The 7 Deadly Sins of the Selling Owner

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I recently needed to transfer a private health insurance and I turned to an insurance intermediary that was recommended to me, to ask for a solution with the requirements I wanted. After many iterations and an indefinite drag, emails back and forth, difficulty in making a telephone contact, I ended up giving up when, after giving the OK, I was sent a “lot” of forms to fill out, despite although they already had all the information. When I was ready to resign myself to the situation, I sent an email to another mediator with whom I had recently taken out another type of insurance, and after 5 minutes I received a call back. Start well! After a few minutes explaining what I wanted, I provide the identification data, confirm that I don’t have to fill out all the paperwork, and I have the insurance taken care of. Wow!!!

It has certainly happened that you want to book a vacation, start by contacting an agency and end up giving up and doing everything yourself, using Skyscanner.com to book a flight and to Booking.com to book a hotel. It has happened to me, due to the frustration of dealing with some travel agencies (not all, of course). Last year, I was looking for a trip to Florida, and I initially contacted an agency to provide me with suggestions. They quickly began to charge hotel options and when I asked the person if he had been there, if he knew the best areas, the answer was always negative. In other words, he was selling me a product without knowing it. Later, I had the opportunity to visit a Virgin Holidays agency on a trip to London, and I realized the contrast for a 5* service ! The person who helped me was able to give me good advice about hotels, help me plan the itinerary, and give me countless suggestions about programs! This person had already been there several times, knew the product well, spoke with enthusiasm! And best of all, it was even cheaper than booking through my means, due to the agreements that Virgin Holidays has with some hotels!

The disintermediation of Transactional Services

Technology has been reducing the space for intermediaries who provide a mediocre service. Service providers have started to use technology to disintermediate the business, and this is visible in all sectors: from insurance, tourism and real estate.

If this is true, it is also true that intermediation remains alive when service is excellent and customers recognize value.

In my case, there are 5 attributes that for me are fundamental in any type of service, and that make it truly a value-added service and not a mere transaction. Are they:

  • Saves time: I have the support of a professional who knows the market offer and selects the best solution for me. And that saves me a lot of time. After all, isn’t that what you get when a friend recommends you to stay at Hotel X instead of spending hours researching the best locations and choosing a good hotel on Booking?
  • He is an information curator: we are currently inundated with information. Virtually all information is available on the internet and there are search engines that help immensely in locating it. However, we still need to turn to our family and friends for advice on a good restaurant, hotel or vacation program. A good professional is aware of the existing offer, strives to understand your needs and selects the best options based on your profile. That is, when interacting with him, he has the feeling that if he did the research by himself, he would not get a better result;
  • Expands your possibilities: based on your requirements, it manages to show you other options you hadn’t thought of, and which can be much more attractive;
  • Defend your interests: how often do you get the feeling that the professional is not sensitive to your wallet, and what you are willing to spend, and does not try to find options that offer you more for less ( ex: promotions, service packages/bundles);
  • Gives you confidence in the process: is someone who explains how everything is going to happen, who takes care of everything in the right timings, who offers security. In the example of the trip, you are sure that it will alert you to the need for a visa, for some type of authorization that is necessary, issue all the documentation, alert you to restrictions at the hotel where you are going, etc…

What does this have to do with the service provided by a real estate agency?

In a word: everything!

If we don’t get a good service, most of the time it’s our responsibility (the customer who uses the service). Yes, because we are the ones who choose who we want to work with. But we seldom do so, with discretion. In real estate, for example, an owner who wants to sell his house spends more time trying to understand how the market is doing than selecting the real estate agent with whom he will sell his house. Makes sense? Before choosing a good specialist, how much time do you spend asking for references and researching him and the clinic?

The 7 Deadly Sins of the Selling Owner

A selling owner must assume the responsibility of taking good care of what, perhaps, is his greatest financial asset – his home. And you should at all costs avoid the following list of what I consider to be the 7 deadly sins of the Seller Homeowner, which generally mean taking longer to sell your home and for a lower value than it would otherwise be possible.

