THE HIGH PRICE OF STUPID
How to spot smarter agents and sell for more
by Neil Jenman
Reading time: Apx 7.5 mins
Most real estate agents have three characteristics: Greedy, Lazy and Stupid.
GREEDY
Greedy is not too bad – provided sellers control the agents.
Don’t sign up for longer than 42 days (six weeks). If you give agents time to condition you down in price, that’s what they’ll do.
At the expiration of each six-week period, you can sign-up for another six weeks – if you wish. If not, choose another agent.
The big point is this: You are in control.
Offer the agent a high commission in return for a high price. If they think they are going to get a big payment for a big sale price, greed will make them try harder. But always remember, that’s a big IF. You can negotiate an agent’s commission up to the point of sale.
Studies have shown that when agents sell their own homes, they get better prices than when they sell clients’ homes.
LAZY
Don’t reward laziness.
For example, it’s less work for agents to nag one seller to lower the price than to contact several buyers to increase the price.
Hold out for your price. Stubborn sellers get higher prices, as agents know. They may not like you, but if you assure them that you are serious, most will work hard to get the price you want.
And then, of course, once they get you a price that makes you happy, tell them you want it “net.” In other words, they must add their commission.
They’ll get cranky, but who cares, it’s thousands more for you.
Watch how much harder they work when they are fighting for their own money.
STUPID
The biggest cost of selling is not the agent’s commission, it’s the agent’s stupidity. Your family home is too valuable to place with most agents. They are too stupid to negotiate the highest price for you.
Add this to their lack of care, it means you’ll have stupidity and apathy. That’s a dangerously expensive combination.
With today’s prices, it’s common to see homes sold hundreds of thousands of dollars below true value. This is especially true with auctions, a favoured method of stupid and dodgy agents.
Of the three qualities possessed by most agents – greed, laziness, and stupidity – the final one, stupidity is the worst.
If you don’t believe most agents are stupid, ask yourself: Have you ever heard of anyone failing to qualify as a real estate agent?
No, neither have I.
I have never seen an agent fail to get a license to sell real estate – which should be called “a license to vandalise the value of homes” because that’s what stupid agents do.
You are better off selling your own home (especially when you realise there’s little to no “selling” involved) than placing it with a stupid agent.
BE POSITIVE
Be positive. Learn to recognise the smartest of what is, essentially a stupid bunch.
And yes, sometimes, selecting an agent is more a case of choosing the one you dislike the least rather than finding a smart one that you like.
The difference between a smart agent and a stupid agent can mean as much as 25 per cent of a home’s value. On a million-dollar home, a stupid agent could cost you as much as a quarter of a million dollars.
Recently, a farmer sold for an extra $14 million. He told his stupid agent to cancel the auction and switch to a ‘best offer system’ – while maintaining confidentiality.
Smart agents use the right strategy to get the right price.
The right price is the highest that any buyer is willing to pay.
HOW TO PICK SMARTER AGENTS
NEGOTIATORS. Smart agents study their craft. Instead of common training courses which teach agents how to “grind” sellers down (yes, that’s the term used these days – “grind ‘em down”) – smart agents study negotiation.
How do you tell if an agent is a good negotiator and capable of achieving the highest price possible?
Ask them to tell you how they plan to get the best price.
If they give you the standard cliches – such as: “The market sets the price” or “It’s only worth what the buyers are willing to pay,” reject them.
Unless you are impressed, don’t hire the agent.
Here is what to say to all agents: “Please tell us how you will get us the highest price.”
HIGH, HIGHER, HIGHEST. Smart agents know the difference between a high price, a higher price, and the highest price. The difference between the three levels can be huge.
Many times, stupid agents claim to have got a “high price” or even a “higher price” but they did not get the “HIGHEST PRICE”.
So, ask the agent: “Can you explain the difference between high, higher and highest price?”
DON’T FOCUS ON ADVERTISING.
Smart agents protect the value of a home. The minute a property is advertised, especially on the Internet, it enters the “comparative market”. Buyers compare prices. They buy properties offered at the lowest prices. It’s madness. Most sellers fall for it.
Here’s an example: An investor wanted to sell a home unit. It “owed” him $700,000. He wanted to ask $750,000.
The [stupid] “managing” agent said: “No way. When it goes on-line, buyers will see similar units as low as $600,000.”
The owner instantly said: “Well, don’t put it on-line!” to which the [stupid] agent asked, “How can I find buyers?”
The owner hired an agent who used an old-fashioned method – work. The agent called investors.
He asked them: “Would you be interested in another investment property with a first-class tenant?”
He only called twenty-five investors to get four inspections. He sold the unit for $727,000.
[Please note: If you are selling and want to meet this agent, let us know. Just email support@jenman.com.au].
BANKS OF BUYERS
Smart agents keep records. They note which buyers are looking in which areas. When a property comes for sale, smart agents call buyers in their “bank” and offer them the chance to get in early.
Such buyers often pay a premium price.
Smart agents are usually ethical. They know that if they make owners pay for advertising, most times, this money is wasted.
Most (sometimes “all”) of the buyers who respond to advertising are known to the agent.
There is a maxim in selling: “Advertising is what salespeople do when they are too lazy to call prospective buyers.”
Make sure your agent makes calls rather than waits for calls. You’ll save money on needless advertising. Plus, you’ll get a better price.
YOU CAN “SELL A SECRET”
Contrary to what [stupid] agents claim, you can “sell a secret”. Indeed, the biggest price – for any product, not just real estate – is when buyers find something secretive. Further, many buyers are conscious of privacy. Security is a big issue. Such buyers shy away from homes where hordes of sticky-beaks have traipsed through.
Only the smartest agents understand that the less you advertise, the more you get.
PAY ON SUCCESS ONLY
The dodgiest businesspeople demand a substantial payment in advance. They know that once the clients know the truth, they will be unhappy. They use glib lines about why clients must pay in advance.
Smart businesspeople have good intentions. They are confident they can make clients happy. They are also confident of success. They say to home sellers: “Pay us nothing until your home is successfully sold.” Most agents won’t make such an offer. But most agents are stupid.
As Earl Nightingale once said, “If honesty did not exist, it would need to be invented because it’s the surest way to succeed in business.”
NOT LIKE AGENTS
The smartest agents are not typical agents. If you find yourself thinking: “This person is nothing like other agents,” maybe you’ve found a “good ‘un”.
Most agents say the same things. They are riddled with cliches. They talk constantly about “the market”. They are vague about price. Or worse, they promise a huge price. Several suggest auction. Yet, as any smart agent knows, with auction, it’s near-impossible to obtain the highest price possible. Unless it’s a private auction, of course.
BUYERS UP NOT SELLERS DOWN
Smart agents are not interested in the lowest price sellers will accept. They focus on the highest price buyers will pay.
To give you an idea of the stupidity in real estate: One Melbourne agent is saying: “The only way to stop under-quoting is to make it compulsory for sellers to reveal their reserve price.”
Like all stupid agents, this bloke is focused on the “sellers’ lowest price”. Smart agents focus on the “Buyers’ Highest Price”. They know how to discover it and how to deliver it to sellers.
IN SUMMARY
Smart agents are the ones you need when you are selling, especially now, when prices in many areas are supposedly “falling”. Don’t make matters worse by hiring a stupid agent.
No matter how long it takes, find a smart agent to sell your home. If it takes you four weeks of interviews to find a smart (or the smartest) agent, it will repay you by several thousand dollars.
Smart agents only – that’s the least you and your family deserve.
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