by Neil Jenman
Reading time: 6 mins apx
Zac is a Sydney schoolteacher, one of the best. Zac cares about the children with whom he spends each day. Indeed, he cares so much that he takes extra courses (outside the school or Education Department) on how to be a better teacher. Given how much his students admire him, Zac is certainly a successful teacher. Yes, surely one of the best.
As well as teaching subjects in the school curriculum, Zac also teaches children how to live a good life. His pupils learn values such as honesty, industry, and responsibility.
“Zac’s kids” are the best-behaved kids in the school. That makes Zac proud.
Zac is the sort of teacher that children remember all their lives. He is influencing hundreds of future citizens.
Well done, Zac. You – and teachers like you – are hidden heroes in society. Being a teacher is not easy in the 2020s, which is why teachers are among the most trusted of all the professions.
Unlike real estate agents who are now the least trusted of all the professions.
Last week, Zac decided to sell an investment apartment in Sydney’s western suburbs.
He contacted the agent who’d been collecting his rent for several years.
The agent told Zac his apartment was worth around $850,000. After paying out his loan, Zac and his wife would need a bigger loan to buy a family home. Sydney prices are high, especially on a teacher’s wage.
Zac asked about the agent’s costs. The commission was 2.5 per cent, a little steep, but Zac remained tight-lipped.
But then the agent said Zac must pay $4,500 for “marketing costs”.
Zac was shocked. He had previously sold two properties without paying marketing expenses – or indeed any costs – before a sale.
The agent replied: “How long since you last sold a property?”
“About ten years,” said Zac.
“Ah well,” said the agent. “Things have changed.” The agent smugly said that sellers now pay marketing costs – usually thousands of dollars – when they list their properties. Regardless of whether their properties sell, marketing costs still get paid.
Zac said he didn’t feel comfortable.
The agent was ambivalent. “That’s the way it is,” he repeated. “It’s the policy with most agents.”
Zac had researched the real estate industry. He’d read articles including one from this author on the topic of “company policy”, a common term used to shut-down dissent from customers in many industries. Fair or unfair, doesn’t matter. Company policy is company policy.
But $4,500 is a lot for a schoolteacher. It would take Zac and his wife at least three months to save such an amount. Zac’s prudent nature was not going to allow him to pay $4,500 without a valid reason.
Like many savvy consumers – in today’s treacherous business world – Zac and his wife have set their own ‘Family Policy’.
They had heard about agents who offer “No charges until sold,” and that’s the policy they embraced.
Zac had also heard about an agent in Melbourne called Scott Kim.
Despite their dreadful reputation for dishonesty and now, as Zac was discovering, their laziness, there are some agents – albeit a minority – who are scrupulously honest and who do work hard for clients. Best of all, these agents never charge for marketing or commission until two results are achieved: First, a property is sold at the highest price. And second, when sellers are happy.
Scott Kim is such an agent. Even though he works in Melbourne, his work ethic can apply to any agent in Australia.
When Scott listed an investment apartment, instead of asking sellers to pay thousands of dollars in [needless] marketing costs, Scott used another method to find the right buyer.
That method is hard work – something that’s anathema to most agents today.
Here’s what Scott did…
Knowing his agency managed properties for hundreds of investors, Scott telephoned investors and asked if they’d be interested in another investment property.
After just 25 calls, Scott had 14 investors interested. He made five appointments. Within two days, he had two buyers offering an enormous price – far above the price for similar apartments in the same area marketed on websites.
This is exactly what Zac’s agent could have (and should have) done. Instead of asking a schoolteacher on a meagre salary to pay $4,500 for marketing expenses so that this lazy agent could sit on his bottom and wait for buyers to call, the agent should have done what agents used to do (yes, ten years ago when Zac last sold).
Things sure have changed. Agents have become greedier. All over Australia, agents now ask sellers to fork out thousands of dollars in marketing expenses (in addition to commission) purportedly to “find buyers”.
But agents have prospective buyers. For investment properties, many agents have hundreds of investors for whom they collect rent. They should contact these investors before asking sellers to waste thousands of dollars in needless marketing costs.
As anyone who understands the real estate industry knows, the purpose of real estate marketing is not to promote properties, it’s to promote agents – lazy agents.
It’s not just investment properties where agents expect sellers to fund their laziness, it’s all properties. Here is what happens all over the country:
A home seller calls an agent. The agent persuades (cons) that seller to pay thousands of dollars in marketing costs – let’s say $5,000 (often much more). The agent advertises the home and sits at an open-inspection for 30 minutes on Saturday.
Let’s say – in three weeks – 200 people inspect that home.
The home is then sold – to one person.
That means 199 people inspected the home and did not buy it. Sure, many will be sticky beaks, but many will be prospective buyers for other local homes.
The next week the agent gets a call from another homeowner in the next street. Again, the agent persuades (cons) the second sellers to fork out $5,000 for marketing costs.
And guess what?
The same people who inspected the first property now inspect the second property.
Obviously, the agent should have called all the surplus buyers from the other property before asking the second sellers to pay $5,000 to attract the same buyers.
Zac told his agent: “It is out family policy to pay nothing until our property sells. We suggest you contact your current investors or prospective buyers before you ask us to waste thousands of dollars. If you do not want to accept our policy, we will find an agent who does accept our family policy.”
Like many sellers, Zac was too polite to say something else.
Such as: The average commission in Australia is now about $20,000. Commissions have risen about seven times higher than the average wage (yes, including schoolteachers). On average, an agent spends four hours to sell a property – most of which is spent conditioning sellers down in price. To earn $20,000 for four hours, is $5,000 per hour.
To demand another $5,000 in addition to the $20,000, well, as many sellers – including Zac – are now saying: “It’s obscene.”
Well-informed sellers are now looking for agents who are smart enough to realise that placing the interests of clients first is good business. Everywhere else in the world (except NZ) agents have one charge. It’s called commission and it’s only paid when a home is sold.
Your family policy should be this: Never pay any money to any agent – especially for “marketing costs” before your property is sold and you are happy.
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FOOTNOTE: Although Zac’s rental agent belongs to a network with the slogan: “We put you first,” Zac realised that this lazy agent was putting his family a distant second. Let’s hope Zac teaches his pupils how to use prudence and character to stand up to lazy agents. And let’s hope Zac’s story becomes an example and an inspiration to thousands of property sellers, thereby collectively saving them tens of millions of dollars every year. Don’t let agents take money that will take you months to save. If $5,000 an hour is not enough for agents, then not only are they lazy, they are also greedy. And worst of all, by not doing what’s best for their clients, is stupid.
Lazy, greedy, stupid – the three characteristics of so many agents today.
But not for you.
Find a hard-working, decent and smart agent. Someone like Scott Kim – or like Zac the schoolteacher. People of character. Not con artists.
Finally, if you can’t find an agent who’ll agree to such a fair condition, contact us at Jenman Support on [email protected]. We will find you a good agent. If not, we will show you how to sell without an agent.
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Frances says:
Many thanks once again for your advice. It is very helpful for me. Frances