Wednesday, February 21, 2007/
Cut-price real estate agents may sound like a great thing — until they start losing sellers real money.
But wait…there’s less
I’m a fairly easy-going type of individual. Until, that is, I see the disagreeable, no, bloody infuriating, grin of Tim Shaw on the TV.
Remember him? He’s the “but wait, there’s more” bloke from cheap commercials more than 20 years ago, flogging crap which always came with the obligatory set of “free” steak knives.
TV viewers in capital cities have been spared – so far at least – Shaw’s new starring role as chief spruiker in north Queensland for an el cheapo real estate agency (I’m not going to dignify it with a name in MY blog).
“Join the real estate revolution,” he squawks, before bagging the professionalism of every decent, hard-working, full commission-earning agent in the land.
The only reason my flat screen LCD TV hasn’t been pulverised with a brick yet is thanks to the quick actions of my partner in diverting my overarm through the window (cheaper to replace). What am I so hot under the collar about?
The appearance in the past couple of years of agencies undercutting the industry-standard commissions real estate agents work hard for, that’s what. (“Yeah, yeah,” I can hear you say, “like our heart bleeds for them … can’t they get a proper job?”).
Okay, I suppose you’re entitled to your opinion about what real estate agents charge, but regardless of that, the spread of these cut-price outfits is heading south like the cane toad.
You might think that’s good, and of course there are several independent agencies in the big cities already discounting fees. A lot of vendors think this is terrific stuff.
The op-shop agents give sellers the big spiel on how they can save $000s on commissions by using them, but the truth — which thankfully is starting to dawn on north Queensland sellers — is that “cheap” can easily become “expensive”. How?
Low cost agents have to sell properties in big quantities, otherwise they’re not making enough in fees/commissions to sustain their business. That’s a no-brainer. The result for the seller is most often a very quick sale. Yay! But wait, there’s more.
A quick sale ain’t necessarily a great sale. Usually, the cut-price bloke will try and persuade his seller to accept the very first offer that comes in, usually waaaaaay below the asking price.
I know of a real estate agent that recently sold a property for a couple who were initially unconvinced that he could actually increase the profit on the sale of their investment compared with the bloke who offered to flog it for a set fee of just under $4000 (they nevertheless listed with the first agent because of his way-cool Prada briefcase).
The first offer that came in was about $15,000 shy of what they wanted. Now, Mr Cut-Price would have done his level best to get them to sign off on it, so he could collect his fee and pay his power bill.
The agent they signed with, on the other hand, persuaded them to hold out for more. Result? Two weeks later an offer on paper of $25,000 more than the first.
They were shown the maths. Even with their agent’s higher commission, they were $17,000 better off than if they’d taken the initial offer. Which meant, however, that they didn’t get a set of steak knives.