It’s A Trust Thing…
Why do we do it…?
What is the purpose of our strategy in acting this way?
As humans we are a funny bunch, with way too much trust in some areas and completely none in others… our minds work in strange ways.
The two below examples should almost be reversed in the trust factor, yet they are not. Someone help me here, why?
When we sell our property, be that an investment property or worst still our home, we hold the cards glued to our chest.
We sell property for many reasons but one thing’s for sure, we are all after the top dollar we can achieve.
So why the hell do we keep the dollar figure we are trying to achieve a secret?
Lets look at this practically, we spend a reasonable amount of time choosing the right real estate agent to list our property – some more than others. This is the person who you think is the best suited to sell your $300,000 – $700,000 – $1 mil or $3mil property. Whatever the price, it’s a huge amount of money.
We enlist their services, get the best commission rate we can and listen to what they believe the property is worth. But at any point, have you told them what you actually want for the property?
In 99% of cases the answer is no…
I mean what are you expecting here, for them to read your mind? C’mon they are Real Estate Agents… not Patrick James!
Don’t you trust them?
But I just thought you enlisted your most valuable possession you own, for them to sell?
Sure they are actually Real Estate Agents – and due to self infliction have put themselves into the used car salesman and lawyer box as most untrustworthy, but if you don’t trust them, then why not list it with the Pawn Shop up the road?
In today’s high tech world where information is readily available, and generally free, can’t we easily enough double check their numbers and sales figures to see if they are right?
You trust them to hold open homes and allow complete strangers into your home when you are not there.
But you don’t trust them enough to tell them how much you want for your home, but they can walk in and out of your home 15 times a day, take a nap on your bed, swim in your pool, cook some lunch and walk out with your TV.
Huh? Am I missing something???
It would make the sales process a ton easier if they had a target to achieve – stop time wasters who could not afford to buy your property at that level, to be easily eliminated from the process and allow them more time to work on serious buyers. The ones who ARE going to buy your home.
Sure put incentives in to make them earn their money, like 2.2% commission up to your wanted dollar figure then 10% up to the next $30,000 and 25% commission for anything above. I mean, if you get your figure, what does it matter what the commission rate is for anything above? Any extra cash you receive is a bonus, right?
And if you don’t tier it heavily like this, what real incentive is there for the agent to squeeze the last $30k out of the buyer?
By giving the agent that figure they can immediately use the lines like – ‘I know for a fact that if we get an offer of around the $740k mark we would be extremely close to a deal here.’
No mucking around, straight to the point…
Now this tactic only works in a good heated market where there are lots of buyers and yes, when we should be selling… it doesn’t work when I buy in dead markets where I offer insultingly low offers because I have no competition.
There’s a flip side to that coin…
When we use the services of a Buyers Agent or a Property Company to purchase an investment property or even a home, it’s like that sales agent magically becomes their long lost son or daughter? WTF?
They almost get a place in the Will…
Purchasers do very little due diligence on the company and even less on the area that this person recommends.
Yes I am a Buyers Agent and one of the few honest ones with a moral conscience but even with that in mind, my clients at times very easily hand over $300,000 of their money for me to purchase a property on their behalf, often in locations they have never been and at times never even heard of…
Yet they wont buy a $30 T-Shirt without trying it on first…
Can you see my point?
And its because of this reason, so many investors often get burnt. Not that this means that everybody needs to view the property before buying, but they should research the area before proceeding with a purchase. Go back and double check what the sales agent has told them to make sure it is correct.
And again you need to be 150% comfortable with the person whom you are entrusting your hard earned cash too… I mean if they don’t disclose how they make their money in the transaction nor how much, are they being honest?
Would you sell your home with a Real Estate Agent who didn’t disclose how much their commission rate was?
We all know the answer to that one…
Being so close to both examples, I see this disparity and think that clients need to realign their trusting nature to more suitably fit each transaction.