21 Things Real Estate Agents
DONʼT Want You To Know
• How to buy and sell at the same time • How much is your home really worth? • Real Estate traps • Questions to ask Real Estate Agents • Real Estate Agents Commission • Mystery shop Real Estate Agents
By Lisa Tremolada
Having worked in the Real Estate Industry since the early 1990’s, I’ve been around enough sellers to know that nearly every owner that sells a property is nervous. Owners are understandably worried about which agency to choose, which method to use, and ultimately, how much money they will end up with. We know and understand that it’s a huge decision to make when you are choosing the right real estate agent.
We also understand that there are plenty of reasons you may want to sell • Possibly your family has out grown where you live • You want to start a family • You want to downsize your property • You want to downsize your loan
We know that you also want to look good, feel good and achieve the best result.
We know that you want the best price in the least amount of time.
We also are very aware that there are lots of stressful situations that arise from needing to sell. • Stress from living in a home that’s too small • Stress from financial pressures • Stress from family situations changing ‐ whether that be a divorce or a death in the family.
We understand thoroughly.
When you are selling your home, where do you start? How much is your property worth? What sort of research should I do beforehand?
Put simply, when you decide to sell your home, you need to collect information, and the internet is the best place to start.
One. First of all, inspect your local Real Estate Agent’s websites. Are their websites full of relevant, topical and current information relating to the real estate market? (Not irrelevant topics, about say politics or recipes) The agents that rank high in Google, Youtube and social media rankings are aware of the need for a high internet presence so buyers can find them. Search some of the major real estate portals. • http://www.realestate.com.au • http://www.domain.com.au After you conduct your preliminary research, you may then be tempted to inspect some of the properties that you like with the view to buying. You may possibly want to inspect some properties that are similar to yours, for comparisons sake.
A word of warning
Try not to fall in love with anything before you sell your home, unless of course, you intend to obtain bridging finance. We wouldn’t recommend bridging finance, unless you are financially capable, for the simple reason that if you find a property you want to buy before you sell yours, you’ll be placing unnecessary pressure on yourself.
Emotionally and financially.
The best way to buy and sell is to buy and sell at exactly the same time.
Two. When you’re looking to sell and buy, we suggest you do so in this order: 1) Place your property on the market. You don’t have to sell! (at this stage, think of it as testing the market to see how much a buyer will pay.) 2) Find a buyer and see how much this buyer will pay for your property. (You still don’t have to sell!) 3) Find a property to buy. (If you don’t find a property, then you don’t have to sell!) 4) Check your finances and if your finances match, then you can sell. You should always remain in control. DON’T ever relinquish that control to a Real Estate Agent.
Three. When you’re trying to gauge what your property might be worth, make sure you inspect similar properties that are sold in your area. There are many websites similar to ours, containing for sale and sold properties. Click on the links below for an example.
MADDISONS Real Estate Properties For Sale MADDISONS Real Estate Properties Sold
When you’re browsing ‘for sale’ properties, keep in mind that the properties you see for sale, have not been sold!
We don’t know the following things about properties for sale… Do they represent true market value? Are they overpriced? Is there something the real estate agent isn’t telling you?
When you’re looking at properties for sale, don’t gauge your asking price by the properties you see. Go by what has SOLD. Only use the properties that are listed for sale, as a reference point. Properties that are for sale when you enter the market are your direct competition. Buyers will compare what they perceive as value in your property, to the value of other properties on the market.
The best thing to do is to call your three real estate agents. Ask them to provide a realistic market appraisal of your property.
Four. How do I know what my property is worth? When real estate agents and owners attempt to work out market value, sometimes they can be at very different prices. Owners and agents are potentially coming from 2 different ways of thinking... 1) An owner will think about what they have paid for their property and also what they have SPENT on capital improvements to the property. 2) An owner can also have EMOTIONAL attachment to the home. (eg It’s been their family home for 30 years) 3) An owner may also think about what price they NEED to sell their home at in order to buy another home. It’s important to appoint a Real Estate Agent that understands and works with you to obtain the very best price.
