One of the first things almost all home sellers do once they’ve decided to sell their homes is to compare real estate agents in their area. They have no idea that they are about to make a huge mistake, regardless of which agent they choose. This is because they don’t know what they don’t know. To compare real estate agents is like deciding whether you’d prefer a punch in the face, a kick in the privates or to be stabbed in the back. You may be lucky to find the rare agent who is pleasant, conscientious, who goes above and beyond their line of duty, and even helps to achieve a great sale price. Unfortunately, even with the best agent, you can only achieve a compromised result. The cost almost always negates any benefit. Those who compare real estate agents have already ignored some very basic phenomena, especially if they bought their current home in the last 15 years or so. They have failed to stop, think and ask some simple questions such as:
- Did I find my home because of the agent or by myself online?
- Did the agent convince me or talk me into buying my home?
- Did I buy my home because of the agent?
- How much did the agent have to do with my decision to buy?
- Did I buy my home or was it sold to me?
- Why would the answers to the above questions be any different for my buyer?
When answering these questions, it is obvious to most home owners that the agent had very little – if anything – to do with their decision to purchase their home. It is amusing then, that the first thing most of them do when selling is to compare real estate agents.
Below are the three most misguided criteria based on which most home sellers compare and choose a real estate agent.
A home appraisal to compare real estate agents
The classic appraisal is one of the most terrible criteria based on which to compare real estate agents. All other things being equal, it is tempting to choose the agent who claims to be able to sell your home for the highest amount. Real estate agents know this and so they feel compelled to overstate the sale price to win your business. They will even find and prepare a list of recent sales that achieved the kind of price that they are promising. Unfortunately, all you will be able to see from this list are small, single thumbnail images of these properties with sale prices and dates. You will have no idea whether they were comparable to your home or not. You have to trust the agent. You want to know the likely sale price and the agent wants your business. These are two very different objectives, with very different dollar figures. This is why it is a major conflict of interest for a real estate agent to appraise your home. Because many homeowners have unrealistically high price expectations, agents fear losing the business if they give a realistic market appraisal. Especially knowing that they will be compared to other agents who are also likely to feel the same fear. This is why you should never have your home appraised by an agent. To compare real estate agents based on their appraisals is a complete waste of your time. I wrote about this and a proposed alternative in greater detail here.
Commissions as a basis to compare real estate agents
Weighing up the commissions they charge is another pointless way to compare real estate agents. Most people still think that a commission gives a real estate agent an incentive to achieve the highest sale price. Nothing could be further from the truth. At 2.5% commission, an agent would only lose $250 to convince you to sell for $10,000 less, so that they can pocket their $20,000 commission sooner. Most agents would prefer a guaranteed $20,000 now than a potential $20,250 at an unknown later date. There are three reasons why commissions are unethical. They simply incentivise real estate agents to sell as quickly as possible. You may find the rare real estate agent who will negotiate hard for the highest sale price, despite their disincentive to do so. Even so, whatever great sale price is achieved will be eroded by the astronomical commissions they charge. Buyers won’t pay more for your home, just so you can pay your agent. No agent who charges a commission can ever help you achieve the result that really matters. This result is about how much you pocket and walk away with after everything. You can only achieve this through the combination of the highest sale price and the lowest sale cost. Commissions not only provide a disincentive for agents to achieve the highest price. They are a terrible investment that erode how much homeowners can pocket. This is why it is senseless to compare real estate agents based on the percentage commissions they charge.
Comparing agents by the number of their For Sale signs in your area
Another common way for home sellers to compare real estate agents is to see which one has the most for sale signs in the area. Agents know this, which is why many of them display their face, name or logo on the street sign. When this is what you see, instead of photos of your home, you wonder whether agents are marketing your home or themselves. This is one of the many clues most people miss, which confirms that real estate agents are in the business of selling themselves, not homes. You can find another clue from the answers to the questions at the beginning of this article. How much did the ‘selling’ agent have to do with your decision to buy your home? So what does it tell you about an agent whose signs you see more of in the area? Does it mean that they achieve higher sale prices and great results for their clients? Does it even mean that they sell more homes? No. It simply means that they are good at selling themselves to get listings. Selling themselves to get the listing is very different from selling homes and achieving great results. Not all of those listings may end up sold and you’re unlikely to know whether the owners of the sold ones were happy with the result and the experience. This is why it is dangerous to compare real estate agents based on the number of street signs you see their face on.
Why comparing real estate agents is futile
Those who choose a real estate agent, are victims of a large confusion. They mistake the agent’s usual involvement with what actually causes a sale – or rather a purchase. The questions at the beginning of this article should help you realise that the ‘selling’ agent had nothing to do with your decision to buy your home. Your home wasn’t sold to you because a home cannot be sold, only bought. There is a formula that finds and attracts an ideal buyer and makes them feel compelled to buy and be willing to pay well. The beauty of this formula is that it doesn’t care who follows it or how much you pay for it. Real estate agents are certainly not the only people who know this formula. So if your home wasn’t ‘sold’ to you by a real estate agent, why bother to compare real estate agents when it comes time for you to sell?
To learn how to easily achieve a higher sale price for your home, without the cost of a real estate agent or the risks of a private sale watch this short video.