How To Avoid the 8 Biggest Mis­takes When Hir­ing A Real Estate Agent

Here I explain the costly mis­takes that prop­erty own­ers make when hir­ing a real estate agent to help sell their prop­erty. Here are the most com­mon mis­takes to avoid:

MISTAKE 1
Choos­ing An Agent Purely on What They Tell you is Your Property’s Highest Poten­tial Selling Price.
Home sellers make two of the biggest mis­takes when choos­ing an agent by basing their decision on:

A) An agent who gives the highest POTENTIAL price for their home
B) An agent who charges the low­est com­mis­sion
I know that you are prob­ably think­ing, ”WHAT are you talk­ing about!” which is per­fectly under­stand­able, given that every home owner has those two factors at the top of their minds. Remem­ber how­ever, that what we are look­ing at here is how to hire an out­stand­ingly com­pet­ent agent. Those two cri­teria have abso­lutely no bear­ing on hir­ing a good agent. This is an expens­ive mis­take that home sellers make time and time again, and I’m here to show you how to get out of this very expens­ive trap.
Ok, lets dive in a little deeper. Quite nat­ur­ally, as a home seller you want the highest pos­sible price for your home. The tempta­tion to advert­ise your prop­erty at your DREAM price to avoid under­sell­ing it might seem like the per­fect answer but, guess what, it isn’t. When an agent advert­ises your home at a price that is not sup­por­ted by hard facts or real­ity, this prac­tice by agents is called ‘buy­ing the list­ing’.
The cold truth is that agents CANNOT tell you how much your prop­erty will sell for. A list­ing agent can help you out by show­ing you prices of com­par­able sales, act­ive sales or pending sales. The final decision on the right sale price is made solely by YOU, and of course, the buyer.

Agent Test

Make sure they show you a C.M.A. (com­par­at­ive mar­ket ana­lysis) which should have the above in it as well as graphs with mar­ket trends.

MISTAKE 2
Allow­ing your EMOTION to dic­tate the advert­ised selling price (The BIGGEST mis­take you can make!)
You’re prob­ably think­ing in your head “but I need more money”. As a pro­spect­ive home seller, it is quite easy to base your hir­ing decision on the agent who prom­ises to deliver the highest sale price. That’s per­fectly nat­ural, after all you have fin­an­cial oblig­a­tions to meet and A HIGHER selling price means more options. You may need to raise your child’s uni­ver­sity fees, buy a big­ger home, or pay for that greatly over­due hol­i­day. Allow­ing your fin­an­cial needs as well as the emo­tions that go with it to dic­tate the value of your home will end up cost­ing you thou­sands and lose you valu­able time. This is how sneaky real estate agents will use your emo­tions to win your business.

Estab­lish­ing the Value of your home, Without let­ting emo­tions get in the way

The truth is that what you or other agents think as the cor­rect value of your home mat­ters very little. The buyer who makes you an offer is the only per­son whose opin­ion counts for any­thing. Pri­cing homes really is both an art and a sci­ence rolled up into one. On one hand, it involves com­par­ing your price with that of sim­ilar prop­er­ties recently sold. On the other hand you need to exam­ine mar­ket trends, ie, are prices cur­rently going up or com­ing down; and how many other houses are on the mar­ket in your area that will be com­pet­ing with your home. In other words, you want to come up with a price range that most real­ist­ic­ally reflects these factors. It is a del­ic­ate bal­an­cing act that only a good agent can mas­ter. Notice that your emo­tional and fin­an­cial needs are not estab­lish­ing what your prop­erty is worth.

Agent Test

A good agent will show you exactly how they came to a price (Cer­ti­fied Real estate agents are leg­ally oblig­ated to demon­strate how they came to the price)

 

Remem­ber that no two apprais­als by dif­fer­ent agents are ever the same. If these are done cor­rectly, how­ever, the vari­ance in price should be small. There is no right or wrong price for your home. What you should work with is the best estim­ate of its price, based on the com­bin­a­tion of factors I have men­tioned above.

Is the Price Too Low?
For any prop­erty trans­ac­tion to go through smoothly, the buyer must be will­ing to pay the price the seller is will­ing to accept. If your home is priced below its mar­ket value, you will most likely receive mul­tiple offers with the effect that the final price will be closer to its true mar­ket value or even above. This style of selling is known as an ‘Offers Over’ and is used to great effect by exper­i­enced agents. You are there­fore not likely to exper­i­ence any ser­i­ous set­backs by pri­cing your home too low. It’s a dif­fer­ent story for advert­ising your prop­erty at its highest poten­tial selling price (this is what agents call overpricing).

