How to handle agents : Part 2

PART 2: The INTERVIEW – Grilling Agents

by Neil Jenman

READING TIME: 9.5 minutes apx

IMPORTANT: In this digital age, you should record what salespeople say to you. Your smart phone has a simple recording mechanism.

By law, you must tell the agents that you are going to record what they say. The best agents won’t mind being recorded; indeed, they will welcome it. Dodgy agents will be nervous. They may say, “I am not comfortable being recorded,” to which you can reply, “Aren’t you comfortable with the words that come out of your mouth?”

Here is how you tell agents that you will record what they say:

“Selling our home and choosing the best agent is a major decision for us, so we have decided to make a recording of what we ask you and what you tell us. We want to minimise any mistakes or confusion in the future. We trust you are okay with this.”

Make sure you are recording as you make this statement.

If an agent will not let you record, you should immediately cease speaking with that agent.

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Okay, you’ve contacted a few agents. They are on their way to your place. What are you going to do when they arrive? What questions should you ask? How can you resist their silver-tongue sales spiels?

And, most important of all, how do you know which is the best agent?

Before an agent even walks in the door, there are four vital points you must understand:

VITAL POINT 1 – YOU ARE THE BOSS!

Never forget, it is your home. You are employing the agent. That makes you the boss. The agent is your employee.

You will hear statements from agents such as: “This is the way it is done” or, “We are the experts” or worse, “This is our company policy”.

As the boss, you can (and should) have control over the selling process. When agents sign-up sellers, they say they have “a controlled listing”. They fully intend to “control” you. They want you to dance to their tune. They want you to sign an agreement that “locks you in”. They want to put you through a process known as “conditioning” where they can get you to accept a price much lower than you could have obtained. They want the maximum commission possible.

And that’s it, all over.

Do not believe, for a moment, that an agent’s first role is to get you the highest price. No, the agent’s first aim is to get your home sold – at any price and as fast as possible. That’s why you need to ‘weed out’ the worst and the most unsuitable agents.

Beware of agents who tell you how long they have been in real estate. Years in the industry does not necessarily make them a better agent.

NEW OFTEN MEANS BETTER!

Often, the rookies, the new agents, are much better than the “experienced” agents.

Why?

Well firstly, rookies are usually keener to sell your home. If they don’t sell your home, they won’t have a job. If they can make you happy and, also, get the name of your friends who may want to sell or buy a home, they will try extra hard.

Secondly, new salespeople have less ‘price resistance’.

It is well-known in real estate circles, that “rookie salespeople” often get the best prices.

The “old dogs” (as they are known) think they “own” the market. They believe they are experts with pricing. An old dog is likely to say (or think), “This home is too much, it will never sell at this price.” Such price prejudicial thoughts get passed-on to buyers.

For example, an old dog agent may say to a buyer, “We’ve got the home you are looking for,” and then add these five price-killing words – “but it’s a bit over-priced.”

The rookies, on the other hand, will often say, “Wow! I’ve got the ideal home for you!” They won’t mention price. They will show the home with zest and enthusiasm. Rookies are like tail-wagging puppies.

The next thing you know, the home sells for an excellent price. The old dogs shake their heads.

So, there you have it, one of the prime qualities of a good agent, ENTHUSIASM.

Imagine you were hiring someone for your workplace.  What would you want in such a person?

Try these eight ‘character qualities’ which are the hallmark of good agents: Enthusiasm, honesty, good communication, a caring attitude, professional presentation, confident without being egotistical, highly skilled and, most of all, dedicated to your interests.

VITAL POINT 2 – YOU ARE A TARGET!

In the 1982 movie, An Officer and a Gentleman, Lou Gossett Jnr plays a tough sergeant focused on one target: to discover which men are the best naval aviators. At the falling-in session, he yells: “I will use any means necessary, fair or unfair to trip you up.”

Agents, like the drill sergeant in the movie, will use “any means necessary, fair or unfair to trip you up” and get you to sign their selling agreement, an agreement designed by lawyers to protect and profit agents, not you.

Agents say they cannot sell your home unless you sign their agreement. That’s not strictly true. They cannot get paid unless you sign their agreement. It does not have to be their agreement. You can design your own agreement – which, admittedly, is too much hassle for most sellers – but you can make changes or cross out as many conditions as you like in their agreement.

