When you think about the really big financial decisions you make in your life, choosing who you will use to sell your house must rank right up near the top for $$ implications.
For an average house of say $500k, a +/- 10% range on realised price amounts to a $100k difference between a great marketing/sales job and a bad one. Agents quite rightly try to highlight this when they are being "nickel and dimed" on sales commission %. Yes - negotiating down your agents sales commision can have some undesireable consequences. As has been highlighted previously, do you really want your property to have the lowest paycheck attached to it of all the properties on your agents books?
What I think most agents don't realise is that they are not really giving vendors much choice but to fixate on sales % commission. Lets be honest, what other hard data have vendors got to work with when choosing an agent other than the 100% certain $ flowing into the agents pockets if/when the sale happens.
For all the sales pitch offerred by agents about how great their customer service is, or how knowledgable they are about the area, or how many buyers they have, or how great their brouchures look, (or how expensive are their agents suits/cars!) - none of this is anywhere near as convincing nor as certain to impact the pocket as the hard facts of the $ commission - so that's where the discussion will inevitably focus, and unfortunately, in the absence of convincing data to the contrary, commission % will continue to be a major driver of which agent the vendor chooses.
So how should vendors choose their agents? I have a fanciful theory that it really should just boil down to two considerations.
The first consideration is "How much the agent say he/she can sell my property for".
EH-OW ! I hear many of you say. Surely you are not advocating awarding the job to the agent who tells me the highest price? Well, no. Not in isolation of the second consideration.
What is the second consideration?
Second consideration: "Should I believe him/her?"
All of the gumph about how good an agents marketing is, experience, sales history, etc etc is just a means to an end and the end is helping the vendor form the view "do I really believe this guy can sell my property for the price he just told me."
Now we move to fantasy land... I wish each agent pitching their service to me came complete with a "bullsh*t ratio", something to tell me whether they deliver on their promises. Or perhaps to be a little more constructive lets call it a "Delivery Ratio"
Delivery Ratio could be defined as "Average price sold / Average price told". So if an agent sold a previous property for $550k but at the time of appraisal/listing for the property he quoted $500k then his Delivery Ratio is 110%.
And the agent who overquotes to buy the listing? ... ends up with a Delivery Ratio significantly less than 100%.
The vendor's job is then very straightforward: calculate for each Agent "Quoted price" x "Delivery Ratio" and sign up the agent with the highest result.
Simple!
Job Done!
time to leave fantasy land......
For an average house of say $500k, a +/- 10% range on realised price amounts to a $100k difference between a great marketing/sales job and a bad one. Agents quite rightly try to highlight this when they are being "nickel and dimed" on sales commission %. Yes - negotiating down your agents sales commision can have some undesireable consequences. As has been highlighted previously, do you really want your property to have the lowest paycheck attached to it of all the properties on your agents books?
What I think most agents don't realise is that they are not really giving vendors much choice but to fixate on sales % commission. Lets be honest, what other hard data have vendors got to work with when choosing an agent other than the 100% certain $ flowing into the agents pockets if/when the sale happens.
For all the sales pitch offerred by agents about how great their customer service is, or how knowledgable they are about the area, or how many buyers they have, or how great their brouchures look, (or how expensive are their agents suits/cars!) - none of this is anywhere near as convincing nor as certain to impact the pocket as the hard facts of the $ commission - so that's where the discussion will inevitably focus, and unfortunately, in the absence of convincing data to the contrary, commission % will continue to be a major driver of which agent the vendor chooses.
So how should vendors choose their agents? I have a fanciful theory that it really should just boil down to two considerations.
The first consideration is "How much the agent say he/she can sell my property for".
EH-OW ! I hear many of you say. Surely you are not advocating awarding the job to the agent who tells me the highest price? Well, no. Not in isolation of the second consideration.
What is the second consideration?
Second consideration: "Should I believe him/her?"
All of the gumph about how good an agents marketing is, experience, sales history, etc etc is just a means to an end and the end is helping the vendor form the view "do I really believe this guy can sell my property for the price he just told me."
Now we move to fantasy land... I wish each agent pitching their service to me came complete with a "bullsh*t ratio", something to tell me whether they deliver on their promises. Or perhaps to be a little more constructive lets call it a "Delivery Ratio"
Delivery Ratio could be defined as "Average price sold / Average price told". So if an agent sold a previous property for $550k but at the time of appraisal/listing for the property he quoted $500k then his Delivery Ratio is 110%.
And the agent who overquotes to buy the listing? ... ends up with a Delivery Ratio significantly less than 100%.
The vendor's job is then very straightforward: calculate for each Agent "Quoted price" x "Delivery Ratio" and sign up the agent with the highest result.
Simple!
Job Done!
time to leave fantasy land......