Whereas, Agents should work out market value by 1) What’s SOLD in the area – This is the most important gauge ‐ Comparable properties. 2) What’s FOR SALE in the area – Your comparable competition. Just remember what a property is on the market for is only a guide. An owner can ask any price, it doesn’t mean the property will sell for that. 3) What BUYERS WILL PAY for the property. What buyers does the agent currently have (NOW) on their books that will buy your property – how much will those buyers pay? The Agent must work for you and your best interests. They should act objectively at all times and tell you honestly what they believe your property will sell for, rather than avoid the price issue by suggesting an auction.
Five. Danger Unfortunately, I have to share with you that in real estate there is a common expression:
‘The biggest liar wins the business’.
Sad, but true. This means, that some agents will lie to you and tell you a much higher price for your property than you could achieve, simply in order to win your business. Luckily, in this day and age, people’s ‘rip‐off meters’ are pretty well tuned for people not telling the truth, however some salespeople are very good at their job and will convince sellers to do all sorts of things before they know it. They normally push to secure the business normally with some sort of deadline attached. Here’s just one example:
‘If you sign with me today, I can get you on the front page of the real estate section of the local paper!’ Be careful of agents pushing you into accepting their deadline.
Six. Keep Them Honest If you are considering going to auction, or you think the real estate agent is telling you a much higher price than the property is worth, ask the agent to guarantee the price range in writing. After all, isn’t that a fair thing to ask? This will force agents to be honest. Only deal with Agents who have a consumer protection guarantee. A guarantee such as this states that if the agent doesn’t sell the property for the price the agent quotes on the agency agreement – you pay them nothing. The guarantee also gives you that peace of mind that if you’re not happy with the agent, you can leave that agent without penalty. Download Your Free Copy Of The Homesellers Guarantee Here If you don’t have this document, you’ll be locked into a contract, possibly with an agent you don’t want to be with. It will also force the agent into telling you the ‘real price’ they think your home is worth.
Just remember that when you’re selling, real estate agents will be literally begging you for your business.
It’s not until the paper work is signed, that you’ll see their level of enthusiasm drop.
The highest point of most real estate agents and owners relationship, is when they sign the agency agreement. The bottom line, is that real estate agents have a financial gain in telling you a high selling price. Let’s face it, they stand to make a commission if you sell through them.
Seven. BEWARE! Most of the time, Agents will know your motivation for selling and almost all of the time, there is generally a timeframe that you’d like your house sold within. The thing is, when agents know your motivation, they will list your property based on your time frame rather than your price. If they know that you’ve committed to buying another property and you need to sell, or that you must move by a certain date to start a new job for example, then they’ll not only list your property at a lower price, but also give buyers the ‘hint’ that you are desperate to sell.
Desperation for a seller is GOLD for a buyer….
these are some of the headings agents will use when their seller is desperate:
MAKE AN OFFER!
DID YOU KNOW?
Agents must disclose all offers from buyers to the owners ‐ no matter how low. • Verbally and in writing.
Eight. As a seller, you are by far the most important person to a real estate agent. Without houses to sell, a Real Estate Agent will not survive. Initially, the agent is keen to list your home for sale. It’s only once you sign, that the agent ‘suddenly’ realises your property is overpriced and will start to ‘condition’ you down in price. Warning! Many Real Estate Agents will avoid telling you the real price of your home by suggesting that you auction your home.
Agents will tell you a really high price for your property and sign you up at ‘any price’ . Agents will even tell you they don’t know how much your property is worth. If an agent says that they don’t know how much your property is worth, hire a different agent. A real estate agent should have an idea of how much your home is worth within a 10 % range.
