01 Nov 8 key questions most sellers don’t ask agents – Tim Eaton
There is a great book I want to tell you about today – its called The Real Estate Matchmaker. In it, Tim Eaton sets about explaining the 8 key questions most sellers don’t ask agents to guarantee they never leave any money on the table when negotiating the sale of a property. You will hear them in the show today.
Kevin: I told you I’d tell you about a book that’s been written by Tim Eaton. It’s one of two books actually that Tim has sent me, but today, we’re going to talk about the one that’s called “The Real Estate Matchmaker” because inside the book, he gives you the eight key questions that nobody asks to guarantee that you never leave money on the table.
First of all, I’ll say hello to Tim. Good day, Tim.
Tim: Good morning, Kevin. Good to be here.
Kevin: I’ve been trying to put together a list of key questions that you should ask every agent before you appoint them, but the thing that I’ve found is that quite often we can ask the questions but we just don’t know what kind of answers we should be expecting because agents are very good at not spinning but selling themselves, Tim.
Tim: Yes, spinning is not an unfair word sometimes, Kevin. Yes, that’s true. They’re looking to convince the homeowner why they should choose them and selling the big story about themselves. The great agents sometimes appear a little intrusive. They’ll ask questions of the homeowner, which is the best way to get a conversation going.
Kevin: Yes, you have to understand about the person. A house is a house. It’s the person you’re actually either taking to auction or taking through the sale process.
Kevin: Yes, I did promise that we’d go through the eight key questions. We’re not going to be able to talk about them all in detail, but we’ll certainly get across the top of them. There’s one in particular I want to talk about, and then I think over the next few weeks, we might pick up on some of the others. Let’s quickly run through what are the eight key questions that need to be asked or understood about how an agent works, Tim.
Tim: The subtitle of the book, Kevin, is that everything sells best fresh. The first of the eight keys is days on market. It’s a terminology that is a bit of jargonized within the industry called the DOM, or days on market. It means how long has the property been on the market before it sells, and the earlier it does that, the better.
Kevin: The measure of a good agent is that their days on market is likely going to be less than their opposition or the market generally.
Tim: Absolutely, and that information is available to the homeowner. It’s free. It’s on public websites. What is the average days on market in that area? You want to see your agent would be less than the average in the area.
Kevin: Okay, second one.
Tim: Auction clearance rates. This won’t apply to every jurisdiction in Australia, but for most of them, you want to see high auction clearance rates. An agent who’s bringing properties to auction, getting somewhere between seven to eight out of ten sold under the hammer, that’s fantastic. Most of those will get sold. If they’re not sold on the day, they’ll get sold shortly after.
Kevin: Yes, a lot of focus is currently on what’s happening with clearance rates in Sydney, and we’re seeing that’s a good indicator that that particular market is actually slowing down. What’s number three, mate?
Tim: Private treaty average discounts. The house that we call for sale – with a “for sale” sign – that’s called a private treaty. It’ll get listed at a first starting price. Let’s say it gets listed at $500,000. Most properties at that point have a little bit chipped off the top of them before they’re negotiated to a sale price. The percentage that they come down is what we call the average discount. With your agent, you want to see that to be a very low figure – they start at much closer to where it finishes.
Kevin: Number four?
Tim: Number four is the ratio of private treaties to auction that your agent has. Are they in offices with a great sense of urgency, that they bring to their properties, that they bring to the market? Offices that have a high ratio of auctions tend to have a higher sense of urgency. That feeds back into the first key: they’ll probably have lower days on market.
Kevin: I’m going to dig more into some of these topics in the coming weeks, as well. What’s number five?
Tim: Five is the vendor’s investment in promotion. There’s an old-fashioned saying, Kevin. You’ve probably heard it. You can’t sell a secret.
Kevin: That’s right.
Tim: The homeowners have to be prepared to put a bit of money on the table to invest in the marketing of their property to attract an emotional buyer.
Kevin: Yes, that’s always cause for a lot of debate. “Why should I pay for the advertising when it’s all going to be about you and so on?” But I don’t want to get into that debate today; I’d love to have it in the weeks to come. What’s number six?
Tim: Number six is surveys. You’ll probably find that when the agent is sitting down with the homeowner looking to bring their property onto the market, they’ll put some testimonials down from their previous selling clients.
It’s very strong if the agent can have both surveys done from buyers and sellers. If you have a good report from the buyer and from the seller, you have an agent who’s got a tremendous ability to create rapport and that’ll always end up with getting a better price for the homeowner.
Kevin: Number seven?
Tim: Guarantee of service, Kevin. It’s a big one. When the homeowner is prepared to make their commitment to presenting the home as well as they have, when they have been prepared to put some investment into their marketing, your agent should be able to guarantee that “If we don’t do what we said we’re going to do, you can just tear up the agreement.”
Kevin: More and more agents are using them now, too, so you should expect your agent to have one. The final one is the one that I want to spend another minute or two talking about. What is it?
Tim: It’s an odd one, Kevin. It says: your fee is the highest in the area.
Kevin: Yes, now why would you want to do that as a seller?
Tim: We can look at the implications, Kevin, of why would you want the lowest fee? That appears to be obvious. It appears at a glance that that’s a good deal, but really, if you were choosing any other profession – in the book, I use an analogy of a medical professional – would you be going looking for a heart surgeon who’s the cheapest, or do you just want the best?
The implications here for the homeowner are that the quality in the service and the ability of the agent you choose has a massive input on the outcome that you’re going to have. You should be looking for somebody who is able to justify being the best in their area.
The competition will know that. The competition will either be able to match that higher fee or they won’t be able to. They simply won’t be able to match the service and the outcome so you should be looking for somebody who is able to justify the best fees in the area.
Kevin: I work with a lot of top agents, and the thing I know about them is that they’re not afraid to ask for the top fee, but demonstrating how they can actually earn that is because they demonstrate how good a negotiator they are. Some of them actually will say, “When I get a buyer, this is how I’m going to negotiate.” They can actually tell you how they’re going to negotiate to give you confidence.
Tim: It’s chapter six, Kevin, negotiation. It’s “Show me, and show me the money.” You should be able to demand of your agent, “Do it for me right now. Show me exactly how you’ll be doing it for me.”
Kevin: Yes, you’re going to hear a lot more about this book and this man too. “The Real Estate Matchmaker” is the book. Timothy Eaton has been my guest.
Hey Tim, we’re out of time, unfortunately, but I want to catch up with you again in the weeks to come. We’ll talk about a couple of the other eight key questions you need to ask to make sure you don’t leave any money on the table.
Hey, Tim, thanks for your time.
Tim: My pleasure, Kevin. Thanks for having me.