by Neil Jenman
READING TIME: apx 7.5 minutes.
Too many home sellers are being caught by an outrageously common trap.
Today, I am going to tell you about it and show you a simple technique to protect yourself.
There is a word I want you to remember. That word is ‘INTRODUCTION’.
Of all the things we are not supposed to accept as Australians, rewarding incompetence and paying for failure is probably the most distasteful.
But that’s exactly what happens to most home sellers when they sign-up to sell their homes with most agents. Those agreements that agents claim are “standard” or “approved by the real estate institute” are not as harmless as agents make out. They are dangerous.
Those Selling Agency Agreements are legally binding contracts designed by agents and their legal representatives with one purpose in mind: To protect agents. Never mind sellers.
Those selling agreements – contracts – contain some very nasty clauses.
If any home sellers check the fine print in any document (CONTRACT) they sign when they placed their home for sale with an agent, they will soon see the word “introduced”.
Now, rather than get too technical in a legal sense, let me explain what happens to thousands of sellers every month – in a practical sense.
And you’ll soon understand the importance of that word “introduced”.
Most people sign up with an agent for a period of 90 or 120 days. If their home is not sold in that time, some sellers choose another agent.
Agents are quick to say that homes which are not sold often become stale. What they don’t say, however, is that it’s often the agent who’s gone stale, not the home.
Let me give you a specific example.
William and Syrie have had their home listed with the same agent for 90 days. At first, they had high hopes for the agent.
But as the weeks went by, Syrie started to notice signs that worried her.
If your home is for sale and you are having trouble finding a buyer, maybe some of these signs may apply to your home and your situation.
Look.
SAMENESS
Everything was the same. The same advertisement on the same on-line portal. The same times for open-inspection each week. The salesperson standing in the same position greeting the prospective buyers in the same manner.
At first there was a good level of enquiry. On their first open-day they had 22 groups of people through the home.
As the time wore on, the number of inspections slowed. Within a month they were getting single figures for numbers of inspections.
Eventually, at the mid-week inspections, often no one turned up.
NEGATIVITY
Syrie was surprised at the amount of negativity from the agent. It seemed as if all the prospective buyers complained about her home.
William began to think the agent was not focussing on the many positives of their home. Or, at best, he was failing to counteract negative points with a positive point, as good negotiators should do.
William wished he could have been a fly-on-the-wall to hear what the agent was saying to the buyers. He had an idea.
MYSTERY SHOP
William asked his aunty if she would attend the open-for-inspection posing as a potential buyer.
The news was not good. The agent’s presentation was flat to the point of being boring and yes, he did mention negative features of the home.
But what was particularly disturbing was that the aunty told him she “might be interested” and that she was going to “think it over”. The agent never followed her up.
When Syrie asked who had been through on that Saturday, the agent said there had been five groups. He said he had followed them all up and they were not interested.
Syrie and William knew the agent was lying to them. They were worried and upset.
PRICE
After four weeks, the agent said they needed to reduce the price. He kept using the same word: He said the buyers were all “resistant” to the price.
All of them? That seemed a bit of a stretch.
OFFERS
There had been two offers in 90 days that could be described as “reasonable”. Both were within 10 per cent of the price that William and Syrie were asking, so they were confident they had a good chance of securing a sale.
But this is where the agent really let them down. His negotiation technique was, in a word (according to William and Syrie), “pathetic”.
To their horror, they discovered that the agent was negotiating by text and email. He did not even pick up the telephone and call the buyers.
Both prospective buyers are stalled at an offered price below what William and Syrie will accept. Frustratingly, indeed maddeningly so, they both feel that, if their agent was a better negotiator, they would possibly have a sale.
William and Syrie had now lost confidence in the agent. They once heard a saying: “Selling is the transference of enthusiasm.” If true, their agent ranked near zero on the enthusiasm scale. At no stage, did he accept any responsibility for his inability to sell their home.
