1. Real Estate Agents Have An Incentive To Achieve The Highest Sale Price

Would you trust someone to sell your home if you knew that they didn’t have an incentive to achieve the highest sale price?

If your home was worth around $1M, I’m sure you would agree that it would be easy to sell for $900,000.

But it’s this easy part on which agents make the most money (2% of $900,000 = $18,000)

What would your agent earn on the last $100K if their commission was 2%?

The answer is $2,000.

Do you think this is a strong incentive for them to maximise your sale price, considering the total commission they are likely to make?

Put another way, it would only cost an agent $2,000 in reduced commission to convince you to sell quickly for $100,000 less than you could have.

Several scientific research studies have proven that real estate agents have a greater incentive to achieve a quick sale instead of the highest sale price.

More specifically, one of these studies showed that real estate agents undersell homes by almost 4% on average.

Unfortunately, most vendors will never know that this happened to them because nobody rings a bell when you sell for less than you could have.

Click here for a more detailed explanation of why real estate agents undersell, which most sellers don’t realise.

There are four common symptoms (including selling by auction) that are ignored by home sellers, which scream that an agent is underselling a home. Find out more here.

To find out how you can easily achieve a much higher sale price than ANY of your local real estate agents – without the usual risks, Click here or go back to the 10 Hidden Traps.

2. Real Estate Agents Are Expert Negotiators

When a real estate agent negotiates on your behalf, how much of it do you get to see?

As a vendor, you never hear what the agent says about you or your property, because negotiations (if they even take place) happen behind your back.

The secretive nature of real estate negotiations removes all transparency from the process for the seller.

When you combine this lack of transparency with a lack of incentive for the agent to strive for the highest sale price (See Point 1. above), you have a recipe for underselling.

Most agents simply bring you an offer and ask you whether you want to take it or counter it, instead of negotiating with the buyer first.

At worst, they will pressure you more than the buyer just so they can get the deal done and pick up their commission.

Remember that a $50,000 or a $100,000 difference in your sale price makes only a very small difference to their commission at either 1%, 2% or 3%.  Just do the maths.

Having a real estate agent negotiate on your behalf is like trusting your chickens to a fox, and I hope you can see the problem with this.

To find out how you can easily achieve a much higher sale price than ANY of your local real estate agents – without the usual risks, click here or go back to the 10 Hidden Traps.

3. Real Estate Agents Have A Proprietary And Valuable Database Of Buyers

When selling your home, do you believe that competition for your home is helpful?

Do you believe that a higher sale price is achievable when there is a larger number of potential buyers competing for your home?

This is a no-brainer, right?

Where do you think there are more of these buyers?  On the database of one real estate agent, or among all the people searching on realestate.com.au and domain.com.au for a home like yours today?

The fact is that most real estate agents will have a database of thousands of people, but it’s important to understand who these people are:

Most of them are those who have left their names and details at open homes.

Most of these names were collected years ago and those people are not in the market anymore.

Most of the remaining prospects on this database are looking for a different kind of home to yours or in a different price range.

Many prospects on this database have left false names, phone numbers and email addresses, because they didn’t want to be hounded by the agent.

That leaves only a relatively small number of people on this single real estate agent’s database, who are looking for a home today, that is just like yours.

Do you think that these prospects are going to sit at home on the couch, waiting for this one real estate agent to call them about your home?

Or do you think it’s more likely that these people will be searching on realestate.com.au and domain.com.au, like 98% of all home buyers today?

When a vendor sells off-market to someone on a real estate agent’s database, they are fishing in a very small pond with very limited competition.

For this reason, they are almost guaranteed to undersell their property.

To find out how you can easily achieve a much higher sale price than ANY of your local real estate agents – without the usual risks, click here or go back to the 10 Hidden Traps.

4. Only real estate agents can advertise on realestate.com.au, and I must pay for an expensive Premier listing to be found by buyers

One of the most common false beliefs among home sellers is that you need a traditional real estate agent to advertise on realestate.com.au.

Most people still believe that agents are the gatekeepers to realestate.com.au.

This is not true.

