by Neil Jenman
READING TIME: Apx 10 mins
Sometimes you can feel you are being cheated. But you can’t figure out why or how.
It’s just a feeling. But feelings are powerful, and we should listen to them more often.
If you look back on your life, you’ll probably find that many of your biggest mistakes happened when you ignored your feelings.
In my life, I have learned more from reading literature and philosophy than from self-help books or business seminars. I often think of what Conan Doyle’s famous detective, Sherlock Holmes used to say: “When you have eliminated the impossible, whatever remains, however improbable, must be the truth.”
But it takes enormous courage and the preparedness to risk a major confrontation to face the truth at times.
Yet, when it comes to the sale of your home, what’s more important: Getting the best price or getting along well with your agent?
I sure hope you answered, “Getting the best price”.
If not, stop reading now. Because, if you decide to continue, I feel there needs to be a warning that the suggestions contained in this article may be uncomfortable to many readers.
Well, if you are a home seller, you are about to discover what your agent is saying about you and your home – and not what the agent tells you is being said, but the truth, what is really being said.
It’s called Mystery Shopping. It’s so important that every home seller should be encouraged to do it especially when you doubt your agent. When you feel something is not right.
Let me give you two examples.
Kevin owns some of the most beautiful land in Australia. He has several blocks on a hill in one of the prettiest coastal towns in Australia. Identical blocks have sold for as much as $850,000 each. But that was a few years ago. And, although bad news in real estate doesn’t get much publicity, prices in this area have slipped back a bit.
And so, Kevin decided to be fair and reasonable. He offered his blocks for sale for $500,000 or near offer.
And so, he reduced the price.
Every time he called the agent, Kevin was given a raft of excuses. Strangely however, the agent was not asking him to reduce the price.
“Land in that estate has been valued by the bank at close to $900,000,” the agent said, “You are asking close to half price, that’s great value.”
Kevin hung in there. Signed up exclusively with this one agent.
Months then turned into years.
Kevin could feel something was seriously wrong, but he couldn’t figure out what.
We decided to “mystery shop” the agent.
Mystery shopping means contacting the agent – by phone or email – and posing as a buyer and asking questions about your own property.
Now, if that feels a little uncomfortable (“the agent will recognise my voice”), ask a friend to do it.
And no, it’s not unethical. Department stores do it with each other all the time.
Here’s what happened when we mystery-shopped Kevin’s agent. And, even as I write this, I find it hard to believe.
The agent was asked if he had any beautiful blocks of land in the area. Sure, there were plenty, the agent said. When asked for details, the agent told us about many blocks. Incredibly, he never mentioned Kevin’s land (and, seriously, Kevin’s land is by far the best in the district).
No matter how many hints were dropped – about location, about size, about views (all of which are features with Kevin’s land) the agent never said a word about Kevin’s land.
Why not? What was going on?
Eventually, the mystery-shopper lost patience. He specifically named the estate where Kevin’s land was located. He nearly passed out at the agent’s next words.
“Oh, you wouldn’t want to touch anything in that estate. The roads were all washed away.”
Now, please understand. Kevin was signed up exclusively with this agent. Like most sellers, he had placed much of his financial wealth in the hands of one agent. He trusted this agent to do what was best to sell his land.
But not only was the agent not doing what was best, he was actively discouraging buyers from buying Kevin’s land. The story about the roads was absurd. Sure, there had been damage years ago in a cyclone – as there had been in the entire area – but the roads had been repaired or re-built to strict engineering compliance.
So, what was going on?
Why was this agent turning buyers away from Kevin’s land?
Simple. Remember Sherlock Holmes?
The agent was apparently in partnership with other developers on other subdivisions. Rather than sell Kevin’s land, the agent could sell land belonging to his mates or himself and earn a developer’s profit instead of just a commission. In real estate, it’s profitable being a rat.
Further investigations turned up some horrifying claims, including one ex-agent who had long left town but who said: “The agents in the place run it like they are the Mafia.”
Kevin fired the agent. Once his land is sold – which, hopefully, it soon will be – Kevin will be lodging a complaint with the authorities.
