Some agents are not willing to back up their word
I recently came across some people online complaining about real estate agents, telling sellers that they can get them a price for the property above their expectations, but not willing to back it up in their commission structure.
Honest agents don’t participate in overpricing
Here is a story I found online of a seller trying to lock an agent into a contract;
The seller interviewed several real estate agents, and most agents estimated the property would sell for $500,000-$550,000.
The real estate agents continued to say “where it would sell for in that range we do not know” which is fair enough to say because it can very much depend on the buyer competition, the market and what price buyers see value at.
One particular real estate agent claimed that they would be able to sell the property for “over $550,000”, far more than the other agents had estimated.
Of course the owner would love to achieve this higher figure suggested by the other agent, however he was sceptical that the agent may not be able to achieve the result promised.
The owner proposed a commission scheme to the agent that effectively would put his money where his mouth is, offering the agent a fixed fee of $5000 plus an additional 20% for every dollar achieved above $550,000 .
This way, the agent stood to earn a far more generous fee if he sold the property for the price he claimed was achievable.
The funny thing is the real estate agent would not sign the agreement claiming, “What if it sold it for $500,000? We would still do the same amount of work and not be paid for it”.
Obviously this agent didn’t believe in his abilities enough to put it in writing and deep down knew what the market would pay.
Agents overvaluing property to win business
This screams to me “UNETHICAL/DISHONEST REAL ESTATE AGENT”.
It is common practice for unethical or dishonest real estate agents to over quote home sellers to get them to commit to their agreement.
It is a classic example of over promising and under delivering.
This technique is called “buying the listing”, and it taps into the seller’s greed.
These types of agents often won’t commit on a selling price of the property, because more often than not they are unable to deliver on that price, spending majority of the time on blaming the market and the home when they cannot achieve their original outrageous claims.
The characteristics of an honest agent that is willing to back up their word
- Tells you like it is, not to offend you but to be honest
- Constantly in communication and not avoiding your phone calls
- Works in your best interest at all times
- Isn’t afraid of telling you the price the property should be marketed for, using local area experience and recent sales to equate the potential price
- They follow your instructions, but lets you know of any implications that may adversely affect the marketing process
- They don’t break the law (this is an obvious one but some sellers may not be aware of the laws)
- They will not do secret commissions or cash jobs
- They can show evidence of their claims
- Most importantly of all they are willing to back their promises in writing. For example a commission structure that incentivise them to get the price for your property they promised.
The key to selling your property the best possible price
The number one key when selling your property, is to know the realistic price of your property.
Now I understand selling a property can be very emotional and your home can be of great value to you, but when selling to the open market, buyers will not buy for your emotional reasons.
Here is how to find out if your price is realistic;
- Take emotion out of it
- Go to other open homes that are similar to your property
- Ring the council to find out if there is any development opportunities for your block
- Pay for an RP data report on what similar properties to yours sold for
- Call a couple of the largest local agents and ask for a list of sold properties every month
If you are realistic on price and take emotion out of selling your property you are halfway there to getting a great selling price for your property, but if you find an
honest experienced agent with good solid marketing, there is no telling how much more your property can sell for.
I have seen in our office properties go for over $100,000 the reserve price on more than one occasion.
This is unbelievable to watch.
That is, when you have such a good combination between the 6 P’s of property marketing;