The modern way or the old way?
by Neil Jenman
Article written and provided by Neil Jenman from Jenman.com.au . To see the original source of this article please click here. https://jenman.com.au/how-do-you-want-to-sell-your-house/. Neil Jenman is Australia’s trusted consumer crusader. He can support you, all the way, from choosing an agent who will get you the highest price guaranteed to when your removalist comes! You get an unprecedented level of total support. All for free. To find out more visit jenman.com.au
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Real estate agents accuse me of being “old-fashioned.”
They say I am “stuck in the 1980s”.
And do you know what?
They are right. Sort of.
At least when it comes to themselves.
My way is not as good as their way – for agents.
But who’s “way” should agents focus upon?
Should they do what’s best for agents or what’s best for home-sellers?
Let’s take a quick look – at times past and present.
Let’s see which way their clients, the home-seller, prefer.
Back in the 80s (and further back, for decades), when home-owners wanted to sell, they’d call a few agents.
The agents would meet the owners and inspect their homes.
When the owners felt comfortable with an agent, they would agree on a reasonable asking price and then “list” their home – sign the paperwork. And shake hands. In those days, the handshake was a powerful bond.
Once the home was listed, the agents would immediately start work.
The first thing agents would do was contact their contacts. This meant making calls – often dozens – to buyers who had previously contacted those agents and whose details the agents had diligently noted.
The agents qualified prospective buyers. They learned the buyers’ requirements.
The agents would arrange for prospective buyers to inspect the new listing. There was a real mood of excitement. Agents knew that early buyers usually offered the best prices, sometimes more than the asking price.
When buyers found a home they loved, their number one goal was to secure that home. They did not want to miss out. If that meant paying the asking price – or more – so be it. Securing the home was their main aim.
Agents would accompany buyers to inspect homes. The buyers would go with the agents – in the agents’ cars – as they went from house to house.
Agents would open car doors for buyers. And doors of homes. It was called courtesy – and yes, it was old-fashioned.
As they drove to various parts of an area, agents would chat with buyers, pointing out features of the area and different homes that had been sold.
As well as selling homes, agents would explain the merits of their area – often with pride.
It is said that true selling is “the transference of enthusiasm.” The best salespeople were great at transferring enthusiasm to buyers.
This is what agents were paid to do – work hard at “selling” the benefits of an area and the features of a home. Sellers hired agents to do what sellers could not do – contact existing contacts and use their skills to convince buyers to buy homes and pay their best price.
Often, when buyers took a liking to a particular home, the agents would take them back to that same home several times. The buyers were encouraged to ask questions and comment. Savvy agents would often sit with buyers in the best part of a home and let them soak up the atmosphere. Imagining it was theirs.
Good salespeople would ask good questions, all aimed at helping buyers to decide to buy a home. Such as, “Would you feel happy living here?”
Sometimes, when children excitedly ran through a home, agents may ask them which bedroom they wanted. Or, if the land was large, the agent may ask: “Hey kids, what do you think of the back garden?”
The personal touch was important. Agents appealed to the hearts of buyers. Yes, “Home is where the heart is.”
In selling there is an important rule: Make it easy for buyers to buy.
The buyers were not restricted to half an hour per week to fit with the agents’ schedules. The buyers could inspect homes when it suited the buyers. Old-fashioned sure, but it was unthinkable for agents make it hard for qualified buyers to inspect a home.
When buyers loved a home, agents would negotiate the sale, often at the asking price or more.
The sale would be made. It was happy times all round.
Finally, once the sale was finalised, agents would get their commission.
The commissions were lower then, of course. The average wage was $23,620 and the average commission was $2,650. The average home price was $88,350 in Sydney; $75,200 in Melbourne and $61,200 in Brisbane.
Until a sale was finalised, agents received no payment. If they met nice home-owners, agents might get a cup of tea. In exceptional cases, maybe a slice of fruitcake.
But no money. No way. Why should sellers pay money before their homes sold?
As for sellers paying for advertising, it was unthinkable. Indeed, if any agent had said to any sellers, “Give us some money to advertise your home to find some buyers” the sellers would likely say: “Have you only just opened for business?”
Also, sellers could have replied: “Well, if you want us to pay for advertising to find buyers plus pay you a commission, why don’t we advertise ourselves and save the commission?”
But what if agents advertised homes that didn’t sell?
When agents advertise homes, they get enquiries from lots of different people, sellers, and buyers. These people often do business with the agent in some way – either selling or buying a home. Sometimes both.
So yes, one thing was sacrosanct: Sellers paid nothing until their homes sold.
