Working with real estate agents are just as important for investors selling properties as it is for investors buying them. Smart Property Investment’s Phil Tarrant and Rich Harvey of Propertybuyer answer some of the most frequently asked questions from investors who are also sellers.
How do you find the best real estate agents for selling property?
Phil: The things I would look for in an agent would be someone who is a tough negotiator, got really good exposure, good local reputation, got a good marketing expertise and someone who’s not a robot. Someone who actually has empathy. I think a lot of agents, sort of, they run this process really in a regimented way and they don’t connect with the buyer, so you want someone that can actually have empathy with the buyers and have really consistent communication.
In terms of their personality, you’ve got to have an agent that’s very, very confident, but not arrogant. You see a lot of arrogant agents that are up themselves. You’ve got to have agents that are really confident about their ability and prove that with their best results. They might have some street records or some suburb records, so ask them, how they handle offers. What if you’ve given them an instruction not to take an offer, what do they do with that? They’ve got to have a certain way that they communicate with the buyers around those offers.
How should a seller deal with commission?
Phil: Not all agents are created equal. In dealing with agents and understanding how they work from a property investor’s perspective, a lot of people when they’re selling a property, all they care about is the commission. They want to pay as little as possible and therefore they’ll choose the agent that has the lowest commission payable and they’ll negotiate with those agents on whoever can give them the lowest commission. That’s not always the best way to go and I’d probably argue that if you’re going down a path of just haggling with agents to try and screw them down on commission, you’re probably not going to get a very good job out of them, and Rich, you’ve seen this time and time again.
What must sellers consider when dealing with an agent?
Phil: Don’t be commission-focused, be process-focused and be outcome-focused. If I was shopping for an agent, I’d get sort of three or four of them to come in and give me a listing presentation. I’d be asking questions about what sort of records sales they’ve had. I’d be looking to get a really good idea on what they think the value of the property’s worth. When a lot of people are selling property, they’ll say, ‘I think my property’s worth this much. Do you think that it’s worth that much, Mr. Agent?’ The agent will say, ‘Yes, it is.’ Obviously, a lot of times, it’s overinflated because they just want to win the work.
An agent is a professional, so I’d be choosing someone who is an expert in a local area that you’re selling. And I would get them to do their job to tell you how much is this property worth and how are you going to sell it.
How does a seller avoid the agent trick “buying the listing”?
Phil: A lot of the times, agents will look to give any listing a lot of boost through advertising – vendor paid advertising. So many times an agent will say to you, ‘I think you should spend this money on X, Y, Z.’ Might be print advertising or on a platform-based advertising. A lot of investors in particular who are trying to make as much money as possible go, ‘No, I don’t want to spend any money on marketing’ or ‘You need to pay, Mr. Agent. You need to take it out of your commission.’
The good agents, and there are some exceptionally good agents, will be able to control the process with you very well – have confidence ... and they’ll tell you ‘no’ as well. The good agent will say, ‘You’re not going to get that. You’re not going to sell it for that. If you put it up there, it’s not going to sell. It’s going to be sitting there languishing on the market for ages and ages and ages.’ If your property doesn’t get sold in the first month or so, you’re probably in trouble, aren’t you?
Rich: That’s right. Well, it’s all about pricing, positioning and presentation. The three Ps that they talk about. Price it right, be realistic. I mean, in New South Wales there’s also underquoting laws, so the agent must give you comparable sales that justify the price that’s being advertised at and quote within a 10 per cent range, and then give you constant feedback on the offers that are coming.
What’s your last tip for investors looking for a selling agent?
Phil: Just because you think they might handle something differently than you would be handling yourself, don’t go down that path because you’re paying them a fee for them to do what they do. You need to be comfortable with them, you need to be confident they can get the job done, but don’t question them on how they’ll deal with particular stuff. You’ve got to let them do what they do.
Tune in to The Smart Property Investment Show’s special episode to get answers to some of the most frequently asked questions about property investment, including tips for getting back on track, creating equity and finding the financial backing you need to get started.