Many agents have a powerful method to persuade you to sign-up with them. It’s called LYING.

They will lie about how much they like your home. They will lie about how “hot” the market is now. They will lie that they have buyers waiting for a home like yours. The biggest lie, of course – and the one that catches most sellers – is the ‘PRICE LIE’, they will lie about the price they think they can get for your home. If they think it is worth, say, $1.2 million, they will imply that you can get $1.5 million – or more. Or, maybe they will do what an agent in Goolwa did when he told a seller: “You name your own price and I will put it on.”

Another huge lie that most agents perpetuate is the “marketing lie”. They will say you need a “good marketing campaign”. They will talk about the benefit of “premium ads” with on-line real estate portals. They will trot out lines, such as “You can’t sell a secret.”

It will all sound so good, so reasonable. But, to many sellers – especially shrewd ones or those who doing research – it will not feel right. That’s because it is not right.

So, please, do not fall for the price lie or the advertising/marketing lie. Just listen to (and record) what the agents say and then, once they leave, assess each individually. Do not sign up fast. The agents are not going anywhere. They will come back tomorrow if you don’t sign-up today.

The rule should be: Unless you totally trust an agent, NEVER SIGN ON THE ‘FIRST DATE’.

As thousands of sellers will attest, that charming agent who makes all those wonderful promises before you sign the agreement can turn into the meanest monster the moment you sign. It’s as if agents have two personalities.

Here is a simple statement to protect you: “We never sign anything the first time we meet someone. We need time to think it over.” If they keep pushing – as they may – repeat that same statement. “We never sign anything the first time we meet someone.”

VITAL POINT 3 – KNOW WHAT YOU WANT IN AN AGENT!

There are three ways to measure the worth of an agent.

First, their personal character qualities mentioned earlier (from enthusiasm to empathy). Although it can be hard to find a good agent, avoid signing up with an agent you don’t like. As one weary seller said: “For us, we chose one we disliked the least.”

Second, the agent must not put you at risk of loss – either through not selling or through needless expenses.

Thousands of sellers lose thousands of dollars each in wasted advertising dollars. They did not realise that their money had been used to promote the agent. They did not realise that the agent had “sourced” many other leads as a direct result of their marketing campaigns. Therefore, except in rare circumstances, you must make sure you choose an agent who will charge you nothing until your home is sold at the price you want, and you are happy with the service.

The third way to measure the worth of an agent is by their ability to get you the highest market price. Think of those three words. You need, you want, you demand just one result: the highest market price – HMP.

You need an agent who is a skilled negotiator. Now, here is the catch: All agents say they are great negotiators. This is where you will hear about how long they have been in real estate. If they are trying to persuade you to auction your home (the worst way to get the highest price) they will tell you startling stories of how prices went sky-high. Are you impressed? Probably not. There is a difference between a “messenger” who runs back and forth between the sellers and the buyers, and a “negotiator” who sits with buyers and persuades them to pay the highest price for your home. Most agents focus on pushing sellers down in price instead of what they are being paid to do: push buyers up in price.

How do you tell which agents are good negotiators? Ask questions. If you are impressed with their answers, you have probably found a good negotiator. If they hit you with clichés such as: “A property is only worth what buyers will pay,” you are being pitched by a mediocre agent. The best agents will tell you things you don’t know. They will amaze and delight you. When you meet a good agent, you know it.

Here are seven questions you can ask when interviewing (“grilling”) agents to discover their ability at negotiating:

1. We are looking for an agent who can negotiate the best market price; can you understand this aim?
2. Are you a good negotiator?
3. Have you ever studied negotiation – such as read books or done courses?
4. How do you get better prices for your sellers?
5. How do you discover the highest amount buyers will pay for?
6. If you suggest auction, how do you know if the highest bidders offer their highest price?
7. Can you give us examples of how you have got the best price for homes?

These are fair questions to ask the person to whom you are considering giving exclusive rights to sell your biggest financial asset. Push your phone closer. Remind them they are being recorded.

