We’ve all heard the saying, “If it sounds too good to be true, then it probably is.” So if a real estate agent offers you a discount deal on commission and marketing, or proposes other cheap sales tactics, you need to ask yourself why.
It might appear that you’re saving money on commission or marketing costs for your Inner West property but you need to think about maximising your return.
In theory you could sell your property yourself so it’s important to look at the selling agent and the marketing as investments. The real value in a good agent and a comprehensive marketing campaign is that you’ll achieve the best net return from your property sale.
Agents who discount their commission, push for an off-market sale or offer a cheaper marketing deal could cost you thousands in the end.
So before accepting the cheapest offer, compare agents, do your sums and consider the following:
1. Discounted commission
Normally the difference between the cheapest and most expensive agents will be less than 1% of the purchase price. An experienced agent who has a strong track record of selling your type of property will easily deliver a result that is more than 1% higher than that of agents who discount their services.
Consider this example:
$1,400,000 sale price (median house price in Rozelle)
Agent commission = 2% = $28,000
Net return = $1,372,000
$1,325,000 sale price
Agent commission = 1.5% = $19,875
Net return = $1,305,125
Real estate agents who believe in themselves and their processes enough that they don’t discount will have a strong database of potential purchasers, relationships with key buyers, and will be experienced negotiators.
They will know your market and what strategy will deliver the best price in the best time frame. They will also be able to advise you on how to prepare your property for sale and they will have a network of economical and efficient tradespeople and stylists.
2. Off-market sales
In the Inner West, we’ve seen a trend lately of agents securing property listings by promising potential sellers that they have a buyer who will pay what the seller wants without going on the market.
This is known as an off-market sale.
However, you should be aware of potential pitfalls before considering an off-market sale. Often the agent will show the property to a couple of buyers and then because the seller has already signed up to their agency they’ll talk the seller into going on the market with them for an open campaign.
The seller may not have chosen that particular agent; however, the bait of a ready-to-sign off-market buyer lured them into signing with that particular agent.
Another scenario we see too often is that although the sellers were promised a high sale price, the agent conditions sellers into accepting a lower offer. Owners have little room to move as they’ve tied themselves to an agency agreement.
In some circumstances, off-market sales can work well. Whatever the case, the real estate agent’s primary role is to ensure that they achieve the highest possible price for your property. Without marketing your property to all active buyers, you can’t estimate the true value of your Inner West home.
You will only sell a property a handful of times in your life; you don’t want to look back and wonder how much money you left on the table.
Take your time to properly screen the selling agents, prepare the home properly for the sale campaign, and ensure your chosen agent can implement a marketing strategy for your Inner West property that will give you confidence that you have obtained the best possible price.
3. Reduced marketing costs
Just like the real estate agent’s commission, your marketing budget should be seen as an investment rather than a transaction cost.
A cut-price marketing campaign may seem attractive but you need to consider that a cheap marketing deal might mean you aren’t reaching or attracting all active buyers – and this could have a detrimental impact on your final sale price.
In the Inner West, a multi-layered marketing strategy should consist of premium digital marketing on traditional property websites, through your chosen real estate agent’s office network and buyer database ‒ and your agent should have a social media marketing strategy that’s tailored to your specific type of property.
Remember, too, that you gain perceived value through the branding of the agency you choose. Buyers are attracted to properties marketed through a premium boutique agency with quality marketing and an excellent track record.
The last word
A real estate agent who discounts commission and the marketing campaign will cost you a lot more on settlement day than will an experienced agent with an appropriate and well-considered marketing strategy.
Achieving the highest price for your property takes time and commitment. Nothing can replace the skills, intuition and negotiating expertise of an experienced and confident real estate agent to maximise the outcome of your home sale.
Remember that discounters are also discounting their own skills; if they’re so keen to discount their own value, then are they the people in whose hands you want to place your most valuable asset?
We think not.