Education Centre

Basic Maths vs Bargain Basement Psychology

Since working in this industry and being a keen property investor myself, I've come to expect the usual "How to Deal with Agents" speal in the latest Property Investor magazine or Guru book.

From a sellers perspective, there's always my personal favourite, "Tell the agent you will only list with them if they discount their commission".

My answer to this question, as a person with my own personal values, and a commitment to excellence is a firm, not-negotiable "No".

If you ask me to list your property, I commit myself to do the best that I can to achieve the best price, and give you the best guidance and feedback on your property that I have learned from my experience as both an investor, a real estate agent and an avid reader who stays in touch with current market trends.  

When I say "No", some sellers will simply walk out the door and go to the local franchise agent and get their discount.  That agent will then promptly sell their house for them and the seller will tell all his friends how they sold his house really quickly and they even discounted their commission, yet what they fail to do, is a little bit of basic mathematics.

Lets say you're house in todays market could reach a price of $280,000.  Agent A, is achieving these prices and is confident they can get that price.  They are achieving the highest prices in the area because their business plan focuses on achieving the best price for the seller, rather than the highest volume of turnover for the office.

Agent B walks in, they have sold 5 properties just this week.  They will gladly discount their commission.  They list your property on the net at $280,000.  The first offer comes in at $240,000.  They talk you down... "It needs this and it needs that".."It'll cost this, It'll cost that." You need to discount your listing price.

  So the seller comes back with a counter offer of $270,000.  Almost there.  The buyer comes up with $253,000.  The buyer knows to make his offer on an odd number and make it sound like he's pushing his last dollar.  (He read it in a Guru book).

Agent B goes back to seller and says, "It's a good offer, they've got their finance organised.  I'd take it.  Hey, I've discounted my commission, I'm really working for you here".

Seller signs at $255,000 and pays 50% commission with Agent B.  His next door neighbour sells his identical property a few days later with Agent A and pays full commission on his sale price of $280,000.  You do the math!!!!

Another factor people don't realise is that agents don't get paid till they sell your house.  If I'm working several hours a day on your property, I'm not getting paid an hourly wage for that at the end of the week and once I get a contract on your house, I have to wait a further 30 days to get my pay cheque. 

I'll happily discount my commission, if you will give me a signed Australain Workplace Agreement to give to your boss saying that you're happy to have your pay cut by 20%. 

 When Sean and I started this business, we committed to provide a quality service that stood far and above the competition, and judging from the feedback from our sellers, we are achieving this. 

You get what you pay for.