Commission cutting is the wrong route to optimal price
Category Blog
Estate agent commission cutting on home sales, which was rampant during the 2008 economic downturn, is making a re-appearance in the current residential property market downturn. It is a path that existing and potential home sellers with best-price aspirations should either walk with care, or opt for a safer route. It does indicate lack of best practice and imminent short cuts to be employed.
My question to agents who are cutting commission to attract business in the current economic trough is: “Are they cutting low enough?” The fact is that there remains a large gap in service between them and the firmly established, standard commission, professional agent. The standard commission agent will ensure all opportunities to achieve best price will be explored.
Best-possible offer
The truly professional agent will:
- put down their pen and devote time to negotiating a higher buyer price
- seek to increase the deposit offered
- set out to reduce the size of the bond involved
- devote many hours to the client interface, topped by consistent, time-consuming follow-up.
In a nutshell, they will construct the best-possible offer for consideration by the seller. By contrast, the attention span of a run-of-the-mill, less skilled, commission-cutting agent could be as little as 15 minutes on simply writing out the offer – almost invariably at the buyer’s comfort level – & then getting it signed ASAP before rushing off to present it to the seller. Pressure for the seller to accept the offer as the best “in these difficult market conditions” will usually follow. The agent will then switch attention to the next home in his or her ‘for-sale’ pipeline and repeat the process… at a cut rate, of course. This is not best practice marketing of what, for most homeowners, is the sale of their biggest asset.
Gross value achieved
In these circumstances, home sellers should be aware that the difference between the two approaches could be as much as a 10% -15% premium on the gross value achieved for them – against just the 1% saving on the commission paid on the fast-track transaction! What makes that difference is the multitude of supportive steps a skilled agent will take in order to add traction and value to the sale process.
They include:
- Meeting the photographer at the house to discuss the best angles and dimensions for the ‘shoot’
- Supervising, and participating in, the print, digital and other advertising processes
- Hands-on monitoring and nurturing of the transaction every step of the way to conclusion.
Against this background, one point is patently clear: The perception that all estate agents are the same, and do the same things, remains exactly that - a perception!
Author: Ronald Ennik
