Most sellers fall for this one.
by Neil Jenman
Reading Time: 7 mins
Warning: This is a thinking person’s article. If you skim it, you’ll risk skimming the price of your home when you sell. Read it slowly. Read it carefully. Think about it. Feel welcome to comment or ask as many questions as you wish. Your family home is your biggest asset. Take care of it. Thank you for reading my articles. Neil Jenman
You’ve got your home on the market. There are two scenarios. Pick one you prefer.
Scenario 1. In three weeks, 300 people inspected your home. No one has bought it. Not a single offer. There seems to be zero interest.
Scenario 2. In three weeks, no one inspects your home. Nothing but silence.
Please consider these two scenarios: Which would you choose – 300 inspections and no sale or no inspections and no sale.
Of course, any right-thinking person would choose Scenario 2. If your home is unsold, the less people who’ve seen it the better. The more people who see your home and don’t buy it, the more you damage its value.
PROTECTING YOUR VALUE
Nothing lowers the value of a home faster than a home seemingly rejected by scores of buyers. Take homes that fail at auction.
Instead of changing the words from ‘For Auction’ to ‘For Sale’ on the signboard, the agents might as well stick the word ‘LEMON’ on the sign.
Stale products rejected by masses of people do not go up in price. They go down in price.
In the real estate world, this is what most agents want. They want sellers to understand that the longer a home remains for sale – especially if it’s been inspected by masses of buyers – the less chance there is of selling the home at a high price.
THE MARKET SCAPEGOAT.
Agents have a scapegoat when a home hasn’t sold. That scapegoat is the market.
Agents love to blame “the market”.
But there’s a behind-the-scenes saying in real estate that sellers never hear. It goes like this: “The agent tells the lie, and the market becomes their alibi.”
It’s not the agent’s fault. No, of course not. It’s the market.
Indeed, every second phrase from agents’ lips seems to be “market this” or “market that”.
Here are ten favourite “market” sayings by agents.
- “This is what the market is telling us.”
- “You can’t argue with the market.”
- “You need to listen to the market.”
- “If the market gets worse, the price will only get worse.”
- “You could be waiting years for the market to go back up.”
- “The market always gets tougher when interest rates go up.”
- “The market can’t pay the same prices now as it was paying last year.”
- “As agents, we are not responsible for the market.”
- “The market is telling us that your home is just not worth the money you want.”
- “The market sets the price.”
But let’s consider some important points (that most sellers never realise, let alone consider).
Anyone who knows anything about real estate – or does any research or has had any experience with selling more than, say, two or three homes, will have stumbled upon a little-known fact:
The “market” always gets worse after sellers sign-up with the agents. Very rarely – only in crazy boom times – does an agent quote a seller a price, the sellers sign-up with the agent and their home sells for a better price than quoted.
The high point in a relationship between agents and sellers is the point where sellers first sign-up with the agents to put their homes for sale.
After that point, it’s downhill all the way.
AGENTS BLAME SELLERS
The first person that most sellers blame if their home does not sell (for the price they want) is the agent they hired.
But, back in the real estate office, it’s a different story. While the sellers blame the agents, the agents blame the sellers. Usually, agents describe sellers as greedy. Sure, because the sellers want the price the agent quoted them when they signed-up with the agent.
But hang on: The agent only quoted (or hinted, intimated, or inferred) that the sellers would get that high price because, at that point, the agent’s goal was not to sell the seller’s home.
No, it was to list the home.
Sellers, please understand a vital point with the sale of your home. Everything goes wrong from the very start, when you call a few agents.
Most sellers interview three agents before choosing one.
And most sellers – and this is only human nature – choose the agent they believe can sell their home for the highest price.
This usually means that sellers choose the agent who’s the biggest liar or, at best, the biggest spin-doctor who makes a really big issue about all the great things that are going to get done for you. Everything from premium internet ads to superbly staged styling to copywritten advertising to professional photography (including ‘twilight photos’) and, oh yes, don’t forget the drone photography.
The way many agents carry on about their “marketing programs” and their “search” for the buyers, you’d be forgiven for thinking that buyers are sheltering behind rocks or sand dunes at the beach.