In one report, when referring to one of the buyers who made an offer, he told Syrie that he had “communicated all the good features of the home to the buyers”. He then added a word that really made an impact with Syrie and William. He said that, despite his excellent efforts, the buyers remain “unconvinced”.
And yet his communication was by text message. “We think he is incapable of convincing the buyers,” William said.
It’s not the price of the home that’s the problem, it’s not the negative features.
The problem is the negativity of the agent and his lack of enthusiasm. He’s gone stale and is now just doing what many lazy agents do – expecting sellers to lower their price. As lazy agents know, the lower the price of a home, the easier it is to sell.
There are essentially two ways agents can sell homes. The lazy way and the hard-work way.
This agent is typical of so many lazy agents.
All they do is place an advertisement on-line and then show up at the home at the agreed open-for-inspection time. They rarely do any work, especially when it comes to following-up buyers by phone. They sit and wait for buyers to show up.
They put all their attention on telling the sellers to lower their prices.
And yet, because these agents do not follow up enquiries, preferring instead to put pressure on the sellers to lower asking prices, here’s what’s really happening: They are asking the sellers to fund their laziness.
Anyway, the good news is that William and Syrie have found another agent. She has seen their home and she is genuinely excited. She believes the price is great value. She is confident she will get close to their asking price, maybe a little more.
She has promised to follow up all prospects in person. She also has a policy, when negotiating, of meeting buyers in person. When the COVID restrictions were severe, she used on-line video conferencing.
Last weekend, William and Syrie signed-up with their new agent.
On the same day, they received a letter from their former agent. Included with the letter was a list of names purporting to be all the prospective buyers who had been “introduced” to their home.
And then came the words: “If any of these people buy your home through another agent you will be liable to pay us the full commission”.
So, here is the trick that catches every home seller: In all those standard selling agreements, there is a clause that says (in lay terms). “If anyone we INTRODUCE to the property buys your property, even after our agency period is over, you still have to pay us the full commission.”
That’s right; agents who fail to sell a home, often due to incompetence still expect to get paid if a second – and more competent – agent is hired by the sellers and that second agent does what the first agent could not do, namely sells the home to one of the buyers who made the offer with the first agent.
The reason, of course, that a second agent was able to make the sale, was because this agent did what the first agent was too lazy or incompetent to do – namely, visit the buyers and sell them.
The first agent still expects to be paid if any prospective buyers who were “introduced” to the home by the first agent buy the home.
So, here’s the farcical nature of real estate today: the first agent fails to sell the home due to laziness, lack of skill or incompetence. The second agent sells the home. The sellers must then pay two commissions. One to the agent who sold the home and the other to the agent who introduced the [same] buyers.
Here’s a fair question:
When selling your home do you wish to pay a selling agent or an introduction agent?
Of course, you should only pay a selling agent.
The problem for most sellers, of course, is that they do not read the fine print. They do not see that “introduction” clause. William and Syrie’s home is worth several million dollars. The commission will be around $40,000. If they had to pay two agents, they’d be up for $80,000 in commission.
But no, William and Syrie have outfoxed the lazy agent.
He has forgotten that, at the time they signed up with him, William and Syrie crossed out that outrageous clause about an introduction fee equal to the full amount of the commission.
But most sellers who have signed up with most agents are not so lucky. They have signed whatever paperwork the agents have stuck under their noses. Big mistake.
So, how did William and Syrie have the knowledge to spot that sneaky introduction clause?
It was simple: Before they called the agent, they called us at Jenman Support. As we do with all sellers, we did not charge them any money. We did not ask them to sign anything. And, finally, we protected their interest. That included crossing out all the nasty clauses in those so-called ‘standard’ selling agreements.
It also included persuading the agent who wanted to have the honour of selling their home to agree to 8 PROTECTION POINTS that we insist are imposed on the agents.
Our role at Jenman Support is to protect home sellers. I can no longer watch this introduction trap which catches most sellers (except those in South Australia where the law forbids such outrageous conduct).
