by Neil Jenman
Reading Time: 4 mins apx
Risk is part of owning a business. If you own a fruit shop, unsold fruit goes stale and needs to be thrown out. If you have a restaurant, the same applies with food. Risk is everywhere in business. It’s the price of great rewards in future profits. Even if you drive a taxi some passengers do a “runner”.
In all these situations and more, business owners lose. But losses are minimal and, besides, they are covered by the profits of the business. That’s why most business-people accept risk.
Except when it comes to real estate.
In the real estate industry, agents try to shift all risk to the sellers, the people they should look after. And, unless the home sellers stand up to agents, many agents get away with this shameful practice. As one home seller recently put it, “It’s outrageous how agents put their clients at risk – no other business does this.”
If you’re selling a home, you do not have to tolerate this ‘transfer of risk’ from the agent to you. You must insist on ‘RISK-FREE’ selling.
‘RISK-FREE’ selling means you cannot be out of pocket for hundreds or thousands of dollars if your home does not sell – for any reason. If there is no sale, you have no costs. This is the way honest business-people treat clients. Okay, there are some exceptions, but there is no need for you to put yourself at risk, especially when there is an alternative.
In real estate, that alternative is ‘RISK-FREE’ selling.
The main topic regarding risk involves advertising costs. Agents say it’s your home, so you should pay advertising costs. It seems logical which is why many sellers get taken-in. If your home fails to sell – for whatever reason – you, the sellers, are out-of-pocket for advertising costs. This could mean you lose thousands of dollars.
But, no matter how the agents spin it, it’s not right. Sellers should never be put at risk of loss, especially when agents profit from their losses as happens with advertising costs.
Again, agents will say: “It’s your house, you should pay the advertising costs.” This is the fallacious argument all agents use. Please don’t fall for it. You can find agents who’ll treat you fairly and who’ll offer you ‘risk-free’ selling conditions.
These days, many agents will decline to accept a home for sale unless sellers pay advertising costs in advance. They threaten to walk away. If this happens when you’re selling, let the agents walk away. Once you understand the process, you’ll realise you can be much better off.
You see, agents rarely disclose two major points about those advertising costs they so earnestly expect you to pay
The first point is this: Agents love to promote themselves at your expense. Many times, they already have a buyer on their books for your home; there is no need to spend your money advertising to find buyers they already know. Agents want sellers to pay for advertising because they are getting free promotion. It’s the biggest ‘backstage joke’ in the industry. “You’re the sucker,” is a common attitude.
Secondly, when agents advertise any home) they get enquiries from other sellers and buyers who may not buy your home, but still do business with the agent. For example, if someone enquires about your home and must sell their own home, the agents will list and sell that home and earn a large commission – all thanks to you. But how much of that commission will the agent give to you considering you paid for the advertising? Well, none of course.
Also, if buyers inspect your home but buy a different home, then again the agent gets another commission. Yes, all at your expense. The agent gets more commission, you get nothing. Worse, they get thousands in extra commissions, you lose thousands in “advertising money”.
When you agree to fork out advertising money before your home is sold – and, worse, put yourself at risk of loss – you are a ‘patsy’ for the agents. They are passing all risk to you and accepting no risk themselves. Don’t fall for it. Stay strong. Insist on ‘RISK-FREE’ selling.
The best agents will gladly offer ‘risk-free’ selling terms. But many agents will say it’s “company policy” for sellers to pay advertising costs. They’ll threaten to walk away if you don’t agree to take the risk. Repeat: Let them walk away.
Seriously, if agents are willing to forfeit their commission if they can’t extract advance fees for advertising money (which they seldom need), let’s face it: They are not the brightest agents.
As one seller said: “If an agent is willing to walk away from a fifteen-thousand-dollar commission because we won’t agree to pay them three thousand dollars up front, we don’t want such brazen stupidity in our agent.”
Just as agents have policies, you, as their customer, can have policies. And one of your rock-solid policies must be: You do not risk being out of pocket for thousands of dollars while the agent earns thousands of dollars. No way.
Business is supposed to be about win-win. But if you are talked into paying for advertising costs up front – and you lose those costs if your home does not sell – the agent has given you a WIN/LOSE deal. That must never be acceptable.
As a seller, remember: You go to an agent to find a buyer for your property. You do not go to an agent to buy advertising space to promote the agent or to makes extra sales for the agent.
You need to be firm with agents. Say these words: “I am a serious seller. If you find a buyer for my property and I am happy with the price, I will pay you a commission and any reasonable costs you may incur – but I will not accept yours (or anyone’s) risk – and I will only pay after we have sold. This is our personal policy. If you do not agree to give us ‘RISK-FREE’ selling conditions, we will find an agent who does agree.”
It’s your property, you are in charge. Better to spend three or four weeks searching for the right agent – who offers RISK-FREE selling and gets you the best price – than signing up with the wrong agent who puts you at risk and with whom you can be stuck for three or four months.
Insist on RISK-FREE selling, it’s the best and safest way to sell your property.
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.