Busting The Real Estate Myths
Most people don't realise that there is a better way to achieve a higher sale price while paying no commission.
Why Pay No Commission? - According to the annual Roy Morgan survey on the ethics and honesty of various professions in Australia, real estate agents consistently rank in the bottom three.
Despite this low ranking and the mistrust people have toward agents, they continue to reward them with commissions typically around 2.5% of the value of their home. Our aim is to show you why no commission like this is ever justifiable. According to the Australian Bureau of Statistics, the average Australian home was worth just over $563,000 as at September 2014. At 2.5%, the commission would be just over $14,000 or approximately $20,000 of your hard earned, pre-tax dollars. We know some excellent real estate agents, but even the best of the best can justify no commission of this level.
How do we know? We have helped many people to market properties of different types, values and locations. While it takes some effort, time and experience, the fair reward for marketing someone's home, should only be a small fraction of the usual commissions. We know that the current real estate commissions are exorbitant and simply unnecessary.
Download our free book to find out why no real estate agent is needed to acheive the highest price for your home.
Below are some of the myths, fibs and deceptions on which the real estate sales industry has been built and why no commission of the current levels is ever justified:
Common Real Estate Myths
"I will sell your property."
No real estate agent (or anyone for that matter) can ever sell a property. This simple statement will surprise most people, but it is true. Think about the last time you bought a property to live in. Did the agent need to talk you into it or convince you to buy it? Of course not. You inspected it, liked it, made an offer and negotiated to buy it. Real estate agents sell two things: themselves to get the listing; and unnecessarily expensive marketing packages.
The actual process of selling is built around creating the right conditions for your ideal buyer to buy and pay top dollar. It also includes removing objections and obstacles that stand between the buyer and the purchase.
This process involves identifying, attracting, enticing and compelling your ideal buyer to buy and to pay as much as they possibly can. There is a recipe or process for achieving this, and it is simply a matter of following a few basic steps. Preparation, pricing, presentation, promotion, negotiation and settlement. This process doesn't care who follows it or how much you pay for it. That means no commission needs to be paid to have this process working for you.
Even with a traditional agent sale, you as the seller are usually involved in all but two steps: promotion and settlement. You would organise the preparations, presentation for open homes, have final say on the price and even have to negotiate with the buyer, through the agent. The settlement and legalities are usually taken care of by a solicitor or conveyancer, leaving promotion as the only task carried out by the agent.
Exposure on Realestate.com.au and Domain.com is the most important component to promotion. The good news is that you don't have to use a traditional real estate agent to be able to advertise on these websites anymore.
"I have a database of people ready to buy."
This is my favourite! Usually, people take around two months to find and buy a house, so it is likely that most of the people on that database have already bought something. If they haven't, they will not be relying on any one agent alone to show them properties. Like most people, they will be searching on realestate.com.au.
No agent 'owns' any buyer because people who are looking to buy have only their own interests at heart and have no loyalty to any agent. Even if an agent did have a unique database of cashed up buyers, wouldn't you want your property to have a greater exposure to a wider market than just a limited database? No commission will ever justify the 'database of buyers' myth.
"You don't have the time for what is involved."
Let me see. So what you're saying is that the time I spend in keeping my house clean and available for inspections does not count? What about all the time I spend with preparations for the sale and discussions with the agent, or the time taken with negotiations through the agent and signing of paperwork.
You still have to spend time on these things whether you use a traditional agent or not. You will spend more time on this than the agent will on your campaign and this is precisely why agents have multiple listings at the same time. Selling your home is never convenient, whether you use an agent or not. No commission will ever buy you total convenience.
"I'm an expert negotiator, trained to sell and will get you a higher price."
This is an easy one. Many people think (as agents would prefer them to) that real estate agents are expert negotiators. The reality is that in most cases they are simply gofers between the buyer and the seller and do nothing more than flick-pass the offer and the counter-offer between the two parties. It is amazing that when buying a property, people do not hesitate to negotiate directly with the agent, but when they sell, they feel that they need an agent to 'do it for them'.
Real estate agents already start with a large handicap, being their excessive commission. To get you more money in your pocket, they would need to sell for a price that is at least that much higher. Potential buyers are not going to pay more than market value for any house just to cover your agent's commission. Most people don't realise that the short course agents need to undertake to become licenced involves no training on negotiation or selling in general. Most of the training agents receive revolves around obtaining listings.
Agents have very little incentive to negotiate a higher price for you because an extra $10,000 for you would only be an additional $250 for them. They are not going to want to risk losing a potential buyer over such a 'small' amount when a $20,000 commission is at risk. In addition, if another agent brings them a buyer, they often have to split the commission. No agent wants to do this, so if they find a buyer first, they will want to seal the deal as soon as possible. Negotiating would only drag the process out and put their commission at risk. No commission provides sufficient incentive for an agent to achieve the highest price for you.
"How will you know what your property is worth?"
This loaded question falsely assumes that there is an exact dollar value for each property. This is wrong! The fact is that most properties can be priced within a zone or a range. This is the zone in which most serious offers are likely to be received. Any exact dollar figure within this range depends on the willingness of the buyer and seller to exchange contracts at a specific value on a given date.
Knowing what a property is worth does not mean that an agent will actually achieve the highest possible sale price.
Real estate agents and even valuers can only make an educated guess as to the price range based on recent comparable sales. Because agents want you to list with them, they have a vested interest in quoting a higher value to get your business.
Even valuers can get it very wrong sometimes. We have seen a formal valuation that was more than $200,000 (28%) below the price for which the property finally sold. The best way to establish the market value zone is simply by doing thorough and exhaustive market research.
We can help you with this using the very same property database that all real estate agents around the country are using. We will show you detailed pictures of each comparable property in your area to give you an excellent idea of the potential value of your home. Having said this, many owners already have a pretty good idea of the value of their property from recent sales in their street.
A registered valuer costs around $500. No commission justifies an appraisal from a real estate agent, because even if it's accurate, it doesn't mean that he will achieve it.
So what is the alternative? Do you attempt to sell privately?
An increasing number of people are doing just that, these people are going in blind, because they don't know the recipe or process to achieve the highest possible sale price. What is the point in paying no commission if you don't achieve the highest possible sale price for your home?
What if there was something in between a private sale and the best real estate agent? What if there was a genuinely better and cheaper alternative? Now there is! Now you too can benefit from the experience of a professional property marketing strategist.
Download our free book to find out about the way in which selling without a real estate agent is a much better option.