Do not be afraid to make agents uncomfortable. You are the boss, remember. They will earn thousands of dollars if you hire them. Some will say, “What is this – a job interview?” in which case you reply: “Sure is, and we have a lot of agents applying. We want the best agent.” You may ask them: “Do you have a problem with us wanting the best agent to sell our home?”

At this point, the bad agents will be squirming. The good agents will rise to the challenge.

Here’s another great question to determine if an agent is a good negotiator.

8. Most agents have been taught to get sellers down in price, especially by a process known as “conditioning”. We are looking for an agent who eschews such methods. How many ways have your learned about how to get buyers up in price? Can you give us some examples?

NOTE: In our Real Estate Negotiation Course, we teach agents 42 ways to get the highest market price for home-sellers.

We have a booklet for agents called, “The 42 Rules of Modern Real Estate Negotiation”.

If you are a subscriber, you can click here to download a pdf copy of this booklet. Or call us on 1800 1800 18 for a hard copy to be mailed to you.

VITAL POINT 4 – YOUR EXPECTATION POLICY!

Many years ago, my wife and I decided to treat ourselves to a week at an island resort. The place we chose was famous and expensive. We figured we had earned the break. Within minutes of arriving, we regretted our decision. There was only one choice for the evening meal, an experience not suffered since boarding school. Our room was pokey. We could hear people in the neighbouring room. The unforgivable sin was mould in the shower. We were both miserable. One night was enough. We decided to leave. When I called the reception, the lady said, “Mr Jenman, you may not be aware of our cancellation policy,” to which I replied, “And you may not be aware of our expectation policy.”

Too many of us get drawn into the “policies” of companies. And too few companies care about the needs of customers. Not so in your case. You are going to stand up for yourself and demand fair treatment.

Make sure you know what you are expecting. It doesn’t have to be complicated. Here is what you should be able to expect. It could be a mission statement for all home sellers:

“In return for me being sensible and fair, I expect fair treatment. I expect the agent to work hard and use the best method to sell my home at the highest market price. I don’t mind paying, but I expect the job done first and done well. I will pay at the end when I can see the results and know how I feel.”

Most sellers will probably agree that the above paragraph is a fair and reasonable expectation.

But is it really?

WHY AGENTS ARE DODGY.

Why are agents dodgy? Why do they lie? Why do they use tricks to lower the price?

Well, it’s simple. Most sellers want too much for their homes. Instead of agents understanding that it’s perfect reasonable for sellers to want too much for their homes, the agents label the sellers “greedy”. Their lack of ability to understand and communicate effectively means they virtually go to war with the sellers.

When they first meet the sellers, agents know that if they quote the right price, they will be beaten by the next agent who lies to the sellers about the “whopping great price” they can get.

Consequently, agents list homes that are so over-priced as to be near-impossible to sell. The agents now start the “conditioning” process or “managing the sellers’ expectations”. A real estate sales campaign is not so much about finding buyers, it’s about a sustained campaign of convincing sellers to lower prices. Lots of advertising, lots of false low quoting to attract lots of buyers, lots of inspections at ‘open homes’ and, most important of all, lots of “market feedback” where sellers are told what “the market is saying”.

Eventually, once this gruelling process is over, the sellers accept the horrible reality, their home is not worth what they thought it was worth, not even close.

Everyone in the real estate industry knows this to be true. Agents have three goals: First, get the sellers signed-up at any price. Second, condition the sellers down in price. And third, sell the home once the owners crack under pressure.

The biggest fault with the common scenario that goes on in real estate is this: The sellers are not selling their homes for lower than they expected but for less than the homes are worth.

It is a fact of real estate: If you start off asking too much for your home you will almost certainly end up selling too low. All that advertising and all those inspections and all those weeks on the market, all add up to one inevitable result – a lower price than could have been obtained had everyone been sensible from the beginning.

DON’T GET FIXATED ON A SPECIFIC PRICE

Sellers, here is what you must do to prevent your home from being undersold: Do NOT tell agents that you want a SPECIFIC price. As soon as you mention a specific price, you can get yourself into big trouble. If your price is too high, which it probably is, the agents will lie to you in the beginning and ‘whack’ you hard through the conditioning process. The buyers will sneer when your home takes a long time to sell. And, as even first grade schoolchildren will know, the longer a home is for sale, the lower will be the eventual selling price for that home.