But your oh-so-successful agent – the one with their photograph on billboards around your suburb – will flush buyers out for you. Like SEAL teams find targets in the mountains of Afghanistan.
As for those agents who claim to have “thousands of buyers on their data base” (yet still want you to pay thousands of dollars to “find buyers”) you’d be forgiven for thinking these agents have got buyers locked away in a cave somewhere. And you’ll only get access to those buyers – who are likely to pay a humungous price for your home – if you chose this agent.
And sellers, here’s the rub: If you don’t go along with everything the agent suggests, it’s your fault when your home doesn’t sell for the great price you were promised.
No, wrong. All this ‘bumpf’ is designed by agents for one purpose – to get sellers to lower their prices to the point where their homes are easier to sell.
The lower the price of a home, the easier it is for the agent to sell. The lower the price, the lower the work by the agent. And here’s the good news for the agents (due to how commissions are structured): When they sell a home for a low price, they still get a high commission.
The formula for selling houses, therefore, is broken down into three stages:
- List the home.
- Reduce the price of the home.
- Sell the home.
And the best way to get sellers to reduce the price is to create a lot of noise.
THE IMPORTANCE OF NOISE
Let’s get back to those 300 people who inspected your home and didn’t buy it. Terrible, isn’t it?
Makes you feel depressed, doesn’t it?
I mean, seriously, 300 buyers looked at your home and rejected it.
Gee, you can’t blame the agent. The Holy Grail of real estate kicks in. Out come the four words that can make the most recalcitrant seller crack (and sell low): “The Market Has Spoken”.
Er no, noise has spoken. That’s not the market.
Those hundreds of people wandering through your home and not buying it, these people are not buyers, they are lookers.
Of course, none wear signs around their necks saying, ‘Open Home Sticky Beak’.
On the contrary, they pretend to be buyers.
And when they don’t buy, they don’t say, “The reason we are not buying is because we are sticky beaks.”
No, they say something such as, “This is not what we are looking for.” Or worse, they denigrate the home.
These pretend buyers are master fault-pickers. They must be otherwise someone might request a look at their wallets or purse. In which case they’d discover moths.
If you doubt what’s being said, please do a little more thinking.
The crowds you see at home inspections or on-site auctions are comprised of mostly, well, crowds.
Consider the following numbers: How many homes are sold in an area each year? On average about eight per cent of people sell their home every year.
How many homes in your suburb? 5,000? 10,000?
Well, the facts are these: There are 10,000 homes sold every week across the whole of Australia. There are 2,644 postcode areas in Australia.
That’s an average of about four homes per area per week.
A lot less than those hundreds of lookers.
Agents rarely qualify people who look at homes. To do so, would eliminate most – if not all – of the lookers. The noise would be gone.
Agents need lookers and sticky beaks making lots of noise. For one reason – to convince sellers to lower their prices.
Every agent has had the experience – many get it regularly – of another agent begging them to “Take someone through my listing at 46 XYZ Street.” And many buyers have thought to themselves, “Why is the agent showing me this property? This is nothing like what I want.”
Noise, that’s why.
One of the worst things sellers can do – and many agents fear this call – is say to the agent: “We haven’t had any inspections for three weeks.”
So, what does the agent do?
Panic. Round up dummy lookers. Hold another ‘open house’ and invite sticky-beak neighbours.
Yes, give sellers some noise. Not only will noise make them settle down, but it will also get the price down.
Noise (also known as “Activity Conditioning”) convinces sellers to lower their price expectations.
Many sellers have had this experience: The agents ask them to vacate the home during the open inspection. The sellers drive up the street and sit in their cars for 30 minutes. They watch to see how many people turn up. One, maybe two. They see the agent drive away. Later the agent calls and says: “We had a very successful open house with 12 couples though.” Liar.
Rather than worry about the time a home is for sale, sellers should focus on how many qualified buyers inspect their home. A good agent should never bring more than a handful of qualified buyers before one or more wish to buy it.
If a home has been for sale for a long time, the reason for it not selling may be as simple as this: The right buyer has not come along yet.
