Get a vendors’ advocate on your side to maximize results and minimise selling hassles.
Kieran Clair [@kieranclair]
The evolution of transacting property has reached new levels in the past decade. A whole raft of fresh professionals has entered the process in order to make sure clients get a fair deal. Buyers’ agents have become firmly established in the lexicon, but there’s a new service in town making waves.
Vendors’ advocates (VA) are building a presence by keeping the seller’s interests front and centre throughout the disposal of their valuable assets. But there’s an elephant in this room – aren’t real estate agents already performing on behalf of vendors? Why is a VA needed? A proper look at the service helps paint the picture.
AGENTS VS ADVOCATES
Vendor advocacy is mostly an extension of the services offered by buyers’ agents. It’s been an organic progression for the profession, according to Janet Spencer, managing director of Buyers Solutions. She says clients build their property portfolio with her guidance, trusting her judgment and devotion to keeping their interests at heart. As such, in a world where every agent is competing for business, clients have naturally started turning to their buyers’ agent for selling advice as well.
“In my role as the buyers’ advocate, I’m mystery shopping all the selling agents all the time.
“I’m a good go-to person who knows who does a really good job as a selling agent and who doesn’t, because when you’re the vendor, you want the agent who walks the walk as well as talks the talk.”
Spencer says regardless of good, honest, hard-working agents doing a great job of selling property, it’s difficult for the general public to get past the vested interest that comes from their selling commissions.
While most agents are honourable and trustworthy, there are practices perceived as dodgy.
For example, advertising not only benefits the seller but also helps market the agent. A VA can step in and make sure the marketing spend is reasonable and correct, Spencer says.
“Sometimes we can encourage a vendor to spend a bit more on marketing when we think it will be useful and sometimes we can also encourage them to spend a bit less, if we think it’s gratuitous.”
Spencer says real estate plays a major role in the drama of a client’s life, so having a VA to lean on means much less stress for all. She quotes one example of a client who was pleased to have a VA by their side.
“It’s a common practice in Melbourne auctions to put in a ‘kicker’, which is if the reserve price is at a certain level, the agent might take 10 per cent of any dollar above that.
“I remember we were at an auction one day and the agent said, ‘Why don’t we set the reserve at $1.6 million?’ and the kicker was 10 per cent of every penny above $1.6 million.
“The bell was ringing, ‘Let’s go, ladies and gentlemen, let’s all have the auction!’ and I just said, ‘Why don’t we set the reserve at $1.7 million?’ and the property sold for $1.92 million.”
That’s a $10,000 saving in commission just for Spencer being present.
“I’m not saying they [the agents] were being dodgy either, it’s just seeing advocacy objectives and thinking on your feet in the moment.”
Patrick Bright, director of EPS Property Search, believes VA services offer a voice of reason that can help save some sellers from themselves. For example, vendors might choose the agent that suggests the highest listing price.
“What happens is people say, ‘One agent says $1.3 million, one says $1.4 million, one says $1.5 million.’ Then they go, ‘the one at $1.5 million believes in my property more than the others. I should give it to them to sell.’
“The oldest trick in the book in real estate is to ‘buy’ the business.”
Bright says by offering an independent sounding board on all matters, the client can make informed, accurate decisions.
“In Sydney at the moment Humphrey B Bear could sell the property. You don’t need to be too clever, but the difference between a good price and a great price is a great agent.”
When offering his VA services, Tony Coughran, adviser with VFM Property Advisors, presents six distinct steps to his clients so they know exactly what to expect.
- Establish the property’s value: “Value is key. The first step is to value and assess the true worth in the marketplace. Provide our client with a full market analysis, equipping them with the most complete and accurate information so they can make an informed decision. Then we can formulate a strategy for marketing the property.”
- Prepare the property for sale: “Once we’ve established a realistic selling range, then we can provide recommendations on how to improve the value of the property overall, at minimal cost and maximum return. We can recommend services from builders, painters, landscapers, property stylists and photography – even furniture staging to get their home presented in its best light.”
- Find the best agent: “Selecting that perfect agent is critical, it’s crucial. We’ll use all of our market insights, knowledge and experiences to short-list it to suitable, top-selling agents in that area for our client. We’ll invite them to submit their appraisals and marketing strategies and we’ll provide recommendations based on these proposal strategies.”
- Going to market: “It’s our job to protect our client’s interest and make sure all the services are being followed through and expectations met… We’ll liaise with the selling agent, on behalf of the buyers with their questions, and address any concerns that might come up… it’s good to be comforted with us as your sounding board. Use us as much or as little as you like and take the emotion out of the process.”
- Negotiating the sale: “This is another big part of the process. It’s not a simple process – there’s quite a bit in it.”
- Keeping things moving: “Making sure everything is running on track for settlement after a contract has been accepted and dated… offer advice when needed. Make sure the building and pest inspections are running smoothly and meeting deadlines.”Bright says he offers whatever level of advice the sellers need, but doesn’t want them to be removed from proceedings. With agent selection, for example, he’ll happily sit with the client during the interviews, but ultimately they’ve got to take responsibility for the agent they choose.“Once I get involved in that process I say, ‘Here’s a shortlist of three agents. They’re all good… They’re in that 20 per cent of the marketplace that you would use that are competent and professional.’“Then I say, ‘Just pick the one you like the most – the one you gel with because it’s going to be a weeks or months process, so you’re going to have to like who you work with.”Ultimately, Bright says, you have to trust any professional you’ve employed, or the process breaks down.“I don’t do the agent’s job for them… Look, they’re the experts.“Don’t hire somebody and then not listen to them.“You’ve made a decision, you’ve hired someone, now listen to them. Otherwise, don’t hire them.”
WHAT TO LOOK FOR
Coughran says there are essential characteristics that VAs should have. First and foremost, be a great listener and communicator. He also recommends using a well-respected member of the local real estate community – someone with good local contacts is a must.
“You need to be experienced and have runs on the board in buying properties and seeing the selling process. If they haven’t been achieving great results, then you’d be questioning their abilities to get your premium result.”
Coughran believes trust is the final major component.
“A good VA will bridge that lack of trust that you might have with the selling agent, and empower you with the information so that you make a really informed decision.”
Spencer had one other essential when it came to selecting a VA.
“I’d make sure they’ve had direct experience as a selling agent themselves. I think that brings empathy and professional respect,” he says.
One upside to using a VA is, in most cases, you don’t pay a direct fee. In some instances, the cost is included as part of other advisory work. VAs also earn their fee as a percentage of the selling agent’s commissions.
This may seem like a conflict of interest, but Bright explains the process of agents paying a “spotter’s fee” or co-commission is well-entrenched.
“There are two types of vendors’ advocates. There are ones that charge an hourly rate to give that advice and counsel, and there are ones that will receive 20 or 30 per cent referral fee from the sales agent for handling that side of things. It’s all disclosed – there’s no secret commissions or kick-backs here.”
Coughran’s approach is to charge an upfront retainer that’s refunded on settlement.
“We just want to ensure that we’re investing our time with serious sellers. At the end of the day, effectively, we’re a no-cost service. The selling agent does pay us our professional advisory fee, that’s paid out of the commission that you’re already paying them anyway. You’re getting two professionals for the price of one. What more can you want? That’s value for money.”
It’s hard to argue with that logic.