REAL ESTATE SELLING
What “selling” means to most agents.
by Neil Jenman
Reading time: 3.5 minutes.
One of the many fallacies of the real estate industry is that agents sell houses.
Real estate agents do not sell houses. Rather, buyers buy houses.
Despite agents commonly saying: “I sold that house for $X dollars,” they didn’t. There was no “selling” involved.
Think about that ubiquitous statement: “We sold that home.”
The meaning of “selling” (in a sales role) is “to persuade someone…”
Are we supposed to believe that agents persuade buyers to buy homes that the buyers neither like nor want to buy?
To listen to most agents, anyone could think the following occurs:
Buyers inspect a home.
The buyers are not interested.
The agent switches into “super-sell mode” – like a vehicle in four-wheel drive – and then, after much straining, the buyers say, “Wait, we’ve changed our minds. We do like this house and now want to buy it.”
Such a scenario seldom happens.
The truth is this: Buyers buy homes they like. The fact that an agent gets a commission of $25,000+ for doing nothing is irrelevant. The home sold itself.
Whether the agent was male or female, short or tall, old or young, the reason buyers buy homes is because buyers like the homes they buy. The agents take the credit, but few truly deserve to be called “salespeople”.
WHAT DO AGENTS REALLY SELL??
Agents know that once they list a home, a sale is usually a fait accompli.
To real estate agents, therefore, “selling” is all about persuading sellers.
There are five main ways that agents sell sellers – and make hefty commissions when properties are bought by buyers.
SALE 1. ATTRACTING HOME SELLERS
The first sale all agents need to make is to persuade sellers to call them. This is commonly done through promoting the agent. Agents call it “profile building”. Agents strive to persuade homeowners that they are local experts and top selling agents.
Warning to sellers: Top agent does not mean a top price. On the contrary, the biggest selling agents are often the best at persuading sellers to sell. They are rarely good at negotiating the best possible price.
SALE 2. PRESENTING TO HOME SELLERS
When agents meet sellers, each claim to be the best agent. Agents are obsessed with improving their listing presentation and finding better ways to persuade sellers to list with them.
Agents use a variety of tantalising tricks at listing presentations. The most common is promising (or intimating) that a home can be sold for a high price. Another is offering a lower commission. Other ways include such tactics as telling sellers they already have a buyer/s interested in buying the home – especially a developer or builder.
Finally, as all agents believe, there’s the charm of the agent. Many modern agents feel that facial hair, casual attire and a flashy car is the formula to persuade sellers to list their homes.
Warning to sellers: Be careful not to reveal the lowest price you want for your home. If agents push you to answer the “how much do you want” question, just say: “We want the best market price. When you can prove that any buyers are offering their best price, then we will consider whether to accept that offer.”
And finally, don’t sign anything at the first meeting, no matter how you may feel. Always think it over.
SALE 3. LISTING HOME SELLERS
The most important sale for all agents is persuading home sellers to list their homes. The moment sellers sign an agent’s listing agreement is the “gotcha moment”. From this point, the agents (not the sellers) are in control. No matter what happens, it’s near impossible to sack the agent. And no matter who buys the home – even if it’s the parents of the sellers – the agents can legally claim their entire commission.
Selling Agency Agreements are legally binding contracts prepared by lawyers whose job is “to protect the interests of the agent”.
Most Listing Agreements are full of harsh and unfair clauses. If sellers knew the reality of what could happen to them once they sign a standard listing agreement, most would never sign such a document.
Warning to sellers: Before you sign any agreement with any agent to list your home, make sure that you delete all the harsh and unfair clauses. As the seller, you can delete or add-in as many clauses as you decide.
SALE 4. SELLING VPA
Today, most sellers are ripped off by a system called VPA – which stands for Vendor Pays Advertising. Of course, the major purpose of real estate advertising is to promote agents, not homes.
But advertising is expensive.
So, what better way for agents to raise their profiles than by persuading sellers that their homes must be advertised. It’s errant nonsense and most agents know it. Many even laugh that sellers are paying to raise the profile of the agents.
Warning to sellers: Nowhere else in the world do agents charge sellers for advertising costs in such a deceitful manner. In other countries, all costs – like advertising costs – are charged once a home is sold. Do not agree to pay any money before your home is sold and you are happy with the price.
SALE 5. SELLING SELLERS TO REDUCE THEIR PRICES
Most agents have a problem when they first list a home – the home is too expensive. All agents know that the cheaper a home, the easier it is to sell.
Given that agents get a high commission regardless of the sale price, agents strive to get sellers to reduce their prices. This is done through a method called “conditioning”. In short, it means bombarding sellers with bad news and often fake low offers, dressed up as “market feedback”.
Some agents – and major networks – have a series of pre-written and pre-planned conditioning letters. Such letters are common with auctions where the entire focus is upon getting sellers to set a “realistic reserve”. To agents, the word “realistic” is a synonym for cheap.
Warning to sellers: An increasing number of sellers are insisting that agents offer a selling price guarantee. For example, an agent may say: “If I can’t sell your home above X dollars, I agree to charge you no commission.” If an agent won’t agree to such a condition, you need to ask another question: Why not?
SUMMARY
If you’re thinking about selling your home, remember that you – not the buyers – will be the one upon whom the agent uses their persuasion techniques.
So how do you find an honest and competent agent, one truly dedicated to selling your home for the best price?
Easy.
Just find an agent who does not ask for payment – of any sort – until your home is sold and you are happy. And make sure the agent truly does understand the major principles of negotiation. Ask them how they plan to negotiate the best price for you. Unless you are impressed, do not hire the agent. For example, any agent who suggests that you use public auction to sell your home is not a skilled negotiator.
As a home seller, don’t let yourself get sold by real estate agents.
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In 2016, I wrote a 28-page booklet for agents called ‘The 42 Rules of Modern Real Estate Negotiation’. This booklet is now available for all real estate consumers– at no charge or obligation. Click here to download a copy or contact us at support@jenman.com.au.
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