04 Feb Are agents worth the commission they get?
How hard can it be? Bang up a sign – whack it on the internet and watch it go. If it was that easy people would be selling their own property in droves but here is why it does not happen.
1. An overpriced property will miss 50% of buyers
As professionals who are well-versed in the market, agents know that just because you spend $10,000 updating something does not mean you will get $10,000 more for the home when it sells. I have lost count of how many times I’ve encountered homeowners with 10-year-old carpet, dated interior, poor presentation and clutter everywhere who think their home is worth the same as the one nearby that is well presented, freshly painted and appealing to walk into. “But ours has a lovely lived in feeling!” Pricing a property right is an art form that many real estate agents spend years mastering, and even then it’s something that many will hone their entire career. Most sellers want more than what their property is worth to start with and that is where, over time, agent education about price expectation is priceless. That leads me nicely into my second reason.
2. Emotional attachment is a barrier
Selling a home is an emotional transaction for the owner. Most sellers have a hard time separating their personal feelings from the business transaction. Think about it. How do your clients react when you bring them a low offer? They’re insulted, right? Now imagine their reaction if someone tells them their house smells musty or like pets. As agents, we can be a buffer and use the situation constructively. That could mean the difference between selling and not selling.
3. Marketing is a huge undertaking
There is no such thing as ‘one size fits all’. Professional agents have an eye for what will attract the eventual buyer. What should be featured in the marketing. How best to describe and represent it and they tailor make marketing campaigns to appeal to the right buyer group. It’s not a skill learned overnight.
There’s a lot more to selling a home than meets the eye, and most listing agents earn their keep by dodging bullets and avoiding common obstacles. That is called experience and that is why you are paid a commission.
4. The third person
There is a reason why sellers need to get lost when buyers are present. It is because most can’t help themselves and they want to take over the agents job. Sometimes it is not what you say it is how you say it and knowing when to speak. Agents are also detached and can read the body language. Most of my buyer clients feel restricted when a homeowner is lurking during a showing. Without a third person in the mix – the agent – buyers feel uneasy and often feel like they cannot ask real questions for fear of insulting the owner.
5. What happens when someone wants to buy
A lot happens after someone says they want to buy. Negotiation, contract, due diligence such as building and pest inspections, valuation, contract deadlines and then settlement. Sure a solicitor can do most of that but what you bring to the table is the ability to negotiate so that it becomes a win/win.
6. Agents get more net return for the seller
There are some basic reasons why I feel comfortable to make this statement:
- An agency has a number of potential buyers on their database as a result of recent inquiries for other properties. This provides an instant list of potential buyers for a property.
- When they decide to buy a home, most people (87%) first turn to a real estate agent. In more than half the cases, they already know the agent and have built up trust. Buyers who decide to contact homeowners directly are rare. The remaining 6% choose to buy directly from the builder or developer.
- Selling real estate is not a part time job. It takes up to 40 hours (my estimate) to sell a property. It also requires flexibility in hours so you can meet buyer demands and be available.
- As a professional real estate agent, never underestimate your skill as a negotiator. As a third party you are able to remove all emotion and see it from both sides.
The bottom line is that your commission is not the cost to the seller of getting a sale – it is the price paid for your expertise, market knowledge and above all negotiation skill. Never undersell yourself!