Tuesday, July 9, 2013

Real estate or real mistake?

You need an agent-and other fairy tales!

Is private selling a mistake? A real estate agent doesn't think so and here's why..

Let’s be clear here – the author of this article is a real estate agent. Not a newbie either but with 10 years in the industry.

As an agent I should despise private sellers or FSBO’s as they are called in the States. Right? The For Sale by Owners and myself should be sworn enemies yes? Natural born enemies like a dog is to a cat, like an lion relates to an antelope, we should be at each other’s  throats shouldn’t we?  Well actually…. no!

I run a business that assists people to sell their own home without the need for a real estate agent and I’m here to dispel some myths once and for all.

People, you have been hoodwinked…..

To be precise you have been conned for the past 100 years.

Agents want you to believe that you absolutely need them in order to get your property sold. They want you to imagine that you cannot possibly attempt the gargantuan task of selling without their assistance. They want you to believe that they have almost superhuman powers of persuasion, legendary marketing prowess and sublime negotiating skills.

Never mind that those 3 things are almost superfluous to getting a property sold. Never mind that most agents have had next to no training that genuinely fits them to sell your home.

Now the agents will sing you a very different tune off course. They will assure you with absolute tenacity that selling a home by yourself is perilous. ( After 10 years in the industry I’m yet to hear of even one case of a private seller getting themselves in trouble ) No doubt it has happened but I have never yet seen it and I deal with FSBO’S on a daily basis. I have however seen agents make a grand old mess of things from time to time.

Of course you must employ an agents services to set the correct price mustn’t you? Hmmm? This particular myth has to be right up there with the tooth fairy. Nothing against the tooth fairy because there is at least the anecdotal evidence of children for the fairy’s existence, while there is no such evidence to suggest agents can price property accurately.

There is however plenty of evidence to the contrary. In the week preceding this article I happened upon two instances where the private sellers used several different agents to give them initial market appraisals. Astonishingly, given that the homes were in the 400K’s range , the market opinions varied by tens of thousands. In one case on a property worth nominally around $450,000 two agents had prices that were $100,000 apart.

How is this possible? How can two supposedly professional, knowledgeable agents quote such disparate figures. Well the answer is surprisingly simple. Some agents are incredibly incompetent…and some agents are very competent but want a listing so bad they will attempt to buy it rather than let it go to their competitor. My point here is straightforward. You can price a property just as accurately as any agent can. In fact I suspect that most private sellers do a better job of it and here’s why…

Agents  view and sell property that is in vastly differing price brackets. Some are two hundred thousand and some may be two million. But you are an expert in your narrow price range. You can take 2 days studying the listings in your local area via the internet and newspaper. I guarantee you can be more up to speed than your local agent for your particular property price and type. Nowadays there are also very inexpensive market reports and sales figures available for your area so there is no reason at all not to be able to get an accurate price on your property without an agents help.

Ok so let’s consider that myth laid to rest. Of course you do need the agent to market your property at least, ahem, don’t you?

Well yes and ….no…but mainly no. If you are going to do a half baked attempt at selling by yourself then yes indeed, you are better off sticking to an agent. On the other hand, if you make an even remotely genuine attempt you can easily get more than enough exposure for your property, all by yourself. The reason for this is that this amazing tool known as the internet has leveled the playing field. You can get your property seen by as many people as you need with little effort or cost. The agents only monopoly, that of marketing, has now been broken and the private house seller is the beneficiary.

Perhaps the, if pricing isn’t a problem and marketing is within anyone’s reach then surely the negotiation part is where the agents shine right ? Oh dear…

An agent is running a business and that business involves he or she securing a commission for services rendered. This is  a very inappropriate starting point for someone attempting to negotiate a sale between a buyer and seller. The negotiations most often come down to price and who has the whip hand? Someone who is seeking a commission or someone who is  selling their own home and who has the benefit of many thousands in commission savings to allow more flexibility in price if needed?

In my experience agents training involves how to sell… to their listing clients ..and very little about how to sell to buyers. In any case the role of negotiation while genuinely important is very much over estimated, because at the end of the day – houses sell themselves!

Price a property correctly and so long as there are buyers around, they will beat a path to your door. My industry experience involves Australian real estate but these same principles and truisms hold true equally in the Unites States, England,Canada,New Zealand...anywhere. Over price your property and you can forget selling unless you are very , very lucky.
If there are no buyers or if you price far too high the neither an agent or a private sale will eventuate. Get the price wrong and no amount of marketing will compensate for that. Essentially you’ll be just informing an ever greater number of potential buyers that your property is priced to high.
The house will sell itself if you let it AND if there are buyers around. Sometimes there simply aren’t any.

No one knows the home like the owner so why on earth do we insist on believing the fairy tale that an agent can do a better job of selling your home. The reason is simple. It’s because that agents will describe all manner of reasons why you will fail and they will sound plausible ( remember they are trained to sell to you, not to buyers ) The stories are coming from an authority figure. You may not like agents but they know real estate don’t they?

The agents will point out the property down the road which is being sold privately and remains on the market with no offers after 6 months. Yet somehow they find no time and have no desire to tell you about the listings on their own books that have sat with them for 18 months. That’s different they will say. That owner’s price is too high and no agent can sell if the price is set too high by an unreasonable owner. Do you see their story unraveling in front of your very eyes?

One last point. There seems to be another misconception that private selling is terribly stressful, as though using an agent will be a cakewalk for you. It seems to me that anytime you introduce an unnecessary third party it can only add to the potential for stress. If you think that by using a real estate agent that you will somehow not need to negotiate etc then you are in for a rude awakening. This is because instead of negotiating with a buyer suddenly you will be negotiating with both a buyer ( indirectly ) AND the agent as well.

If you really think that you need a realtor to sell your property then you are probably right and no article will convince you otherwise. But know this. If you are using an agent you are bound to have exactly the same hurdles and exactly the same challenges. The only difference is that you’ll be paying handsomely for the feeling of assistance you may or may not receive from your realtor. Estate agents have been pulling the wool over the publics eyes for years but the jig is up.

The wool over the eyes analogy is appropriate because you dear private seller are being treated like so many sheep in a big herd.

If you want to sell your own home, do some basic research to get an accurate price. Place a sign outside your property, place it on a well trafficked internet site and then be patient. If an agent tries undermining your attempts with typical mind games, call their bluff. Give them the possibility to sell while retaining your right to do so without commission…and see who gets the prize. My money is on you!