by Neil Jenman
Jenman – Real estate support you can trust
In this article, you’ll discover two ways to identify two qualities possessed by the best agents. These are the agents who will get you the best price, often tens of thousands of dollars extra.
Unfortunately, very few agents possess these qualities. But hang in there, because when you find the agent who offers these benefits, you will be the one who benefits, often to the tune of tens of thousands of dollars extra on your price. Which means thousands of dollars extra in your pocket.
It’s not hard to find an agent to sell your home. Almost daily, a different agent leaves a card in your letterbox saying, “Pick me, pick me”. Usually, they’ll claim to have: “Buyers Waiting!”. But if that was true why do so many agents then ask you for money to advertise to find buyers.
Agents constantly badger home-owners to sell. One seller quipped: “Throw a rock in any suburban street and you’ll likely hit a real estate agent.”
No, it’s not hard to find an agent; what is hard is FINDING THE BEST AGENT to sell your home.
So, how do you pick the best agent if they all seem identical: the same people with different faces saying the same things? Well, if you really can’t tell the difference, if they are all near-identical, the most obvious way is to pick the one with the cheapest fee. Watch out for extras, though.
Agents are much more skilled at deceiving sellers to give them their homes to sell than they are at selling those homes, especially for the best market price. Sure, a one percent fee is enticing, but is that all you must pay? Watch out for the extra hidden costs! Especially the biggest hidden cost of all – under-selling. More on that point soon.
What about advertising? Who pays for the ads – the agent or you? And will the agent charge you the exact amount they pay for the ads or does the agent pay wholesale while you pay retail and the agent pockets the difference? The reason so many agents push advertising so hard these days is that they get an ‘earn’ from the ads, a hefty kickback from advertisers. Indeed, some agents get a bigger percentage to sell advertising than the percentage they get to sell homes.
The best way to know how to find the best agent is to ask yourself two questions. The first question is: What do you want the agent to do for you? The second question is: What do you want the agent NOT to do for you? This second question is the one that thousands of home-owners wish they’d asked before choosing an agent. More on that in a moment.
But first, what do you want an agent to do for you? There are only two things you need an agent to do well – or, better still, to GUARANTEE – in order to sell your home: Negotiate the highest price for you while exposing you to the lowest risk, or, better still, no risk. Got it?
Therefore, the two essential qualities of the best agents are: “HIGHEST PRICE” and “LOWEST RISK”.
Let’s look at each of those requirements. It’s vital that you understand which agents can really deliver on those qualities. You see, here’s your challenge: All agents tell you that they will get you the highest price at the lowest risk. How do you know which ones to believe? I’ll show you.
First, HIGHEST PRICE
Here is a staggering fact: Most homes sold by most agents are under-sold. Most buyers admit that they would have paid a lot more, often as much as tens of thousands of dollars more.
Jim Grigoriou has been a real estate agent in Melbourne for 35 years. He believes that the biggest scandal in real estate is not dummy bidding, it’s not fake offers, it’s not the fraud in most auctions, it’s not the thousands of dollars that sellers are tricked into spending on needless advertising – no, Jim Grigoriou, who is presently writing a book called ‘The Real Estate Short-Sell’, is convinced that the greatest scandal in real estate is the massive amount by which most homes are under-sold. Or “short-sold” as he calls it.
According to Grigoriou’s research, more than 80 percent of homes are short-sold. And not just by small amounts either. He believes – and says he has the evidence to support this claim – that the average home is short-sold by ten percent of the average value of that home.
So, for example, a home that should have sold for a million dollars sells for nine hundred thousand dollars. A home in a cheaper area that sells for, say, $400,000 should have sold for $440,000. Given that the average home price in Australia, according to analysts, Core Logic, is $538,668, this means that the average home-seller loses around $54,000 when they sell their home. That’s a big “cost”!
There are two questions I often ask home-buyers who recently bought: First, how much did you pay and, second, how much more would you have paid? In almost nine times out of ten, buyers admit they would have paid more, often tens of thousands more. Sometimes, in more expensive areas, buyers would have paid hundreds of thousands of dollars more. Recently, I bid at an auction on behalf of an elderly lady. Her highest price – which she only disclosed to me, of course, not the auctioneer – was $1,401,000. We bought the home for $1.3 million, a massive hundred and one thousand dollars below her highest price. The home was under-sold by more than a hundred thousand dollars. The agent later said he had “only charged the sellers one percent commission” (most agents charge at least two percent) which made me think of the well-known saying about “cheap agents”: If they give their own money away, what do you think they’ll do if they get their hands on your money?!
Jim Grigoriou has this to say: “It’s not what agents charge you, it’s what they cost you that’s most important. The amount by which a home is short-sold should be added to the cost of selling the home.”
Unfortunately, most sellers never realise their homes are short-sold. How many sellers ask the buyers, “How much extra would you have paid for my home?”. If they did, many would discover the shocking truth – their homes had been short-sold by an average of $54,000.