It is amazing what you discover when you mystery shop your agent.
There are two instances where you simply must mystery shop an agent. First, if you are in Kevin’s situation and nothing is happening. No sales, no offers. Nothing. Just silence. You need to know what’s really going on. And, as you have just seen, mystery shopping instantly reveals the truth.
Second, if you are getting low offers, all around the same figure.
Please realise something. In many cases, when buyers offer a certain amount for a property, they are offering what the agent has suggested they offer.
One of the worst experiences of my real estate life occurred recently
We were given the honour of helping some delightful owners to sell their gorgeous home on Sydney’s lower north shore.
We chose an agent we believed we could trust, one to whom we had given many sellers in the past. But, this time, because the sellers were “known” to me and because the home was so special – and would sell for many millions – I took an active interest.
The agent – as did many other agents – gave us a price estimate between eight and ten million dollars. The agent we chose even said “maybe more”.
Now, granted, the home is old and in need of repair. But the land and the location are superb. It’s arguably the best available land in the most sought-after part of Sydney. Located a few steps above a secluded beach with views across the harbour, you can fall asleep with the sound of the waves lapping on the sand below. It’s virtually “on the beach”.
This land is a “slice of heaven”, a “piece of paradise”. Those who can afford it can build their dream home and live happily here for years. Listening to the sound of the waves and the parrots in the trees. No traffic, no noise, just bliss. The aura and the atmosphere are c’est magnifique.
Of the 4,925,987 residents of Sydney, 4,925,987 would love to live in this dream location.
Based on our suggestions, the owners signed up with the agent. I was looking forward to getting what the agent promised “between eight and ten million, maybe more”. Personally, I loved the location so much, I would not have been surprised if someone offered well over $10 million.
The house next door – with less views – had been sold at auction. It had been severely under-sold. It should have sold for at least $9 million. But as happens at auctions, if there is no second bidder, then homes get under-sold. By millions of dollars. As happened in this case.
Although our agent agreed that the home next door had been undersold, he kept implying that it would harm our ability to get a good price. Well, not if we explained to buyers, if it came up, that it had been grossly under-sold? The agent agreed. He promised to never use the under-sold next-door home as a reference point for buyers looking at our home.
But then the low offers began.
The first was just over $6 million. When the agent received my angst, the offers improved somewhat, but still they were all coming in around $7 million with only one around $8 million.
And the word in the street, among the neighbours, was that we “wanted around $7 million”.
Why so cheap?
Where were these low offers coming from? What was causing them?
The agent assured us he was not quoting buyers anywhere near $7 million. He insisted that he was not using the sale next door as a reference point with prospective buyers.
So, what was causing buyers and neighbours to be talking about $7 million?
“When you have eliminated the impossible, whatever remains, however improbable, must be the truth.”
I called the agent. I asked him directly if he was telling buyers a figure of around $7 million.
No way, he said.
Was he telling buyers they could use the house next door as a reference point given that it sold for around $7 million?
No way, he said. Definitely not.
I put it to him directly that someone must be spreading all this $7 million gossip.
In a space of 30 seconds, speaking to me as if I was a child, he said the words, “It hasn’t happened” four times, meaning he had not been quoting $7 million or mentioning the home next door.
“It hasn’t happened”; “It hasn’t happened”; “It hasn’t happened”; “It hasn’t happened”.
But it had happened.
And it was still happening.
The famous quote from Hamlet: “The lady doth protest too much, methinks,” tipped me off.
We mystery shopped our “truthful agent” and discovered that he was a lying agent.
When asked by email for the price of the home, the agent responded: “The owners have asked us not to attach a price, however as a reference point next door sold for $7.22 million.”
As we read the words, we all gasped. The agent’s dishonesty rocked us.
To another email enquiry, he replied: “We have interest very close to $7 million”.
To a friend who called him by phone and asked about the price, he said, “Low sevens.”