Whether you as a seller choose to use Jenman Support to help you get a better price and a much fairer deal is up to you. But now that you know about this introduction rule, you can simply cross out the offending clause. In New South Wales, you must cross out clause 3 (ii) and 3 (iii).
Ideally, you should always get independent legal advice from a trusted solicitor before you agree to sign anything with any agent.
No lawyer protecting your interests could possibly agree to you signing any of the so-called “standard” Selling Agency Agreements in real estate. They will cross out many nasty clauses.
The few hundred dollars you may pay a lawyer for advice will be much more economical than the thousands of dollars you can lose by being forced to pay two commissions.
If you need help finding an agent or getting yourself a better price, please call Jenman Support on 1800 1800 18. Thank you.
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PLEASE NOTE: Our focus is upon helping consumers. Abuse from agents on our web site or Facebook page will be deleted, ignored or well publicised – it depends on our mood.
But one thing will never vary: We will never stop doing what we love most – helping polite and honest consumers get the best deal possible in real estate. And, of course, if any agents are serious about taking care of consumers, we’ll help you too. Thank you.
Sergio Medina says:
You made my day ! I love learning something new every day .
I got a house I might sell it , I’m not sure as yet, If I decide to do it , I’m confident I can sell it myself.
So far I’ve received a few inquires from my neighbours . looking for a house in the area for relatives .
Azza says:
Excellent article, it is outrageous this is allowed to happen, reminds me of the banking royal commission, some of the Financial Planners where claiming trail commissions for doing nothing.
Robert Blyth says:
Great stuff, I will certainly take your advise and run it past our solicitors before signing anything.
Chris C says:
Thank goodness we have someone like Neil and his organisation warning us of these shady practices. His organisation appears to be the sole protector of real estate sellers in the industry. I will particularly note this particular article on Introduction for when I downsize in the future. Many thanks.
Thomas Mc Nabb says:
Excellent / eye-opening info indeed.
Bravo!
Jane says:
Excellent info – thank you
David says:
Great stuff that you are doing Mr Jenman. Best wishes.
David says:
I wasn’t aware of this “introduction” clause until a friend of mine was chased by a lazy agent for a second commission. He fought it off and gave him nothing. This is a despicable action and should be outlawed in every state and territory in Australia.
Every sensible seller should use no one else other than Neil’s JENMAN SUPPORT preferred Agents.
Graeme SPENCE says:
Again you are the Crusader for home owners and buyers
Steve Wylie says:
I decided to sell my (investment) house myself. I got two valuers to appraise it and I set the price based on them. I printed fliers, a poster board out front and advertised on all the RE sites. Total cost of advertising was $350.
I decided to have open home inspections on Sunday afternoons because then was the only time I was free. Among the many people who came to view, or who phoned me, were real estate agents. They were all very negative.
One RE agent who came to view the house was particularly loathsome. She said I was on her ‘turf’, and I had no idea what I was doing. She said the price was wrong. She implied what I was doing was borderline illegal, and that she could sell the place by the ‘next day’ if I signed it over to her. She said the house was ‘a mess’ as she looked distainfully around. She has a list of buyers, she claimed. I asked her to send them around to look. She snorted. Needless to say, no one ever called claiming she had sent them.
I sold the house for the price I asked to a young family. They told me they appreciated the inside knowledge of the property and surrounds, and thanked me for my honesty. My settlement agent did all the paperwork without a hassle. Her fee was $600.
The whole process was fun and painless and cost about $1k, excluding my time and fuel costs to get there. I met many interesting (and a couple of loathsome) people, and the experience has inspired me to take control of the sale of the our other houses when the time comes. I highly recommend it.
Fashion Styles says:
Hello! This post could not be written any better! Reading this post reminds me of my good old room mate! He always kept talking about this. I will forward this article to him. Fairly certain he will have a good read. Many thanks for sharing!
Doug says:
If Agent brings buyers to inspect a property having not signed any agreement with Seller until 2 days later does the now signed agreement stand.