Nine. Auctions Auctions take the focus off the price. Auctions can be a cop out for agents. This method allows agents to avoid the price issue all together. Auction methods try to sell you on a hope method. A sign, a few ads and a prayer. With Auctions, agents will not tell an owner what they truly believe a house is worth. Auction agents commonly say, “let’s take it to auction and see what the market will pay”. Hope, hope, hope. Please print the consumer protection guarantee below:
Consumer Protection Guarantee
If you auction your property and it fails to sell, your property will have the ‘stigma’ of being a failed auction. • Prior to an auction you are in the power position ‐ after a failed auction, buyers know that no one wanted or bought the home. • They also know how much buyers were prepared to pay (if you had bids). • These results are published in the newspapers for all to see. • It will be hard to sell the property for higher than the ‘passed in’ price.
Consider getting a valuation before you have Real Estate Agents appraise your property. • Unlike Real Estate Agents, the Real Estate Valuer will be paid no matter what price they tell you. • Some real estate agents will tell you a very high price just to convince you to sign up for sale with them. • Valuers will be unbiased in their opinion as they have no financial gain in telling you a high price. • You can use the valuation as a bench mark on your price.
Ten. When you consider using a real estate agent, ask them the following questions • Do you have buyers on your books now that you could bring through the home? • What price will you guarantee I can achieve? If your life depended on it, what price would you guarantee? • How many sales did you make last month? • Can you give me a list of your last 5 sales. • Were all these clients happy with your service? • If I called those owners, do you think all of them would be happy with you? • When an agent tells you a price of what your property is worth, ask them what are they basing the price on? Properties sold? Properties for sale or what buyers they have on their books? • Ask if they will guarantee the price range quoted? • Will they indemnify you for any loss suffered as a result of an open house? When you are choosing a real estate agent, ask them how many buyers do they have on their books in your price range. Agents should know how many buyers they have registered on their own website, and on other real estate portals such as: realestate.com and domain.com etc.
There are also plenty of agents that feel the pressure from their place of employment, to secure properties for sale at any cost. Sometimes if they don’t secure new business, they could lose their job. When real estate agents are new to the industry, or if the agent is not highly skilled, the only way they can compete and win the business, is by telling owners a high asking price and a low selling fee. The owner in the process, is being told 2 things they want to hear: • They have the potential to obtain a higher price for their property. • They will receive a lower commission than others are charging. Some agents will list your property at a very high price, and then proceed to ‘condition’ you down in price. If this has happened to you, look at the price range the agent gave you as an estimate on their agency agreement. Pay attention to the mid range… That’s generally where an agent thinks your home is worth. If you feel that the Agent is avoiding committing to a price for your home or not telling you the truth, then this is where you can bring out your copy of the Consumer Protection Guarantee.
Eleven. As we all know, when a property has been on the market a long time, people think that if it hasn’t sold quickly, there is something wrong with it. It can develop the ‘lemon’ tag.
If an agent is efficient, they will have an extensive register of buyers already. • Why do these agents need your money to advertise your home when they have been advertising homes, for example, for the last 10 years. An efficient agent will have a database of buyers and they will have systems in place to keep in contact with past buyers.
Rather than agree to an open house, insist that your agent conducts private one‐on‐one inspections with your buyer, as this will not only make the buyer feel special, it will also greatly assist negotiating the best possible price for your property.
Twelve. How should you enhance the value of your property? Different buyers like different things – some will pay more for a property either with OR without certain features. For example: Will a pool add value? Will a new kitchen add value? The answer is yes and no. Some buyers will like and pay more for a pool, some won’t. Some people will love your kitchen. Some buyers won’t. Many will want to replace it. Some people will pay more to live close to a busy road, some won’t. Some will pay more for a big yard, some will want a small yard. Some like built in wardrobes, some don’t. Some like federation style, some don’t. Some like big houses, some don’t. Some like modern houses, some don’t. Some like big blocks of land, some don’t.