  • Do not interview at least 3 real estate agents: In the US, it is common for a homeowner to make so-called “listing appointments” with several real estate agents, before choosing the one to work with. The owner shows the house, explains what his plans and expectations are. The real estate agent shares his professional opinion on what should be done to maximize the value of the home, gives his estimate of the market value, and presents his experience and services. This is a time for both of you to realize if you want to work with each other;
  • Expecting to hear “yes” to everything: when your real estate agent agrees with everything they say, it’s a bad indicator, because it could mean that: 1) they either don’t have the experience and knowledge to discuss the issues with you or 2) wants to please you to give you the fundraiser. You should expect to be challenged, on topics such as price, improvement works, decoration adjustments, marketing strategy, etc…
  • Not preparing your home for sale: a good agent brings you the buyer’s perspective, the buyer’s clinical (and sometimes cynical) “eye”, which is surely different from yours! When you are selling a house, you have to project in your mind that the house no longer belongs to you, and therefore, nothing you can say makes a difference to the buyer. Put yourself in the buyer’s shoes: if you were buying a new home, how much weight would you give to a stranger’s opinion? Even more so if this stranger was interested in selling…
  • Do not demand that you be provided with market indicators: you know how many houses are for sale in your area, what is the price range, what is the price/m2 comparable to yours, what is the average sales time, how is that the price has evolved in recent months, what is the trend for the coming months? If you do not have this information, you must obtain it from your agent, and you must decide on the basis of objective information from (preferably) independent sources;
  • Putting the asking price above the market: Many homeowners insist on falling into this blunder. There are many studies that point out that when a house is placed at a price above the market, the tendency is to end up being sold below the price that would be obtained if it was placed at the correct price right away. This seems counter-intuitive, but the explanation is simple. The real estate market, like any other, is governed primarily by the law of supply and demand. Now, it has characteristics that make it different: 1) it is not very liquid, that is, it is not an easily tradable asset, demand is relatively low (don’t count on dozens of people interested in your property); 2) very heterogeneous (each property has its specificities that make it difficult to compare) and 3) the price is not very elastic, that is, it reacts slowly to changes in supply and demand. When the property is placed above the market price, the demand (which is already low) is even lower, so instead of 5 potential interested parties, you can count on 0 or 1 (very lucky). When you have only 1 interested party, who do you think has the negotiating power?
  • Don’t try to find out how agencies work: when the owner hands over the house to a real estate agent, he thinks he is handing over the house to the agency, and will rely on the agency’s marketing and visibility to promote his home. Now this is only partially true. In fact, legally the mediation contract is established with the agency (it must have an AMI code). In practice, the marketing investment is made by the agent and not by the agency. The agency is responsible for placing the ad on its website, in some real estate portals, in the store window, and little else. Anything beyond that depends on the real estate agent. Photographs, videos, 3D virtual tour, drones, flyers, print advertising, social media advertising, dissemination to partner networks and networking, staging/house decoration… All this is paid for by the agent. Which means that either the agent has the financial capacity and can have a premium service, or it doesn’t and is left with a basic service;
  • Opt for an open contract instead of an exclusive one: this is the point that usually results in greater controversy with many owners, due to the lack of knowledge of what an exclusive contract with a mediator is. An Exclusive contract means that only the broker can promote your property for a certain period of time (typically 6 months), and the commission will always be due in case of sale, regardless of where the buyer comes from. There are essentially 3 things that scare homeowners. We will explain how they can be resolved, through a written commitment that is recorded as an addendum to the mediation contract (do not facilitate, and must require that it be in writing):

I will have less exposure (advertising) than if I gave myself to several: establish a commitment that the real estate agent will place the property on the most relevant real estate portals and that it will explicitly indicate that it shares the commission with all agencies . Ask how you will promote the property to other professionals;

Only that realtor can sell the property: ask your agent for a written guarantee (in an addendum to the mediation contract) that they will share the commission by 50% with any agency (with valid IMI) that brings a buyer. In this way, any agency can sell the property, as if it were open;

If the Marketing efforts don’t go well, I’m tied to a contract for 6 months: ask that everything agreed in terms of promoting your property and your agent’s commitments be written in an addendum to the contract, with the possibility of terminating the contract if the commitments are not fulfilled;

An Exclusive contract must be a premium service contract. An Open contract is a basic, undifferentiated service. Why? A good mediation service implies a significant investment in a good Marketing plan, which can reach 20% to 30% of the remuneration provided for in the contract. Only if the agent is sure that if he sells the property he will receive the commission, will he be able to make this investment. You may think: yes, but if it is open, if you sell, you also receive the commission, so you must invest if you want to be remunerated. Unfortunately, it doesn’t work like that: if the property is open, the real estate agent has no interest in disclosing it to their peers, because anyone, if they have a buyer customer, can skip over it and go directly to the seller. If you’re still not convinced, the advice I give you is: as in the examples we talked about in the introduction, look for the best ones and you’ll understand why exclusive service is so important. And attention, to be better it takes much more than many years of experience. But that is a topic for another article.

Conclusion

In real estate, as in other areas of activity, everything boils down to providing a service of the highest quality, so that you feel that if you did it by your own means or if you worked with another professional, you couldn’t do better. At the end of the day, what counts is achieving your goals, which in the case of selling a home are: selling at the best price, as quickly and with the least possible friction.

Your comments are welcome. Share them with us. And, you know, if you need to discuss any sale of your property, talk to us.

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