This is what hap­pens when an agent wins your busi­ness by over­pri­cing your prop­erty.
Ima­gine you are a buyer and seen a home that has come on the mar­ket for a high price. You seea prop­erty you like, and notice that it has lowered­its price every 2 weeks over 2months. Now what would you be think­ing? You’re prob­ably think­ing there’s some­thing wrong with the prop­erty, right? We find this has a sig­ni­fic­ant impact on enquir­ies and people start ask­ing what is wrong with the prop­erty. We see this all the time in selling real estate and it is more com­mon that you think.
The longer the prop­erty sits on the mar­ket, the buy­ers start mak­ing lower offers. As soon as a prop­erty is advert­ised on the mar­ket, stat­ist­ics have shown that the prop­erty will receive max­imum interest within the first two weeks. Buy­ers who have been search­ing for a home will view any new home that appears on the mar­ket. If the price is right, you will get bucket loads of people to your open home.

Pri­cing Is An Art
If you have priced it right, you will get an offer quickly. If your prop­erty is over­priced, you will be lucky to receive any offers. You will most likely be forced to reduce your price, but this will only make poten­tial buy­ers sus­pi­cious, so going for price overkill does much more harm than under-pricing.

MISTAKE 3

Choos­ing An Agent Based On Com­mis­sion
“The cheapest agent can cost you a lot of money”

Cheap is expens­ive in the long run’ cer­tainly rings true in this situ­ation. So remem­ber this before fall­ing for the tempta­tion of hir­ing the cheapest agent. Real estate agents, just like other pro­fes­sion­als, are vastly dif­fer­ent. Ten per­cent of real estate agents do ninety per­cent of the work. Gen­er­ally speak­ing, it’s bet­ter to go with an agent from a com­pany with a great track record and can nego­ti­ate extremely well. This way you stand a bet­ter chance of gain­ing greater expos­ure to more poten­tial buy­ers, and a bet­ter price.

 

Agent Test

If you are able to nego­ti­ate the agent down dramatically/quickly or offers for a very low fee, they are most likely sac­ri­fi­cing adequate advert­ising budget or are unable to afford qual­ity staff.

 

Have A Think About This….
So instead of focus­ing on the com­mis­sion alone, you need to ask your­self can the agent stand apart from the com­pet­i­tion on ser­vice, know­ledge or nego­ti­ation skills.

MISTAKE 4

Hir­ing an agent based on Emo­tion rather than Skill

Hir­ing an agent based on a friend­ship will not give you any advant­ages. There are sev­eral busi­ness factors that you need to con­sider when hir­ing an agent. Look at their track record. Don’t leave the sale of some­thing as valu­able as your home in the hands of an agent with poor Eng­lish or one with min­imal exper­i­ence. Hir­ing friends or fam­ily to act as your agents can be par­tic­u­larly tricky and cre­ate ten­sion in the rela­tion­ship.
We see this often and the friend often finds it hard to tell you want you need because it may cre­ate stress in the friend­ship or they may not up to the task.
For example, they may not nego­ti­ate the buy­ers high enough or don’t have the cour­age to tell you the truth about your home. By the time you real­ise it wasn’t a great idea to use them as your agent, you don’t have the heart to fire them.
What hap­pens next is your home sits on the mar­ket and you lose all the interest in your prop­erty and find your­self lower­ing the price because of a lack of enquiries.

When poten­tial buy­ers see the price com­ing down they think there is some­thing wrong with your home, which there is, YOUR AGENT!

MISTAKE 5

Hir­ing An Agent Who Is Poor At Negotiating

One of the biggest reas­ons why home sellers lose money on their prop­erty is simply because their agent is a very poor nego­ti­ator. Many agents simply have no idea how to get the best price for their client’s home. If in doubt, just do a little research and ask a cross-section of buy­ers what they paid for their homes and what they were will­ing to pay if push came to shove. I know it sounds incred­ible but the truth is that many home buy­ers would have paid more for their prop­erty had they been pushed/persuaded to go a little harder by a more com­pet­ent agent.

Don’t Hire A Slick Sales­per­son; Look for a Good Nego­ti­ator
Hir­ing an agent who is a good nego­ti­ator can eas­ily add up to 10% of the final sale price of your home. If your home is val­ued at $500,000, that can mean get­ting an extra $50,000 on the final sale price, just by hir­ing a good nego­ti­ator. Try to find out just how skilled your agent is in nego­ti­ations by cross-examining them on the sub­ject. Please refer to agent test below.

 

Agent Test

Ask the agent: “When a buyer makes an offer, what do you say and do to get them to raise the offer?”

Ask your­self:
Was the answer struc­tured and do you think it would lead a buyer to offer a higher price?
Can the agent explain the over­all logic of his nego­ti­ation strategy?

The agent test will let you know whether they are a good negotiator.

A well trained agent will pass this with fly­ing col­ours. If you are less-than-impressed by what you hear, chances are that they are a poor nego­ti­ator so look for someone else.