Just because you have certain things you like, doesn’t mean everyone will pay more for those features, we just need to find the right buyer for your property that loves everything about it. Click below to find out how some sellers achieve a much higher price for their property. Seller’s Tips
DID YOU KNOW? The real auction statistics may surprise you. Newspapers and real estate agents would like you to think that the majority of properties sell by auction. This is in fact not true. To give you an example, during 2009, estimates from rpdata.com show that approximately 57,500 properties were taken to auction throughout our capital cities during the year. In the same period there were approximately 317,000 house and unit sales across the same combined capital cities. Given this, only 18% of property sales were sold via the auction process last year. Also during 2009, the average auction clearance rate across Australia’s capital cities was 69.2%. This result indicates, that across the country’s capital cities only 12.5 per cent of all properties transacted are actually sold at auction. In Sydney auctions account for only about 20% of all real estate sales and in Melbourne the proportion is 30% of all sales. For example if there are 1800 sales in a given area, 20% of the sales, is only 360 sales. That means 1440 properties sold by methods other than auction.
Thirteen. Contract of Sale
By law in NSW, you must have a contract of sale and a signed agency agreement (if you are using a real estate agent) to place your property on the market. This law was brought in to stop ‘gazumping’. This means that every buyer has the opportunity to buy the property and exchange contracts before someone else does. If a real estate agents offers to bring buyers through your property without a contact of sale and a signed agency agreement, don’t use the agent. (Applicable in NSW) They are breaking the law. It is NSW Law that a contract of sale must be prepared before any buyers can be told about a property for sale. It is also NSW law that an owner signs an agreement with a real estate agent outlining the price the property will be promoted at, commission etc.
Fourteen. Consider getting a building and pest report done before you place your property on the market. • You will know if there are any surprises. • If buyers try to negotiate on something that is not accurate. (They may say you need a new roof when you don’t). It could save you thousands.
A buyer may not be interested in buying this report off you. • For a person to have any legal recourse, it needs to be addressed to the person that it’s written for. E.g. If the builder fails to report that the property has termites, you can’t sue the builder unless the report is written in your name.
Fifteen. Real Estate Commissions Real estate agency’s can appear high profile and charge a lesser commission however they also charge you thousands in advertising. Similar to ebay, people buy a product for cheap and then pay a high postage amount. You have to add the 2 together to see the real cost. An agent can charge a small fee, but can cost you a great deal if they don’t obtain the very best price for you. Think about how much you end up with, not how much the agent is charging you. Can the agent demonstrate how they can negotiate? Does the agent know the 18 principles of negotiation?
• When you are talking to an agent about their commission, if they lower their own fee in a heartbeat when you ask them to, they won't hesitate to give your money away by lowering your asking price.
Ask them to demonstrate some great ways they have negotiated with buyers and sellers in the past. eg Did they leave out some inclusions such as a dishwasher, and negotiate them into the offer later? Did they negotiate a longer settlement or special terms.
Some agents only know how to negotiate on price. That can leave you, the loser.
Sixteen. Real Estate Agents Database A real estate agent should have a contact list full of buyers. If agents have a database, they don’t need your money to pay for expensive advertising campaigns to promote your home. • A reputable and efficient real estate agent should already have a large data base of buyers. • A Real Estate agency should have their own marketing plan in place for their office to attract buyers to the office. If not, they are relying on your money to keep them afloat. • If an agent is asking you for money to advertise your property, they are telling you they don’t have any buyers for your property. • If all an agent is going to do is advertise your property using your money, advertise and sell the home yourself. • If an agent is asking you for money to advertise your home, ask the agent if they have sold anything recently comparable to your property, if they say yes: • ask them where all the buyers are from that campaign • ask them to call all of those buyers before you advertise to gauge any interest they may have in your property.
Seventeen. Advertising Agents will try to sell owners ‘vendor paid advertising’ by making comparisons with mechanics – saying it’s like ‘parts and labour.’ This is absolute rubbish. A mechanic has to buy parts that are required for your car otherwise the car will not start. The mechanic does not gain any benefit from your parts. Real Estate agents ask for your money to advertise your home, putting big photos of themselves and their logos on their ads. What these agents are saying to you is that they don’t have any marketing in place to attract buyers and sellers to their company. They have to rely on you to pay to promote your property to the market.