The first thing you need in an agent, therefore, is one who is competent enough and smart enough to make certain that your home is sold for the highest price and that, no matter what, your home is not under-sold. Your agent, therefore, needs to be skilled in the art of negotiation.
And please, do not make the mistake of believing agents who say, “I’m a good negotiator.” They all say that. They need to prove it to you. And, how do you discover which agents really do get the highest price for you, the home-seller?
The first thing you do is ask them. Just a simple question such as: “If we give you our home to sell, will you get us the highest price?” The best negotiators love this question. They will be eager to prove they are the agent you want: a skilled negotiator who can get you the highest price.
Now, just as all agents will tell you that, yes, they are good at negotiating, it follows that they will answer your question about getting the highest market price with a positive yes. Your next question, however, is the zinger, it’s the one that exposes most of the agents for what they really are – little more than messengers who convey buyers’ offers to you and hope you say yes so that they can make a sale. They will have no idea how to persuade buyers to increase their offers.
So, here’s what you do. After you have asked the agent if they can get you the highest price in the current market and they have confirmed that, yes, they can do this, you then say: “Please explain how you will get us the highest price.”
Now, most Australians know that a well-known politician was once made to look very foolish when she answered an interviewer’s question with the two words, “Please explain.” But this time, it’s agents who look foolish when you ask them that two-word question: “PLEASE EXPLAIN”.
Yes, please explain how they plan to get you the highest price or how they have got the highest price for all the homes they have sold.”
Now, please stay strong on this next point: The right agents are the ones who will impress you with their answers. As they explain how they get the highest price you will be increasingly impressed.
Unlike with most agents who use clichés such as “lots of marketing” and getting “lots of inspections” (none of which answers the ‘how-do-you-get-the-best-price’ question!), when an agent who really is a skilled negotiator starts to explain how to get the highest price you will not just be impressed, you will be learning something you didn’t know. You will be enormously impressed. If not, if all you hear is the sort of stuff that most agents trot out, such as “you can’t sell a secret”, it means that you have not found the best agent. Not yet.
Keep going. Hang in there. It will be worth it.
If you don’t feel sure that the agent can get you the highest price, tell them you have other agents to interview and if you want to speak with them again, you will call them later. Keep your signing-hand out of sight. Three of the best words of advice are: “DON’T SIGN ANYTHING”, at least not until you are sure that you’ve found the right agent, one you can trust to negotiate the best price for you.
Another great question to ask any agent is this: “If I did some research into the homes your agency has sold; for example, let’s say I spoke to the last ten buyers who bought through you and I asked this question: ‘Would you have paid more than you did pay?’ what sort of response do you think I’d get?”
If an agent gets hostile or uncomfortable with this question, it means you have not got the best agent. The best agents have nothing to hide. They will answer any question because they quite understand your need to check them out. After all, by giving an agent the rights to sell your home, you are probably putting your biggest asset in their hands. You cannot be too careful.
You will almost certainly lose thousands of dollars if you do not select a skilled negotiator.
If you’d like to know exactly how a skilled negotiator gets you the highest price for your home, feel welcome to call ‘Jenman – Real Estate Support’ on 1800 1800 18 and speak with one of our trusted supporters. This is a free service.
Second, LOWEST RISK.
Imagine this: You call a plumber to fix a blocked sink. The plumber assures you that he can fix everything. A few hours later, your sink is still blocked but the plumber has gone. The only thing he’s left behind is an invoice for $500. You are flabbergasted. Even though your sink is still blocked, the plumber is demanding you pay. Or how about this: You’re planning a large barbeque, so you visit your butcher and order 50 steaks. A week later you come to collect your steaks, but the butcher says you’re not getting any steaks, not now, not ever. Oh, but you owe the butcher a thousand dollars.
Both these situations sound ridiculous, don’t they? Impossible, right?
Wrong, each year, thousands of home-sellers get caught.
Here’s what happens: Sellers call an agent, they tell the agent how much they want, the agent assures them everything will be okay and then asks them to sign a ‘Selling Agency Agreement’. A few weeks, sometimes months, later, the home is still not sold. The agent did not do what the sellers expected the agent to do, namely, find a buyer at the agreed price. And so, the sellers decide not to sell. Or perhaps, they change agents. But then, shock-horror, the sellers receive a bill, sometimes for thousands of dollars. If they don’t pay, the agent threatens legal action. Some agents even place caveats on the homes of unsold home-owners. This is not a joke, it’s happening all over our country.
So, literally here is what happened. The home-owners approached the agent to sell their home, the agent failed and now the agent is demanding that the sellers fork out thousands of dollars.
Can you even begin to imagine how you’d feel if this happened to you?