What was almost as bad as the lies was the lack of enthusiasm. The agent didn’t ask prospects for their phone numbers. He did not follow them up later. As our mystery-shop caller told us, the agent sounded “unenthusiastic”.
When confronted by the results of our mystery shopping, the agent’s first response was to imply that our callers were untruthful. Or, later, when the evidence was irrefutable, the agent implied that it was only a handful of people. Yes, from hundreds of enquiries, the only ones where he had quoted $7 million or mentioned the home next door were the ones we had found. As if.
Here is a truth about liars: Where you find one or two lies, there will likely be hundreds of lies you didn’t find. As any good police officer will attest: Thieves are thieves, liars are liars. If you catch them one time, it’s unlikely to be the only time they lied or stole.
And, if you catch your agent lying in the manner of these two examples, you should cease all dealings with such agents. As the saying goes, “Fool me once, shame on thee. Fool me twice, shame on me.”
The agent had also said, in writing to the owners, “As you know, we are actively pursuing all leads.”
That, of course, was another lie.
Sellers, yes, you may upset liars when you catch them lying. But this is your home at stake here, your greatest financial asset. It is vital to know the truth.
Mystery shopping is the best way to discover the truth.
Here’s one truth about liars: Liars seldom admit being liars. They can be very convincing. But remember Sherlock Holmes: “When you have eliminated the impossible, whatever remains, however improbable, must be the truth.”
That’s why we all gasped when he discovered that this agent was lying to us.
But the big question the sellers wanted to know was “WHY?”
Aside from lying to us, why did the agent do what he did? Why did he quote $7 million when he knew there was no chance, ever, of the owners selling at such a low figure? That would be tantamount to giving it away.
After many long silences, the agent finally said he was quoting low prices to create more interest from the buyers and then, hopefully, talk them up in price later.
He was using bait pricing.
Breaking the law.
Seriously, sellers, be warned of some obvious facts: When an agent suggests using ‘bait pricing’ because it attracts more buyers, that’s true. But it attracts buyers at a lower price, and it means lower offers. Only fools and crooks use bait pricing.
Competent agents know that if you want to sell a home between $8 million and $10 million, the first thing you need is to attract buyers who can afford between $8 million and $10 million.
If you use a bait price of, say, $7 million, you are going to get offers around $7 million.
The other important point about bait pricing is this: If an agent is prepared to deceive buyers, the agent will also deceive sellers. Cheats are cheats. They don’t discriminate. Cheats cheat everyone.
Not only did this agent lie and get caught but his response when caught was cowardly and shameful. He later wrote to the owners implying that he, the agent, was “duped” by the owners into thinking the home next door had sold for more. The owners were right to feel insulted at this dodgy agent inferring they were dodgy. In all my years in real estate, I have never met owners more honest and decent than these owners.
Fortunately, as I advise all consumers to do, I recorded all my conversations with this agent (with full disclosure). As I said to the owners, I feel somewhat embarrassed that I suggested an agent who told them whopping lies, and who also caused damage to the value of the home by quoting it at a lower price.
Thankfully, despite this unpleasantness, we dismissed the agent (which can happen when Jenman Support is helping sellers) and we have placed the home for sale with an honest agent. As happens, the dismissed agent is starting to “white ant” the new agent. Buyers are not silly, at least not as silly as this agent. But, just in case, this article explains what happened.
Mystery shopping enabled us to catch two lying agents. Potentially, the difference to the sellers could be as much as a million dollars. Maybe more.
The message for all sellers is clear: If your home is not selling or if you are getting low offers, you must discover the reason. Sure, the agent will fall back on that same line that most agents use: “Your price is too high”.
Price is not the only reason homes fail to sell. In these cases, it wasn’t that the prices were too high, the lies were too high. With the lying agents gone, watch what happens now.
Never be afraid to check up on an agent by mystery shopping. Or ask us to help you do it.
It’s your house, your wealth, you have a duty to yourself and your family to do what is best for you. If this means you must discover and then confront a lying agent, do it.
What’s the alternative? Lose money by selling too cheaply? No way.
Mystery shop your agent. Always. You will be so glad you did.
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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.