Consider this – On average, agents will collect say $10,000 of vendor paid advertising for each property. If there are 10 properties advertised to be auctioned on the same day, that’s $100,000 spent on advertising. That’s from only one real estate office, on one night. I have been to auctions where no properties have sold. $100,000 was flushed down the advertising drain. Agents probably don’t think much of it, as its spread out over 10 owners and it’s not their money. It’s still $100,000! I’m sure if a real estate agent had to pay for advertising, they wouldn’t be so reckless with their money.
Eighteen. Open Houses Agents love open houses because they find a lot of sellers. Most people look at properties for sale before they place their home on the market. • Agents very rarely sell homes from open houses HOWEVER… • Agents do LIST a lot of properties for sale as a result of open houses. Regardless of all the pitfalls, such as giving up your privacy, compromising your family’s security and not being covered by home insurance if something is stolen, listing properties while your house is being sold is one of the major reasons why Agents will try and talk you into having an open house.
When you agree to host an open house, be aware that you are probably not covered for any theft arising from the open house. • Because an agent is ‘inviting guests’ into your home, they ARE classified as invited guests, (assuming you know who the people are). • Ask if the real estate agent has insurance to cover you for any loss suffered. • Contact your insurance company. Due to high demand, some insurance companies do have special policies specifically for the purpose of open houses.
In our experience, most women don’t like the thought of allowing strangers or nosey neighbours through their home. A lot of women consider it an invasion of privacy. Especially if the home doesn’t sell. • Your family is much safer having an agent bringing only qualified buyers to your home. • A major rule of negotiation is knowing all the facts. Knowing the property well enough to sell these features to the buyers. • When an agent knows the sellers and buyers situation, they are in the best position to help both parties achieve the best outcome. • Open houses make it difficult to know your ‘buyer’ in depth.
Can you tell which one of the people above is a genuine buyer and which ones are sticky beaks? Neither can a Real Estate Agent…
Nineteen. DID YOU KNOW? Agents will heavily suggest open houses, as they obtain many listings, mostly owners that are window shopping to compare to their property. Principals of real estate agencies like open houses because they know their staff have to do certain actions. Eg. Attending opens. Etc. When an agent lists your home for an auction, they really only spend 2 hours possibly 3 hours a week selling it. Half an hour on a Wednesday and half and hour on a Saturday (open house times) A lot of agents have their personal assistants attend open houses rather than the agent you signed with. • That way they can perform twice as many open houses. • You may not be getting the agent you thought you were representing you to sell. You may be allocated a junior.
Twenty. Mystery Shopping
Before you employ an agent, mystery shop the agent. • Call them. • Ask them about 3 different properties their office has for sale. If they don't know about all three. Don't list with the agent. • If you list with their agency buyers will have the same experience with your property. It will probably cost you a sale.
Pay attention to the following: • Does the agent ask for your name and phone number so they can get back to you about any new properties for sale? • Did they ask any qualifying questions to help them determine if you are a ‘hot’ buyer? • Did they just tell you to go to the open house? • Ask the agent if the owner is negotiable. See what the agent says. • Do they take money off the price straight away. Or tell you what the owner will accept.
Just remember, what they do to you, they will do to buyers.
Agents love signing up owners for auction for a number of reasons. • The owners are committed, mainly because of the financial commitment involved with paying for all the advertising. • They are also committed to a very high pressure selling method.
Twenty One. Franchises and Social Networking and Internet Marketing
People think that when they list with a franchise, they will have access to a much bigger database of buyers. The reverse is actually true. • When you list with most big name franchises, you are only listing with one agent in that company. The other agents in the office are not permitted to sell your home. So you are really in effect listing with one agent. When you choose your Real Estate Agent, ensure they have a business model where any of the sales representatives in the office can sell your property. By doing this, you will be assured of more agents working for you and ultimately, more buyers.
List with an agent who is web savvy with social media marketing and internet marketing. • Print media is the old way. • Most newspapers now have an online version. • Iphones, smart phones, ipads etc are becoming a way of life • Most people use the internet as social proof. What are others saying about a topic? • They see what the agent is like via social media. They get to know what the agency is like.