MISTAKE 6

Choose An Agent Who Is Current

The word ‘cur­rent’ here means agents who are up-to-date on the latest tech­no­lo­gical trends. Stud­ies show that agents who rely solely on ‘Open Houses’ account for just 2% of total home sales (sur­vey car­ried in 2013 by REA group). You want to hire an agent who is up to speed with the latest and most rel­ev­ant tech­no­logy. Many agents under­es­tim­ate the power of video. Agents who neg­lect to use this vital sales tool are cer­tainly lag­ging behind the times. If your agent doesn’t use video, it should alert you that you are bet­ter served look­ing else­where for a more technology-savvy agent. Buy­ers nowadays use GPS to loc­ate neigh­bor­hood prop­erty that’s up for sale, and they use smart phones to look for homes. The more tech­no­logy and web­sites an agent uses, the higher the chances of meet­ing and enga­ging poten­tial buyers.

Agent Test

Try to search for your agent’s name and com­pany via Google. If they are smart with their use of tech­no­logy, you will see a list of search res­ults on the first page of Google. If you have to go to the second page to find them, buy­ers will have a harder time find­ing them. There­fore it is best to use an agent that you can find on the first page of Google.This means that poten­tial buy­ers can con­tact the agent about your prop­erty more easily.

 

MISTAKE 7

Stick­ing to Tra­di­tional Selling Methods

We are liv­ing in dif­fer­ent times now and gone are the days when agents relied on simple clas­si­fied ads to sell houses. MOST buy­ers search for prop­erty via the inter­net, which offers a wide vari­ety of ways to search for property.This is not to say that agents should com­pletely do away with tra­di­tional advert­ising meth­ods. They should incor­por­ate newer meth­ods such as inter­net list­ings, social media, vir­tual tours, and video to name a few.

How­ever, there are old fossil­sout there that aren’t get­ting with the times. They­still rely on print advert­ising more than rely­ing on inter­net advert­ising. This is bad because inter­net mar­ket­ing gives more tar­geted and track-able res­ults, and gives you more reach than tra­di­tional print advert­ising. By tar­geted I mean find­ing qual­i­fied buy­ers (buy­ers that have fin­ance) that are look­ing to buy your par­tic­u­lar prop­erty. By track-able I mean — After spend­ing X dol­lars the agent should be able to track where buyer enquir­ies come from and how many enquir­ies gen­er­ated in total.

These old-school real estate agents are get­ting sellers to spend more money on print advert­ising than on inter­net advert­ising, which is wrong. It doesn’t get you as good a res­ult as online advert­ising. They do this because they do not know any bet­ter. Please use the test below to sift these agents out.

 

Agent Test

  • Before hir­ing, ask to see the agent’s mar­ket­ing plan (they should have a whole strategy of how they will mar­ket your property)
  • What mar­ket­ing plat­forms and sales tools are they going to use to sell your property?
  • Ask the agent if they are advert­ising using majorreal-estate web­sites, Face­book, Linked-In and Google ad words.

 

MISTAKE 8

Hir­ing an Inex­per­i­enced Agent

Hir­ing an inex­per­i­enced agent can have ter­rible con­sequences. An inex­per­i­enced agent can give you bad pri­cing advice, per­form inef­fect­ive mar­ket­ing or waste too much time with buy­ers that are not even qual­i­fied prop­erly. You might be sur­prised to find that the com­mis­sion charged by a good agent is not much dif­fer­ent from that charged by a bad agent so take your time and do some prior research to get your money’s worth.

 

…Bonus…

Char­ac­ter­ist­ics of a Good Agent

Here are some of the char­ac­ter­ist­ics you should see in a good real estate agent:

  • Exper­i­ence. Hir­ing an inex­per­i­enced agent means that they will end up learn­ing the busi­ness at your expense, so go for an exper­i­enced one.
  • Mar­ket­ing. The inter­net is the key and can make or break you dream price. Make sure they can show you case stud­ies and they appear on the first page of google (search for your agent’s name and com­pany via Google).
  • Edu­ca­tion. Ask pro­spect­ive agents to fur­nish you with cer­ti­fied cop­ies of their dip­lo­mas, degrees or other certification.
  • Hon­esty. Your agent should be hon­est and truth­ful. If you have nag­ging doubts about their integ­rity, trust your intuition.
  • Net­work­ing. An agent with a huge net­work of con­tacts is much more likely to be suc­cess­ful in this business.
  • Nego­ti­at­ing Skills. This is crit­ical. The more suc­cess­ful your agent is at the art of nego­ti­at­ing, the more likely you are to get a good price for your property.
  • Good Com­mu­nic­ator. Excel­lent com­mu­nic­a­tion skills and ease of avail­ab­il­ity are import­ant qual­it­ies in a good agent.
seven hills real estate agent NSW
Cnr Federal Road Prospect Highway Seven Hills NSW 2147 Australia