That was the ‘way’ most real estate was sold in the 1980s. Agents worked hard. Few dared to expect to be paid for doing nothing. If they achieved nothing, they got nothing. This, of course, encouraged agents to do something – make sales and please sellers – knowing that, until a sale was made, the agent would not be paid.
No sale no pay. That’s the way it used to be.
Today, a few agents (the best and most ethical) still offer this old-fashioned service.
But most agents prefer the “modern way.”
So, let’s take a quick look at this modern way of selling real estate.
First rule for today’s agents: Don’t mention price – even though you know what a home is worth. If you tell the truth, liars will come in behind you and you’ll lose.
At the least, be vague about the price.
Talk about “the market.” Tell sellers success stories. Push the greed button – and push it hard. If you think a home is worth $1.5 million, the owners will probably want $2 million.
Second rule for today’s agents: Tell sellers what they want to hear. Agree that their home is fantastic, much better than others. Hint that it may be possible – in “this market” – to get far more than $2 million.
$2.5 million? Maybe. The “market” is hot right now.
Nothing is impossible in today’s market – except truthful agents, of course.
Third rule for today’s agents: Tell sellers you’ve already got buyers on your books who’d love to see this home.
Remember the entire aim when pitching for a listing – SIGN-UP THE SELLERS. Sign them up for as long as you can. Three months as a minimum. Four months, better. Six months, if you can get away with it.
Remember, once you’ve got them, you’ve got them. They can’t wriggle out, no matter what.
“Controlled listings” – that’s what this business is all about. When you sign them up, you’ve got control. Remember, they can’t even sell their home to their best friends, or their relatives once you’ve signed them up.
Fourth rule for today’s agents: Get VPA. Yes VPA. It stands for Vendor Pays Advertising, but we all know the real reason – and what VPA really means – Vendor Promotes Agent.
Get as much money as you can. Promote yourself at their expense. Yes, even if you already know you’ve got buyers on your books. Sell advertising, sell advertising, sell advertising.
Give them all the lines you’ve been taught – by sales trainers who work for the advertisers.
“Advertising is an investment”
“You can’t sell a secret.”
“One bid can pay for the cost of the advertising.”
“A property as good as this deserves to be promoted well.”
“The more you advertise, the more buyers you attract.”
Make sure you know the answers to all objections from sellers, such as:
“If you’ve got buyers on your books, why do you need to advertise as well?”
“Most agents are only advertising to the buyers already on their books.”
“Why don’t you call the buyers on your books before you advertise?”
“Agents use advertising to convince sellers to lower their prices.”
“If a home is widely advertised and does not sell, it gets a bad name.”
“Surely you know that many buyers pay a lot extra for a ‘secret’.”
Many of the ‘modern agents’ push an old-fashioned way of selling – auction. These agents are often the laziest and, also, the worst negotiators. To auction a home means to under-sell a home.
Many sellers now realise the truth about auctions.
Typical agents fear educated sellers who ask clever questions and make comments that leave agents squirming and spluttering.
Questions such as:
“You say auction is the best way to get the best price; but if there are two buyers, one who’s maximum price is $2.5 million and one who’s maximum price is $3 million and the bidding stops at $2.5 million, how do you get the other $500,000 for us?”
Such a question makes auction agents go red-faced.
Or comments such as:
“Have you read Neil Jenman’s new book called ’88 REASONS YOU MUST NEVER SELL YOUR HOME AT AUCTION?”
When the agents say they have not read Neil’s book, smart sellers reply: “How can you disagree with something you haven’t read?’
Of course, the dodgiest agents will tell their favourite lie: that Neil Jenman sold his own home by auction. That’s not true.
Once owners are signed-up, today’s agents do what they have been taught: They immediately start the conditioning process.
Many agents follow the words of that foul-mouthed real estate trainer: “GO UGLY EARLY.”
Don’t be scared to give sellers bad news. There’s nothing they can do. They can’t sack you because you’ve got them tied up on an exclusive selling contract. Controlled. Locked-in. They aren’t going anywhere.
Hit them hard and hit them fast.
Give sellers dummy offers too – but make them low (just in case the owners accept them).
And always, always, always blame the market. Here’s what the modern agents all seem to say when sellers get upset: “I am just telling you what the market is saying.”
If sellers want to know what happened to that great price the agent promised them before they signed-up, blame the market.
Agents are taught to always blame the market. Not themselves.
The fact that the market is always “fantastic” before sellers sign-up and then it always drops after they sign-up with you, well, agents hope sellers don’t notice that point.
As for buyers, modern agents don’t waste their valuable time with buyers. This is not the 1980s where you can put buyers in your car and spend time with them. There are too many buyers these days which is caused by the widespread false low-price quotes from agents. Agents are following one of the great rules of modern selling: “Quote them low and watch them go; quote them high and watch them die.”