SOME FINAL TIPS Ask an agent to inspect your home and give you opinions about what should be done to the property to prepare it for sale. I don't mean advice which involves them spending your money, for example, spending thousands of dollars on furniture hire. Things like what needs fixing or painting or what needs ‘decluttering’ is the sort of advice you need. You may be wise to fix certain things, as somethings will turn some buyers away. You really don't need to have a public auction to get the best price. Conduct a silent auction. This system was developed by Sir William Vickery – Sir William Vickery, won the Nobel prize for economics. He discovered the public Auction system is flawed. Agents love Open houses because they are introduced to a lot of future sellers. Agents win a LOT of business through open houses! If an agent is knowledgeable in the area, they should know what the property is worth. If an agent tells you they don’t know what a property is worth, this demonstrates clearly that they are either new to the area, new to real estate or they are lying.
Thank you for reading our report. I hope this was beneficial for you, if you have liked this report, please comment on our blog page. I hope you also enjoy the free videos with industry experts which are aimed to help you achieve the best price possible when you sell. These videos are full of sensible advice that you don’t want to miss. Thank you Lisa Tremolada Director MADDISONS Real Estate
Hi everyone, I hope you enjoyed these tips. Just to give you some background, I started in real estate in 1994 and within 18 months owned my own real estate office on the South Coast. At the time of taking over the Agency as Director, the office was under a Real Estate franchise. I wasn’t comfortable with franchise operations. After all, as a salesperson, I had learned of many tricks and traps that real estate agents were taught. The truth is, I was embarrassed to be called a real estate agent, particularly when it’s fairly well known that only 10% of the population thinks that real estate agents are honest and ethical. I’m not saying for a minute that real estate agents are bad people, far from it. I have a lot of great friends that are real estate agents. I just don’t agree with some of the methods they use. For a start, I feel that vendor paid advertising and auctions are the main reasons why real estate agents have developed such bad reputations. When I hear of sellers who have spent $70,000 or more with agents to advertise their home and then the property doesn’t sell – well, that’s embarrassing for real estate agents everywhere. I can’t believe that many sellers see that the best option to sell their home is to pay thousands of dollars in advertising costs and take their home to auction. There are better ways and much safer ways. The most popular way to sell is by private treaty. On the lower north shore, the perception is that everyone sells by auction. The public doesn’t really know the real facts when it comes to real estate. Here are the real statistics from rpdata. In Australian capital cities, auction only accounts for 12.5 % of the total sales. On the lower north shore, auctions only account for 20 % of the total sales. This means 80% of properties sell by other means. For various reasons (that you would have found in this report) the main people pushing auctions are real estate agents and newspapers. As you would have read, these people have the most to gain.
Anyway, back to my story…. After earning a solid and reputable reputation in Wollongong, in 2001 I sold my office and moved to Sydney to open up an office on the lower North Shore. I felt that the people of the lower north shore deserved a choice when it came to selling their home, rather than be trapped into accepting real estate methods that have been tried, tested and proven to be failures a lot of the time. Our customers often ask us how we made it into such a tight‐knit community – especially in an area that is so saturated with real estate agents that have been here for so long. We’re so grateful to everyone in the area and at how well our methods have been embraced and accepted. Our methods really work for our sellers. Results have been fantastic, and we’ve received so many wonderful testimonials, including many video testimonials that are located on our website. We offer our clients a better way to sell and the truth is that these methods work exceptionally well in this area. Local residents expect personal service when it comes to buying and selling and that's what we’re aiming to do every single day. MADDISONS is not a franchise, we are a boutique agency that’s small enough to care, yet big enough to get the job done well. After reading this report and watching the videos, you may decide we are what you are looking for, or you may decide to go with another agency. Either way, I hope you find all of our material helpful so that you can sell your home with less hassle and end up with more money in the bank. Thank you for reading my report. With respect.
Lisa Tremolada Lisa Tremolada JP Director and Licensee MADDISONS REAL ESTATE
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21 Things Real Estate Agents Don't Want You To Know. By Lisa B. www.dominatetheinternet.com.au This is previous marketing I had in an ol...