So, what do you do if you do not mention a specific price that you want?

FOCUS ON GETTING THE HIGHEST POSSIBLE PRICE!

Again, it’s simple. Tell the agents you want the HIGHEST POSSIBLE MARKET PRICE. You want a good agent who is a skilled negotiator to sell your home for the highest price in today’s market. Surely, that’s a reasonable expectation?

Sellers, please consider this: If you hire a good agent – who genuinely cares about you and will not charge you anything until your home is sold, how can you expect the agent to do more than get the very best price available? You can’t.

So, don’t mention a price. Sure, you can discuss price “ranges” and, yes, you can look at what other sellers are asking (but realise that these homes have not sold!) and you can see prices for which other homes sold (but realise that these were often undersold!) and you can come up with a figure you hope to get. But a good agent is a good agent, not a magician. And all that the best agents can ever do for you is get you the best price in today’s market.

Once the best agents have got you the best price available, please understand a very important truth (that most sellers don’t realise until they have undersold their homes) : With the best price on the table in front of you, you have two choices: Accept it and sell OR reject it and stay.

A lot of sellers make the mistake of thinking they have a third choice: A better price. But if you are genuinely offered the best price in today’s market and you want more, obviously you must wait until tomorrow’s market. And when will tomorrow come? The next real estate boom, which could be years away.

There is nothing wrong with wanting the highest price for your property, that’s what you should want. Things go wrong, however – and this happens with most sellers – when sellers want more than the highest market price. When sellers hold out for an impossible price, they never get it. Worse, by asking too high a price in the beginning, then, I repeat, they will almost certainly sell too low at the end.

When you find an agent you trust – in character and competency – the best and fairest instructions you can give that agent is: Do your best to get me the highest price possible so I can decide whether to accept it and sell or reject it and stay.

When a specific price is mentioned, two great value killing situations arise: First, the agents use tricks to get sellers to lower their price and, second, the seller’s pride (ego) makes them hold out for a price they have no chance of getting.

Yes, focusing on a specific ‘hope price’ can cause all sorts of trouble. All sellers believe their home has special features and is worth more than comparable homes. But buyers rarely buy way over-priced homes. They buy comparable homes instead. And the sellers of the over-priced homes end up underselling their homes.

HIRE A VALUER – PLEASE!

One of the best ways for sellers to realise the true value of their homes is to pay for an independent valuation from a reputable valuation company. Valuers are usually honest, decent and reliable. They have no hidden motive. You pay them a fee; they do research for you and then give you a price they believe represents the true market value. Then, instead of using your emotions (or dare we call it, your “greed”) to determine the value of your property, you have it from a professional, ethical and independent expert.

And yes, you can often sell for more than the price given to you by valuers, especially if your agent is a skilled negotiator and especially if you have given the agent that fair instruction: Sell my property for the highest price.

How can you expect more than the highest market price? You can’t.

So, let the highest market price be the expectation you tell agents. Of course, different agents will sell your home for what they believe is the “highest market price” and that’s why it is so important to select the best possible agent.

The best price, your expectation, will only come once you have found the best agent.

If you feel you have found the right agent, go ahead and sign-up.

But, one final suggestion: Most agents expect you to sign up for a long period, 90 or 120 days. Do not sign up for more than 60 days, even 30 days. There is nothing worse than being stuck with an agent you don’t like. Tell the agent: “I am going to give you 60 days. If our home is not sold by then and we are happy, we will give you another 60 days. But, right now, when we don’t know you, 60 days is the longest we will give you.”

If the agent won’t agree, find another agent.

And finally, if you need help to find the best agent in any area, please contact me personally. I will be proud to help you through both the selection and the interview process.

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COMING UP in PART 3 of ‘HOW TO HANDLE AGENTS’ – TROUBLE SHOOTING, WHAT TO DO WHEN THINGS GO WRONG. To be published and emailed automatically to Jenman subscribers on October 15, 2019. To subscribe to Jenman Support, please click here.

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But one thing will never vary: We will never stop doing what we love most – helping polite and honest consumers to 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.

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