Vendors often select a real estate agent to sell their property without fully considering their selling strategy criteria against the proposed selling strategy.
Blogger: Peter O'Malley, author, Real Estate Uncovered
The simple task of selecting an agent to sell your home can become problematic very quickly.
Whilst there will be many agents who pitch for your business, knowing which agent is the right agent won’t necessarily be straightforward. Selecting the right agent becomes all the more challenging if you don’t know how to identify a good real estate agent versus one who over promises and under delivers.
Many people will interview real estate agents and focus on two seemingly plausible selection criteria: the price the agent feels the property is worth and the agent’s selling fee. Even though most people select their selling agent using these criteria, it is flawed and often leads to the wrong agent being selected. The agent is not a valuer. All agents whom you interview will have an opinion on the likely value of your property, and that’s all it is – an opinion of value.
Ultimately, a real estate agent’s job is to maximise the sale price on behalf of the seller, in a timely fashion. If all you want is a price on your home, call a valuer, not a real estate agent.
When interviewing and selecting an agent, you need to examine the overall proposed selling strategy – the agent’s proposed marketing and negotiation process. The best agent is the one with the best selling strategy, not the highest price quote.
The name of the game when selling is for the agent to negotiate the maximum price from all interested buyers. If the owner signs up with the most price-optimistic agent and commits to a $10,000 advertising campaign over 90 days hoping the agent is telling the truth around price, it will most likely end in tears.
Often, people will sign with an agent who uses a selling strategy they don’t like, such as auction, purely because they like the price the auction agent quoted.
This seems simple enough. However, if you interview real estate agents and don’t bring the selection criteria back to the proposed selling strategy, you will plunge into a world of confusion.
Any prices quoted by agents should be backed by sales evidence. An agent who quotes a proposed selling price without supporting sales evidence should be taken with a pinch of salt. It’s easy for an agent to quote a high price to a property seller, but it takes genuine knowledge and skill to defend the price quote with sales evidence to a buyer when the home hits the market.
Finally, never tell the agent what you feel the home is worth. We are all susceptible to believing what we want to hear. Keep the focus on how the agent will negotiate the highest possible price from every buyer for you.
In terms of commission, fees and advertising costs, the cheapest agent is the one who leaves the most money in your pocket after the sale has occurred. An agent who cuts their commission by one per cent to get the listing is one who likely cuts price instead of building value.
Ask yourself: when an agent is negotiating the sale of your home, do you want one who cuts price to get a deal done or one who builds value into the offering?
It may feel good to get the agent’s fees down at the time of listing, but it won’t feel so good if a buyer is out-negotiating your incompetent agent a few weeks later.
When it comes to paying real estate agents, cheap is rarely good and good is rarely cheap. The best agents maximise price in a strong market and protect price in a falling market.
About the Blogger
Peter O'Malley is the author of the book Real Estate Uncovered which was released in 2013. The book has been written for real estate consumers offering an insight and guide to the inside traps and tactics of the real estate industry.
Peter has worked in real estate since 1997 and offers a unique insight into the inner workings of the industry. He is based at Harris Partners Real Estate in Sydney's inner west suburb of Balmain. Many investors, homeowners and buyers both succeed and fail when transacting in the real estate market. The lessons learned by him have been nicely packaged in Real Estate Uncovered.