As for their results, today’s agents call each other superstars for achieving results that would have seen salespeople fired for inferior performance in the 1980s.
Since the 1980s, the wages of the average Australian worker have increased three times. But the commissions earned by the average agent have increased ten times.
That’s right, modern agents (as they love to call themselves) are paid ten times as much as agents from the 1980s. This does not count the myriad of other charges sellers are slugged in the modern real estate world. Of course, many of today’s agents pocket huge kickbacks on money they are telling sellers is “essential.” Essential to feed their greed, but rarely essential to get a better price for the sellers.
Most of today’s modern agents under-sell homes.
The aim of the modern agent is not to sell homes for the best price. Their aim is to sell homes at any price.
And today, thousands of sellers are also losing thousands of dollars when their homes fail to sell. If they have not already paid the agents several thousand dollars for advertising money, and they decide to withdraw their homes from sale – often simply because the agent failed to achieve the price the agent promised to achieve before they signed-up with the agents – then the sellers are likely to get a legal letter demanding they hand over several thousand dollars.
Some sellers object and say: “The only reason we placed our home for sale was because you promised us a high price. And then, as soon as we signed-up with you, you started talking us down in price. And so, after weeks of your conditioning process, we refused to buckle and lower our price. We withdrew from sale. And now you have the hide to threaten us with legal action if we don’t pay you $10,000 (or whatever amount, often more than $10,000) in advertising money.”
These sellers bluntly tell the agents to get lost, they are not paying money because they have been deceived. But what happens next in this modern word is this: Sellers discover that the agents have a colleague – a firm called Campaign Agent.
And when they read the fine print of what the agent got them to sign, the sellers are horrified to discover the word ‘CAVEAT’ is mentioned 15 times.
If the sellers refuse to pay, Campaign Agent lodges a caveat on their homes.
Think on that for a while, please.
This is happening to sellers all over Australia. Unless they pay for advertising – which increased the agents’ profiles and gave agents more sellers and buyers and gave the sellers nothing – the sellers cannot sell their home to anyone else.
No, first they must pay Campaign Agent.
Back in the 1980s, it would have been unthinkable for sellers to be treated the way they are treated today.
This may be the modern real estate way. But sellers need to realise an important point. This does not have to be the way sellers are treated.
As a home-owner, you should remember: You are the owner of your home. You employ the agent. You do not have to succumb when the agent tells you: “This is the way it’s done.”
As the owner, you can choose the way your home is sold.
You can choose the conditions in the Selling Agency Agreement.
You can choose the amount of commission you wish to pay.
You can insist on as many conditions as you like which protect you from paying any money until you believe you have received excellent value for the money you are asked to pay.
It is not excellent value to pay thousands of dollars to agents and their advertisers and to not sell your home. That’s not just a travesty, it’s nonsense. It’s hugely unfair to you.
The one factor over which you, as a home-owner, has complete control, is your signature. But the minute you sign whatever the agent puts under your nose, you literally lose all control.
Before you hire an agent to sell your home, take the time to agree on what you want that agent to do for you.
Also, decide what you do not want.
You do not want to be stuck with an agent who cheated you to coerce you to sign-up.
So, you need to have the right to sack the agent if you are not happy – and without having to pay any penalties.
And you should never, not under any circumstances, sign any document that gives an agent – or any of their cohorts – the right to lodge a caveat on your home.
These dastardly methods may well be the modern method.
But they do not have to be your method.
If you prefer to use Neil Jenman’s so-called “old fashioned way” which, in effect, means that you as the client come first, you can still have this way.
And don’t just accept the word of Neil Jenman. If you are forceful enough to stand up to greedy, deceptive, and manipulative bullies, you can find agents who will treat you well.
There are some ethical and competent agents. Not many, to be sure. But you only need to find one – the same as you only need to find one buyer. The right buyer. The right agent. And make sure you sell your home the way that’s right for you.
Recently an agent in Sydney wrote a book explaining how he and his office are selling real estate without having to lower their morals to fit with the modern way. The agent’s name is Russell Haddan. His book is simply called The Real Estate Book.
As your reward for reading this article, you can have a free copy of The Real Estate Book by clicking here.
Finally, we’d love to know your thoughts – or even get your vote: As a seller, which way would you prefer to sell your home – the modern way where agents charge you the most to do the least? Or the old-fashioned way where agents only charge you a fair fee once they have proved they can sell your home for a great price?
The choice is yours. For your sake, please think it over. And please choose wisely.
The right agent selling your home the right way will make an enormous difference to you – both financially and emotionally.