Property’s Prickly Pear
How Agents 'Guilt' Sellers by Neil Jenman Reading Time: 8 mins apx VPA – ‘Vendor Paid Advertising’. It’s now the most common scam in real estate. More than 90 per…
by Neil Jenman
If you want to sell your home for the best price, there is one simple rule you must follow.
Put a price on it.
Never mind what agents tell you, if you fail to display a price; or worse, if you use a ‘price guide’ or a ‘price range’ you will almost certainly under-sell your home.
These days, thousands of sellers are being coerced into under-selling their homes because incompetent or deceitful agents persuade them to conceal the price.
It’s basic Negotiation 101 to display a price. It’s also honest and upfront. Buyers love it.
Be warned: Agents these days will apply enormous pressure to you to convince you to hide the price – or use one of those bait-price strategies. You must resist them. Stay firm. Be determined to sell your home in an honest manner, with no deception.
If getting the best price doesn’t matter to you, if you want a sale at any price, then do what most agents suggest: Hide the price or, advertise a lower price than you will accept.
Of course, your first reaction, when an agent suggests such a strategy, may be: “But we won’t sell for that price.”
Your second reaction may be: “Isn’t it dishonest to advertise a price we won’t accept?”
Well, of course it is dishonest. And illegal. But the real estate industry has managed to con authorities by allowing a “range” of price variances to disguise their deceit. Agents figure out ways to break laws as fast as laws are enacted.
When selling your home, an important point to understand is this: You and the agent have different goals. Your goal is to sell at the best price. The agent’s goal is to sell at any price.
Here is what most sellers fail to grasp: Whether the agent sells your home for a high price or a low price, the agent still gets a high commission.
The lower the price, the easier your home is to sell. And the faster the agent gets paid.
This is why agents are always pushing sellers down in price.
Here is a trap that catches thousands of sellers: Agents say: “Hey, hey, wink-nod, if we advertise a lower price, we will attract more buyers.”
Now, while it is true that a lower price attracts more buyers, here’s what is also true: You attract buyers at a lower price.
The agent then uses the ‘This-is-what-the-market-is-saying’ pitch. But here’s the trap: The agent is looking in the wrong market.
If you want to sell your home for say, $2 million, the first thing you need is a buyer who can afford $2 million. If you advertise it for, say, “$1.7 million to $2.1 million,” you will just attract buyers who offer you $1.7 million. Or even lower.
That’s what most agents want: If your price is lower, they sell your home faster. Pocket the commission and then find their next victim.
Look at all those price ‘ranges’ or ‘guides’ nowadays. How often do buyers see a property advertised “from $2.5 million to $3 million” and offer $3 million? Almost never.
By advertising a lower figure, you force your price lower. Never do it. No matter how good or how slick the agent’s spiel, you are almost always better off with an honest price.
Please realise how frustrating it is for buyers when they see no price or when they are “suckered” with a bait-price. Imagine if you try to buy a car and there are no prices. How would you feel?
What about a fridge or a washing machine? You need a price. If not, you get frustrated.
Here’s a golden rule of negotiation: Never make your customers angry.
With so much deception these days, with many agents failing to give buyers a straight answer, you will attract more buyers – and make them a lot happier – if you display an honest price.
And even if you don’t get as much interest, so what? What’s the point of having lots of interest at an unacceptable price? The only advantage is for the agent who can say: “Look at all this activity, this is what the market is saying, you need to accept this offer, it’s the best you’ll get.”
Rubbish.
Many times, agents tell sellers that an offer is “the best you’ll get”; the sellers hold out and, sure enough, the home gets sold for a higher price later.
Be wary of agents who say, “If you put a price on a property, you can only go down.” This shows their lack of skill at negotiation. If you display a price and two buyers wish to buy at that price, you can ask each buyer to make their best offer. You accept the best offer. Recently, an agency that always displays prices, reportedly sold more than half their properties in one month above the asking prices. They are constantly selling similar properties for more than other agents in their area.
Do not be frightened of selling too low by displaying a price. But, again, be careful that you do not leave it too high for too long. If an agent has done everything possible to find a buyer, then you can gently reduce your asking price – until you find a buyer.
Also, be wary of the “more buyers” trap. Agents constantly talk about “more buyers” or “more enquiries”; but how many buyers do you need? Just one. The best paying one.
And, believe it, agents who display prices are always finding that one best paying buyer. They are getting far better client satisfaction – without fake reviews (the latest big scam with agents) – and, best of all their sellers are getting great prices.
So, how do you decide what price to display?
Well, if you are lucky enough to find an agent you trust, this agent will guide you.
If not, invest a few hundred dollars and hire an independent reputable valuer, one with no connection to agents. Overall, valuers are more honest than agents. In addition, valuers do not have a vested interest in inflating the price. You pay them regardless of the price they value your home.
Michael Kies from South Australia is one of the most honest and competent agents in Australia. In his real estate career, he averaged 11 sales per month for a dozen years. He is now a respected real estate trainer. Recently he made a comment that is echoed by thousands of consumers: “The real estate world has gone mad”. He was referring to the madness of price ‘ranges’ and the damage it does to sellers, most of whom never realise what’s happening.
Michael never used deception to make his sales. As a great negotiator, he knows that a fair starting price is the best way to get a great finishing price.
It’s true: If you want to sell your home for the best price, the best rule is to put a price on it.
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Peter woods says:
Wow! This is the most logical and convincing message I’ve seen you provide in all the years I’ve been following you. Thank you.
Rosemary says:
What you say is so true. We were told that we would be able to sell our lovely property for $2 600 000 to $2 700 00. The agent had 6 opens with no price or price guide and there was no real interest once they were told the price began with a 2.
We told them to forget opens and put a price of $2 500 000 and appointment only for inspection. We also wanted the prospective buyer vetted to make sure they were able to purchase.
They have now encourage us to aim for $2 350 000 to encourage offers. We are very disappointed as 4 different agents told us that it was worth $2 500 000 at least.
We have a couple of buyers interested but not at $2 500 000.
We are thinking of taking it off the market and relisting with another agent in a couple of months. The hard thing is to find the right agent.
Colin says:
Appreciate the mention of buyers frustration with not displaying a firm selling price. I have decided to ignore properties that say ‘Offers Over’ etc in my search for a new home. I will tell agents not to waste my time with any that don’t give me a firm number from which to work. Thanks Neil
Ken Beer says:
I am so nieve about property and appreciate your regular commentaries
Ken Beer says:
Thank you for your great insights into selling property
Jack Klaassen says:
Hi Neil, i love reading your reports every time. We bought and sold several properties over the years and thankfull we sorted the good ones from the bad ones.Keep up with the stories andhelpfull information.
What do you think about “Timed auction ” and offers in a closed envelope. More about the buyers view.
Any advise about that would be interesting.
A true reader
Kim Barker says:
Thank you for your advice as I learned a lot from your comment