It is happening again. In fact it has been happening for a long time and no doubt will continue to happen; but it shouldn’t. What am I talking about? The Marketing Trap!
With all the wonderful things that real estate can bring to people’s lives and the many wonderful people the industry employs, there is one activity that ‘gets my goat’ more than anything else. For the 3rd time in a matter of days I have had property sellers, who were listed with other agents, call me to advise them on what to do about their expensive advertising bills.
Firstly, let’s go back to what happens and then why it happens.
In one of the cases, the seller signed up with an agent for a period of time and agreed (was convinced) to have an almost $3,000 marketing campaign. The money was not payable up front and there is a reason the agent does this. Meanwhile, the weeks go by and the seller is receiving feedback from the agent that the buyers reckon the price is too high. Turns out the price was way too high but that high price was told to the seller by the agent at the initial appointment. (Remember at the initial appointment the agent wants the job. This motivation and ensuring commission that comes with a sale led the agent to wanting to impress, hence the extreme quote).
But what is not impressive is spending the $3,000 of a client’s (yet to be paid) money only then to tell them their price is too dear when in fact it was the agent’s price in the beginning Ahh Hah! But here is what the agent gets – the marketing of the property included amongst other forms of agent profile building; a huge for sale sign out the front of the home (the sign was so big it just about hid what was actually being sold but the size and clarity of the agent’s face, name and company was super impressive); not forgetting other elements such as potentially crippling the real sale price by over exposure and over pricing of the property. The agent has effectively bought their profile at the seller’s expense. It was suggested in one case that the agent didn’t want to sell it promptly as it would lessen the exposure of themselves as opposed to a quick successful campaign. The seller’s expense is twofold; the raw costs of marketing plus a likely under market value resulting sale.
Now, here is the agent’s trick. This is taught by some training companies. The agent doesn’t ask for upfront money or send the client a bill whilst they are with them – you see the seller has now invested $3,000 in that agent. If they dismiss the agent they are going to cop a $3,000 account, therefore better to stick with that agent to get some return on the outlay of money; the seller will eventually pay regardless of any result.
Locally, the worst cases I have seen is a couple of property owners that spent over $20,000 to not sell their properties. Ouch! One case I was made aware of was where an agent charged 0% commission to sell a property. When asked why they did this, the reply was ‘The seller spent $30,000 on advertising, where can I get that sort of profile for myself for free’.
The most pertinent question is, ‘How much did this agent end up getting for the client? The one paying the bill!’ Answer, the agent didn’t care! A commission wasn’t paid for selling it so the sale price was irrelevant.
Look, there is a simple solution to this. Your property needs to be promoted properly to attract the best buyers. But let the agent pay for it. If they truly believe in their marketing packages, their price quoting, their service standards and skill, they shouldn’t have a problem investing their own time and money into the sales process.
Every agency, including us, has properties that can be difficult to sell and some that may be on the dearer end of what their true value may be, but just don’t lose money by over committing your funds to find this out.
The real estate industry has been very good at protecting itself. No result hurts sellers while the agent can simply get on with the next one. It shouldn’t be that way. Industry practices such as these benefit the agencies and the people within them, just don’t let it be at your expense.
At CE Property Group we can show you an alternative and this is one of the real differences we can provide to you.
Mark Watkins – Director/Sales Manager