Well, unless you’re careful, this could happen to you if you choose the wrong agent. These costs, by the way, are farcically labelled “advertising” or “marketing” costs. The agents will say that they have spent thousands of dollars promoting your home and therefore you must pay up. Just check that ‘Selling Agreement’ you signed when you first met the smiling, ever-so-nice agent and there you’ll see it, albeit buried in the fine print, the agent is “legally entitled” to charge you for the cost of any advertising that’s ostensibly done on your home. It’s a classic ‘gotcha’ one of the real estate industry’s most common and most seemingly justifiable scams. I use the word “seemingly” because, at least from the agent’s view, it seems fair. The agent spent thousands advertising your home, therefore you owe the agent thousands regardless of whether your home sells. The money was spent, so the money is owed – by you. Pay up or get sued.
But here’s what dodgy agents don’t tell you: The major purpose of that massive marketing has nothing to do with promoting your home, it’s about promoting the agents. Just check any real estate training manual (which they never allow the public to read) or attend any real estate training seminar (which they never invite the public to attend) and you’ll discover the real reason so many agents encourage sellers to spend thousands of dollars on [needless] advertising: it’s not to promote your home, it’s to promote the agents. They call it raising their “profile”. It’s been going on for years, although since the arrival of internet advertising it’s become worse.
As one real estate institute taught agents: “The more ads you have with your name on them, the more successful you will look.”
But, as agents know, if they have 20 homes for sale, the same buyers respond to different ads. Think about it: Why does an agent need to advertise your home? If the agent has been in business for more than a few weeks, they should have hundreds of buyers on their books. And that’s why most of the advertising done by agents is “needless”. The agents already have the buyers on their books.
You have probably heard agents boasting about their number of inspections. “We had more than four hundred buyers through our open-for-inspections,” they’ll crow. Yes, and how many of those four hundred buyers bought the home? Just one.
So, what happened to the other 399 buyers? I’ll tell you: the agents tricked more sellers into handing over thousands of dollars for advertising. To do what? To attract the same buyers.
Are you starting to see the enormity of real estate advertising scams? Agents are taking thousands of dollars from home-sellers supposedly to attract buyers, but the agents already have the buyers.
Here is a simple way to understand real estate advertising scams and why you seldom need to pay for advertising: Let’s say a home-owner wants to sell. The agent says, “You’ll need to spend five thousand dollars to advertise to find buyers”. The sucked-in sellers fork out five thousand dollars. Then, at the open-inspection, fifty people show up. Let’s say they are all genuine home-buyers.
The next week, another home-owner in the next street decides to sell. The same agent gives the same spiel about needing to spend five thousand dollars of advertising to attract buyers. So, this home-owner also gives the agent five thousand dollars. And then, at the open-inspection, guess what happens? The same people that inspected the other home where the other sellers also paid five thousand dollars, show up to inspect this home.
So, here is exactly what happens. At any given time, in any suburb, there might be, say, a hundred buyers looking for a home. There might be fifty homes for sale. If the agents have their way, each of the fifty home-owners will pay five thousand dollars – to attract the same buyers. This is exactly how it happens. And yes, only well-informed home-owners, such as ones reading an article like this, know that being asked to pay for advertising is a scam. Think of those fifty owners all paying five thousand dollars each – which is a quarter of a million dollars between them – to attract the same buyers.
So, here are the two ‘must-have-qualities’ you need in an agent: First, an agent who knows how to negotiate the highest price and, second, an agent who does not charge you for advertising your home, not now, not ever.
Stand firm on these two points. Don’t be bullied. It’s your home, you are the employer of the agent. Do you know what that makes you? The boss! And, as the boss, you tell your worker what you want done. If the worker says no, find another worker.
To make sure you insist on finding an agent with these two qualities, consider this question: If your home is worth, say, a million dollars, how long would it take you to earn a hundred thousand dollars? A year? Six months?
What about saving? How long would it take you to save a hundred thousand dollars? Two years? Five years? If you’re like most people, it will take you years to save a hundred thousand dollars. And yet that’s about the exact amount you’ll lose unless you choose the best agent. So, don’t worry if it takes you a bit longer to find the best agent. Better to search another few weeks than the few years it will take to save the money you will lose unless you choose the best agent.
And, if you can’t find such an agent or the agents tell you that “it’s not done this way in this area,” tell them to wait. Then call us: ‘Jenman – Real Estate Support ’ on 1800 1800 18. If you want to speak with me, Neil Jenman, I’d love to help you. If I am not available, one of my colleagues will help you – at no extra cost. We will either find an agent who can get you the highest price or we will lead an agent in your area through the negotiation process to make sure you get the absolute highest price possible. And, of course, we will make sure that whatever agent you choose, you will not be slugged for advertising.
You now know the two ways to recognise agents who will get you the best price when you sell your home: they are good negotiators who impress you with their negotiation skills and they do not slug you for needless advertising expenses. These two qualities are all you need to ensure that, unlike most home-sellers, you will be thousands of dollars ahead when you sell your home.
These two qualities or benefits – an impressive negotiator and no advertising costs – can easily add up to tens of thousands of dollars extra when you sell your home.