Thousands of sellers wasting millions of dollars
Here’s a question for home-sellers. What is the most important factor in the sale of your home?
Is it the quality of the agent, the method of sale (auction or private treaty), the amount of advertising, the advertising medium, the number of buyer inspections, the communication from the agent, the speed of the sale or the price offered?
The correct answer (and this is based on years of research) is that¬†the property gets SOLD.
A sale is the number one priority of home-sellers. The next most important priority ‚Äì which is a very close second ‚Äì is¬†the price paid¬†for their property.
It should follow, therefore, that the best agent ‚Äì and the one most likely to make the sellers the most happy ‚Äì is the agent who gets a fast sale at a high price.
But this is where common sense and common perception commonly part company.
Welcome to the ‘Hard Work Trap’ a phenomenon that collectively costs thousands of property sellers millions of dollars each year ‚Äì in wasted selling expenses, lower selling prices and longer time periods.
Unlike many real estate rorts, the agents are losing too. Yes, everybody loses with the Hard Work Trap.
Here’s what happens…
Let’s say a property is placed for sale and the agent immediately finds a buyer at a good price. For some psychological reason, the sellers think the agent has done no work.
“The agent had my property for one day, showed it to one buyer and now I am being asked to pay $12,000. Is that fair?”
Well, yes, it could be very fair. After all, the agent has delivered the two most important factors ‚Äì a good price and a short time. The agent may deserve a bonus.
But, no, the sellers (often egged on by everyone from nosy neighbours to jealous lawyers) will often demand a discount. Worse, some sellers reject the good price and demand that the agent increases the asking price.
All agents are aware that a quick sale, regardless of the price, creates a perception of no work. And so, in order to convince sellers that their commission is “good value”, many agents feel they have no choice but to create an elaborate charade of hard work.
This, of course, involves the sellers in needless costs (usually for advertising) as well as lengthy time delays (in which holding costs still continue).
Finally, after weeks of advertising, scores of inspections, emails, phone calls, meetings and conferences, the [seemingly] exhausted agent finds a buyer.
In most cases, the property could have been sold much sooner and often for a much better price. All those extra expenses and all that extra time just to put on a show for the sellers.
What most sellers don’t realise ‚Äì and what most agents fail to explain ‚Äì is that, most times, the best offers for a property are the early offers. The longer a home is for sale, the lower the price it is likely to fetch.
When a home is fresh on the market, it’s exciting, buyers often feel an urgency to get in before anyone else sees the property. But, after a few weeks (sometimes a few days), the freshness is lost and the buyers start wondering why the property hasn’t sold. The urgency is gone ‚Äì and so is the chance to get that good early price.
The message for sellers is clear – don’t punish agents for finding buyers quickly. Pat them on the back. If they’ve got a good price, you’ve got good value.
Imagine you were sick and went to a doctor who cured you instantly. Would you prefer a doctor who put you through weeks of pain? If both doctors charged the same price, which one would you choose? It’s obvious ‚Äì the one who cured you with the least amount of pain in the shortest time.
The same applies in real estate.
Field-Marshall Montgomery is reported to have said that there are four main human qualities of which the average worker has a combination of just two. People can be hard working or lazy ‚Äì and they can be smart or stupid. The worst type of person to employ is the hard working idiot.
Finally, there’s an old fable about a man who takes his car to a panel-beating shop. He wants a large dent fixed in the front fender.
The panel-beater climbs under the car with a rubber hammer, taps once and the dent is fixed.
“That’ll be two hundred and two dollars,” says the panel-beater.
“You’re kidding,” says the man. “Two hundred and two dollars for two minutes work and one tap. That’s not hard work.”
The panel-beater replied: “The tap is two dollars. Knowing where to tap is two hundred dollars.”
Sellers, you don’t pay agents for hard work. You pay them for a result.
Don’t get caught in the ‘Hard Work Trap’.