And yet many sellers get upset and change agents. They make the proverbial “frying pan to fire” leap. Things get worse. No agents have a secret supply of buyers known only to them.
THE SOUNDS OF SILENCE
Sellers should not be afraid of silence. On the contrary, they should be afraid of turning their homes into lemons.
Go to any real estate websites and you can see how many people “viewed” a home. Sometimes, it’s thousands. And the home is still for sale. What message does that send to other buyers?
Imagine a dating website. There’s a photo of a man in his early 40s. Call him Fred. He’s good looking. He’s clean cut. Got a nice smile. He’s had 3,756 ‘views’ but no one wants him.
What’s wrong with Fred?
What’s wrong with your home? Nothing, other than you should not be spending thousands of dollars to advertise to people who don’t want to buy your home.
What all this “noise” does, of course, is enable agents to push sellers down in price. Look at all these buyers rejecting your home. This is “the market” speaking – oh how they love that “market” line.
PAYING FOR NOISE
Nowhere is the fallacy of real estate noise more apparent than with big real estate websites.
Australia’s biggest website is currently boasting that it’s had 54.2 million visitors in the three months to May 2023.
That’s about double the population of Australia.
So, what’s happening?
Are planeloads of overseas buyers being imported?
The monthly figures for this internet website are about 18 million per month. But eighteen million what? Not buyers that’s for sure.
Buyers are people who buy properties. Is that a fair enough definition?
Indeed, the number of properties sold (to buyers) each month in Australia is about 40,000.
This means, therefore, that there are 17,960,000 lookers on these big websites. Every month.
That’s one hell of a crowd. That’s a lot of noise.
Of course, agents label anyone who glances sideways at a home as a “buyer”.
Lookers are not buyers. Sticky beaks are not buyers.
And remember this: When you take those 10,000 buyers a week – and spread them across the entire nation – how many real buyers are currently looking in your area?
Don’t pay thousands of dollars to reach millions of people who don’t want your home. That’s nuts.
All you need to do is a bit of thinking.
There is a great book that’s recently been released. It’s written by three scientists, and it explains how noise throws us off track. Noise which we so often embrace, causes us to make wrong decisions. They call it “the greatest fault in our collective decision-making – noise.”
We have all been in a situation where we can’t think because of noise. Watch how most men turn off the car radio when they feel themselves losing direction. Noise causes us to get lost, to make huge mistakes.
Like sell our homes too low. Or too soon.
Sometimes there’s a word that sellers need to remember. That word is ‘WAIT’.
You may have to wait for the right buyer.
Provided you’re not wasting thousands of dollars on noise or feeding egos of agents or contributing to the billions made by the owners of the real estate sites, what’s the problem?
It happens all the time. Sellers influenced by noise. They slash thousands, even millions from the value of their homes – and then massively under-sell their homes.
Why pay attention to people who don’t want to buy or can’t buy your home? Again, that’s nuts.
A home in Mosman sold for $7.5 million. It was the highest sale for the month in which it sold. Local agents had all tried to persuade the owners to spend thousands on expensive marketing campaigns.
One agent arrogantly said, “You can’t spend less than $25,000 on marketing when you sell a home in Mosman.”
Yea, maybe he can’t.
As is often said, “Advertising is what lazy salespeople do when they can’t be bothered working.”
These sellers paid nothing – zero – in marketing costs in advance of their home being sold.
The same happened a couple of weeks ago with a home in Bondi Beach. Not one cent was paid by the owner for marketing costs. And yet he managed to get millions, yes millions, more than most agents said he’d get if he spent tens of thousands of dollars on “marketing”.
This owner was very happy with his $7.3 million. Sure, he waited. But, as we said to him: Every week you waited, your home increased by another $10,000.”
And when someone asks you why your home hasn’t sold, just reply in a confident manner. “We are waiting for the right buyer, that’s all.”
To sell your home for the right price, you only need one buyer, the right buyer. You don’t need masses of non-buyers, whoever they may be.
Get rid of the sticky beaks, eliminate the noise and focus on finding the one right buyer.