Since Adam and Eve decided to sell their house, real estate agents have been over quoting the expected sale price in order to win listings. In a rising market, over quoting does minimal damage to sellers as the buoyant conditions patch the gap between the agent’s quote and the true market price.
In a falling market, the gap between the agents quote and the true market price can widen. Every percentage point the market declines is the vendor’s lost equity. Even in stagnant and/or falling markets, there will be competitive bidding for accurately priced properties.
Solution – Select an agent on their selling strategy not the price they quote. The right strategy will deliver the right price. Write a clause into the agency agreement that the agent accepts a reduced commission if they fail to achieve the price they quote.
Conditioning is a tactic where the agent praises a home to gain the listing and then systematically bombards the owner with negative feedback to get the price down once on market. Owners are often shocked and disheartened to find their smiley positive agent is suddenly negative about everything from the size of the bedrooms to the market conditions to the weather on Saturday.
Don’t fall for it. Fire an agent that conditions you with systematic negative feedback.
Solution – Only sign short exclusive agency agreements. If the agent is conditioning you with manufactured negatives, fire them.
Agents want a ‘motivated vendor’. One of the most common and easiest ways for agents to get the vendor motivated is have the sellers spend huge amounts of money upfront. Newspaper/print advertising, expensive internet advertising, renovations on the house, stylists, move the tenants out (this is obviously reducing the income not an expense), video tours, you name it. If it costs money, some agents will recommend it, provided the vendor is paying.
Solution – Tell the agent at the outset that you will only pay for the marketing on a settled unconditional sale. If the property does not sell for any reason, the agent wears the expenses. Suddenly, the agent may produce an economical campaign that gets the job done just as effectively with less financial risk to the client.
Signing a Long Agency Agreement
Time heals all wounds. It also wears down all objections and objectors. Auction agents love adding a clause to their exclusive agency term that reads along the lines of ‘the agency shall be granted exclusive selling rights for 90 days after the auction date’. If the agent really ‘has buyers’ and feels that your home ‘would do really well under the hammer’ why do they need 90 days on top of the 30 day auction campaign. The agent’s talk is tough and confident, but is quickly diluted by the need for 120 days to sell one property!!
Solution – Read the agency agreement carefully. Many people only read the agency agreement when they are trying to work out how to dismiss the agent. This is the worst possible time to learn that you are committed to the wrong agent for 120 or 150 days. Give the selected agent 60 days exclusive agency period. You can and should extend their term by 14 or 21 day periods after the exclusive period expires if they are doing a good job.
Above all, maintain control of your home and who it is listed with.