeks later, the home sold for $2.7 million.
The owners were delighted. Danny obtained offers from several different buyers. He used the Buyers’ Price Declaration – as featured in QUESTIONS EVERY SELLERS MUST ASK (Question #174).
So, because Danny Gurney was willing to offer a pay-only-on-success benefit, he earned a commission (at 2%) of $54,000.
And Fred – who said Jenman is out of touch – was out of luck when it came to commission. He got nothing. Not even the $2,500 he’d requested (no, demanded) in VPA.
If only more agents knew how much business they lose because of VPA – because of their greed and stupidity.
Danny Gurney is neither greedy nor stupid.
Had Janey Benjamin met Danny, she’d surely have called him beautiful.
Here’s why.
I decided to call Danny Gurney and thank him for using his knowledge of negotiation to get these sellers $200,000 more than they ever expected.
But I had another reason for calling Danny.
I wanted to tell him that I am not totally against agents being paid advertising money.
What I am against is sellers – many of whom struggle financially – being forced to pay thousands of dollars if their homes haven’t sold.
But Danny told me: “We never charge advertising costs, Neil.”
I misunderstood him. I thought he meant that he didn’t charge marketing costs until a property sold.
But he repeated, “We never charge any advertising or marketing costs, Neil – or whatever agents want to call them.”
Why not?
And then Danny said something that made my eyes moist with admiration for his genuine care for his clients.
“Neil, we look at it this way,” he said. “We just got $54,000 to sell one house. Sure, that’s more than most sales. But these days we often get $30,000 to sell a house. Leo and I can remember how it wasn’t long ago we were getting $3,000 for a sale.”
Although it was probably 30 years ago, what other workers have had a ten-fold pay increase in 30 years?
It was clear from his manner – as well as his voice – that I was speaking with a good and decent man. Sure, I had always known Danny and his brother to be “good blokes”.
But right now, I realised that he clearly didn’t feel comfortable getting paid ten times his previous pay – and getting paid by people with less than a third of his pay increase – plus slugging them for more thousands of dollars in advertising costs.
Leo & Co can afford to absorb advertising costs in their commission. As can most agents. But few agents are so good and so decent. Sadly, it’s hard to find beautiful agents in the ugly world of real estate.
And yet Danny Gurney – in just seven words – says so beautifully what all agents should consider.
“We reckon $30,000 is enough for us,” Danny said.
Just like Bob Geldof’s question to John Howard: “Is 99.5 per cent not enough for you?” more sellers would do well to ask agents: “Is $30,000 not enough for you?”
Maybe you might find an agent, like Danny Gurney, who says – even before you ask:
“That’s enough for us.”
In which case, you will have found one of Australia’s beautiful agents.
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Tragically, Janey did not live to see Bob Geldof shame John Howard with his – “Is that not enough for you?” question. She died of leukemia in her early 30s. On November 24, 2007, five days after that question, John Howard lost the Federal Election and his seat of Bennelong.
QUESTIONS EVERY SELLER MUST ASK is available in most bookshops or can be ordered on-line.
Please note: Some numbers – and the name “Fred” – are changed in this article. The essence remains correct and intact.
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