Don’t let agents profit if you lose.
by Neil Jenman
READING TIME: APX 3.5 MINUTES
HOME SELLERS BEWARE: One result is 100 per cent guaranteed with many agents. You lose. No matter what happens, whether your home sells or not, whether you get a good price, a bad price or no price, the agent wins and you lose – big time.
Yes, many agents profit from your losses, which is highly unethical.
Here’s what happens:
Let’s say you are selling your home. An agent quotes you “about $1.2 million”. Sounds good.
Let’s also say the agent persuades you to pay $12,000 in advertising expenses (They call it an investment. In reality, it’s the ad scam).
You do not have a spare twelve thousand dollars. The agent mutters something about “paying later” and “when your home is sold”.
You swallow the line that “$12,000 is not much from $1.2 million.”
You agree to list your home with the agent at the quoted price of $1.2 million.
The “conditioning process” starts immediately. “Conditioning” is the term agents use to persuade you to drop your price. They give you a series of bad news such as: “The buyers are saying your home is not worth as much as you expected.” Many agents have a series of “conditioning letters” – all pre-written and ready to send after you sign-up.
One of the most common words in the conditioning process is “market”.
A favourite saying that agents repeat ad-nauseum is “This is what the market is telling us.”
Oh sure, it’s not the agent’s fault, it’s the market. You can’t argue with the market. Really? So how come agents always get it wrong to the disadvantage of sellers? Other than during a property boom, agents seldom tell sellers, “Good news, your home is worth more than we first estimated.” No, it’s mostly less because that’s the system. Agents lie and use the market as their alibi.
Let’s say you resist the conditioning pressure. You refuse to lower your asking price and “meet the market”. You realise what’s happened. You were quoted a high price to make you choose that agent.
You are furious and rightly so. You decide not to sell.
But, wait. Remember that twelve thousand dollars the agent suggested for a “marketing campaign”? Well, that’s what you now owe the agent. If you don’t pay, the agent will sue you. Read the fine print in your agreement.
Thousands of homeowners get ripped off. They lose thousands of dollars and do not sell their homes. Homeowners reading this article might be nodding along. “This happened to me!” are four common words we hear at Jenman Support.
Agents argue that they “spent the money on the owners’ behalf”. They say they did not lie about the price. It’s the market’s fault, not the agent’s fault.
What the agents never tell homeowners, of course, is that agents are promoting themselves with the sellers’ money. In the industry, it’s called “building profile” or “branding”.
Also, agents mention “kickbacks”. Few sellers realise that, when they fork out, say, $12,000, some agents may pocket three thousand dollars of their money – or receive it as ‘credit’ for more advertising. Either way, it’s a rip-off.
Here is something else that happens. When people enquire about a home, one of the first questions agents ask is: “Do you have a home to sell?” Many people say yes. The agents then sign-up more home-sellers as a direct result of your adverting money. When the agents sell those homes and pocket, say, $20,000 commission, how much do they give you considering it was your advertising money that led to these other sales? Nothing.
When you pay (or agree to pay later) advertising money, the agent can profit in three ways. First, by profile, second, with a kickback and third, by finding other sellers. Agents profit from your losses. This is the essence of the ad scam.
Most agents get hundreds of enquiries from potential buyers each month. They should check through their existing data base before spending your money – needlessly.
There is no need to advertise every house in an area to attract every buyer in an area. There are only five ‘types’ (categories) of homes. If agents advertise the most appealing homes in each category, they will attract all the buyers they need. Such honesty and business acumen would save sellers thousands of dollars.
Remember the Golden Rule with Agents: “NEVER PAY ANY MONEY TO ANY AGENT FOR ANY REASON UNTIL YOUR HOME IS SOLD AND YOU ARE HAPPY.”
Ask agents: “Do you have any buyers on your books?” Well, bring those buyers to our home.
Ask the agents: “Are you advertising other homes similar to ours?” Well, bring those buyers who call from those ads to our home.
Ask the agents: “Do you get any commission from advertisers for collecting advertising money?” They won’t like this question. They will realise you have done your research.
Don’t let yourself be bullied – either by having to accept less for your home or paying for needless advertising.
Put the risk on the agent. Tell them, “Sell my home and we will pay you. But, don’t sell my home and you don’t get paid.” Be tough. Bullies fold when you stand up to them.
Competent and honest agents do exist. Sure, they might be in the minority but that’s why many home sellers lose money. Don’t be one of them. Stand strong. Beat the ad scam. Find agents with the integrity to make sure they never profit from your losses and that you only must pay them when you are happy with the sale price and the service.
FOOTNOTE: If you have any problems, call me, Neil Jenman. I will make sure you are not placed in a high-risk position. I will protect you and look after you from the time you think of selling until the time you move out. If you want me to help you, I will be proud to be with you all the way. And, at NO EXTRA COST to you.
ALSO, PLEASE NOTE: Our focus is helping consumers. Abuse from agents on our web site or Facebook page will be deleted or ignored or well publicised – it depends on our mood.
But one thing will never vary: No matter how much we are abused or threatened, we will never stop doing what we love most – helping honest consumers get the best deal possible in real estate. And, of course, if any agents are serious about taking care of consumers, we’d love to help you too. Thank you.