HOW TO INSTIL COMPETENCY IN YOUR AGENT
by Neil Jenman
Reading Time: Apx 3 mins
Imagine the following scenario: You list your home for sale. You know it’s worth around $1.5 million. But you’re hoping for more.
A few hours after you sign-up, the agent brings some prospective buyers. As they view your home, you hear them gasping in delight. They love your home.
An hour later the agent returns. The buyers are offering you $2 million.
It’s an incredible price.
You’re ecstatic. Even the agent seems shocked. But he’s known these buyers for months, he’s stayed connected with them and shown them several homes. Yours is their ideal home. As the agent says, it’s their “dream home.”
Of course, you accept their offer. You sign the contract. All’s done.
Sold your home the same day for a huge price. You can’t wait to tell your loved ones.
The next day, the agent confirms the details in writing.
And then you see it – the commission.
Fifty-five thousand dollars (including GST).
Sure, you got a good price. But $55,000 for about four hours work – that’s nearly $15,000 an hour.
They can’t be serious. Surely, you’re entitled to a discount given your home sold so fast.
What do you think?
A well-known anecdote may help: A man has a dent in his car’s fender. He goes to a panel beater who climbs under the car with a rubber hammer. One tap and the dent disappears. All fixed in seconds.
The panel beater writes out an invoice for $220.
The man objects: “Two hundred and twenty dollars,” he says, “for one tiny tap that took one minute. You cannot be serious!”
The panel beater replies: “No sir, twenty dollars for the tap. Two hundred dollars for knowing where to tap.”
That’s the answer. Sometimes we are not paying for time, we are paying for competency. Or to be blunt, for results. Especially a result we want.
Imagine being ill. The hospital offers you two choices. Get fixed now, no pain, completely cured – for $2,000, payable today. Second choice, months of intense pain, no certainty of cure – but you get a discount and pay $1,500.
Anyone of sound mind would choose to be cured fast with no pain. Even if it costs extra.
The same should apply in real estate. We should not be frightened of great results, we should encourage them, embrace them. Most of all, we should reward them.
Competency – which is rare in the real estate world – has a value. We admire good lawyers who get a great result in a short time. We adore caring doctors who cure us.
So why not agents?
In real estate it’s different. If agents sell a home quickly – regardless of price – most home sellers want a massive discount on commission or, worse, they think their home sold too cheaply. Some increase their price – not realising, of course, that early offers are usually great offers, often the best they’ll get.
Real estate agents know the dilemma they face if a home sells quickly. They know the owners will want to cut the commission or increase the asking price. And so, instead of doing what they should do – explain to the owners that a fast sale often gives them the best price – most agents engage in an elaborate charade. They prolong the selling process, increase the expenses and, worst of all, sell for a lower price.
There are more reasons agents don’t let homes sell quickly. A quick sale can mean no advertising which means agents can’t promote themselves at the expense of home sellers.
Plus, a quick sale cuts off new leads. All those people coming through open inspections – especially in the first weeks – many are neighbours, some of whom are selling soon. More time means more sellers found. More sellers means more sales and more commissions.
Many agents have a set charge – regardless of circumstances – of around five thousand dollars for advertising costs.
Why would they do that? And for every home? It doesn’t make sense.
Unless, of course, it’s in the agents’ interests to string out sale times – but not too long, just long enough for the agent to enjoy three advantages: First, promote themselves with the sellers’ money. Second, attract more leads. And third, ‘condition’ sellers.
If you are selling your home and you want the best result, do not reward an agent for prolonging the process. Do not agree to pay upfront money for advertising (If advertising really was needed you wouldn’t need an agent – think on that) and make sure you make it clear that if they sell your home fast for a good price, you will happily pay a good commission.
As a seller, you are “employing” an agent. Like all good employers, you should reward competency and punish incompetency.
Sadly, due to their inexperience – many sellers only move once or twice in their lives – most sellers reward incompetency (which is a close cousin of stupidity) and punish competency.
As the great management author Michael LeBoeuf wrote: “What gets rewarded gets done”.
If you want your agent to be competent, it’s simple: Reward competency. Nothing less.
FOOTNOTE: If you want to sell and you need help to find a competent agent, please call us on 1800 1800 18 or email email@example.com. We charge nothing to help you find a good agent.