I have recently introduced the service of selling real estate. I would like to take this opportunity to thank the people who have entrusted me with organising the sale of their hard-earned real estate asset.
It is not the first time I have carried out this role. Early in my career I worked as a selling agent for an inner Melbourne firm. It was an interesting experience carrying out the service once again many years later.
Real estate marketing has completely changed since the advent of the internet. However, it has not always been for the betterment of sellers. I have come to the realisation that the current way of selling property, often does not achieve the best outcome for owners.
On many occasions the wrong method of sale is used. In Melbourne, selling agents are irrationally obsessed with auctions. In most situations it’s because it benefits them not the seller.
A successful auction requires two highly motivated buyers with the appropriate financial capacity. If this scenario doesn’t occur the property will either pass in or sell under the hammer for a mediocre price. In both these situations the seller is shortchanged.
A small proportion of auctions attract multiple highly motivated buyers, the optimum price is then achieved for the seller. However, many auctions don’t pan out this way. They either pass in with no bids or one bidder is highly motivated and competes with less motivated buyers.
If the property passes in, the seller is on the backfoot in the negotiation, their weak position has been exposed.
The other common scenario is a highly motivated buyer is pushed to a mediocre price level by less motivated buyers. After some subtle pressure from the selling agent the property is announced on the market and sells for a lesser price than could have been achieved using a different method of sale. The fact is, 80% of buyers who purchase at auction have much greater capacity.
Auction contracts must be unconditional, for this reason some buyers are unable or unwilling to participate in an auction. This can impact negatively on the selling price.
Real estate agents love auctions because it is a great business model for them. Open the property for inspection for a few weeks, carry out the auction, “crunch” the seller on price on auction day, bank the commission, repeat, repeat, repeat!
If the property passes in, it gives the seller instant negative feedback, this makes the agents job easier. As a bonus the selling agent gets to parade around on the street during the auction giving their business the opportunity to attract another unsuspecting seller.
The amount of advertising money real estate agents extract from sellers is excessive. Glossy brochures and even glossier for sale boards. What for? The only winner is the selling agent’s business, not the seller. Buyers can download a glossy brochure of the property from real estate.com free of charge.
Real estate agents are not supposed to make money on advertising. How can I charge my seller less for advertising when I only have one seller as against an agent who has multiple sellers contributing to their advertising spend?
The next important factor when selling is making sure your property is presented to the optimum degree. This doesn’t mean spending a lot of money. I have been doing pre-sale refurbishments for my entire 30 plus years in the property industry.
It is a fine art, under or over capitalising will impact negatively on the selling price, the sweet spot needs to be achieved, this will add many thousands to the selling price. As part of my service, in most situations I don’t charge for organising pre-sale improvements.
The next important attribute of a quality selling agent is to have a genuine desire to negotiate the highest possible price. Many agents just want to put the transaction together and move on. The standard percentage-based commission structure gives no incentive to achieve an exceptional price.
Sellers only get one opportunity to sell their hard-earned asset, I will always negotiate the highest price for my seller.