There are countless online platforms that hold a real estate license in every state and territory in Australia.  These platforms allow anyone to advertise their home on realestate.com.au without a traditional agent.

Although these platforms are popular with private (DIY) sellers, I don’t recommend selling privately for the reasons outlined in THIS article.

In short, you have other options than to sell with a traditional agent or privately (DIY), and you certainly don’t need a real estate agent or be selling privately to list your home on realestate.com.au.

You also don’t need an expensive ‘Premier’ listing, which real estate agents will force on you, without even explaining your options.  They do this for a number of reasons.

Firstly, agents get free publicity at your expense.  In the industry it’s called Vendor Paid Marketing or VPM for short.  Premier listings show the agent’s face in a circle on your listing and because YOU pay for it, your agent enjoys free promotion using your hard-earned money.

Secondly, Premier listings are a huge money spinner for realestate.com.au, which uses the carrot and stick approach to push real estate agencies to force it on you.

The enticing carrot is the lower cost of Premier listing for agencies, provided that this is the only kind of listing they push onto all their vendors.  A lower cost Premier listing allows agencies to charge you higher margins with their ‘marketing packages.’

Both realestate.com.au and real estate agencies will tell you that you ‘need’ a Premier listing to be seen by more buyers.  This is totally untrue and very misleading.

It is true that Premier listings often get more views, but these views are mostly from the sticky beaks who make ‘property perving’ on realestate.com.au a national sport in Australia.

These sticky beaks are the reason why listings will often have thousands of views, but less than 50 enquiries or physical inspections.

Actual, real and serious buyers search differently.  They will set alerts to be notified when a property that meets their criteria is listed.  They are notified irrespective of whether you’ve paid thousands of dollars less by avoiding a Premier listing.

Serious buyers will also search using the map function on realestate.com.au, which shows red dots for each listing in a given area, irrespective of whether you paid thousands of dollars less by avoiding a Premier listing.

Real buyers will filter searches to see the most recent listings.  If yours is a new listing, then it will show first, irrespective of whether you paid thousands of dollars less by avoiding a Premier listing.

Actual buyers will be very specific about their search criteria (suburb, narrow price range, number of bedrooms and bathrooms etc.), which often result in only one page of listings.  Does it make sense to pay several thousand dollars more to appear just above a listing that cost a fraction of what you paid for your Premier listing?

Around 80% of searches today on realestate.com.au happen on a mobile device.  On a mobile phone, a Premier listing is exactly the same size as all other listings.

These are just some of the reasons why the former CEO of realestate.com.au – Simon Baker – said in a recent article that he would never pay for a Premier listing and neither should you.

To find out how you can easily achieve a much higher sale price than ANY of your local real estate agents – without the usual risks, click here or go back to the 10 Hidden Traps.

5. Three Or Four Appraisals Will Give Me A More Accurate Indication Of The Value Of My Home And Which Agent Can Achieve The Highest Price

Why do you think a real estate appraisal is free, while an independent valuation by a licenced valuer costs over $500?

Simple.  It is the only way for agents to get inside your home, pitch themselves to you and then keep hounding you until you submit and give them the listing or choose another agent.

Did you know that what you think is an appraisal, is actually called a ‘Listing Presentation’ by agents?

In case you’re not aware, this makes it a conflict of interest.  Why is this?

Because when you ask agents to give you an appraisal, you want to find out the accurate market value of your home.

But that’s not why agents go to your home.  Agents want your listing, and they know that they have a higher chance of getting it by telling you a figure that you want to hear – accurate or not.

There is even a name for this phenomenon in the industry: “Buying The Listing” (buying it with a promise)

Even if an agent resisted the temptation to ‘buy your listing’, no agent will secure a listing (client) from every listing presentation (appraisal).

A good agent will generate around 5 clients for ever 10 appraisals.  This means that every second appraisal is a waste of their time.

Considering this, how much effort do you think they will put into an appraisal, and how thorough and accurate will these appraisals be?

The accuracy of the appraisal has nothing to do with winning your listing – which is the agent’s real priority.

Appraisals can be generated within minutes using Core Logic / RP Data.

From 3 or 4 such appraisals, how would you know which is accurate – if any?  The one you agree with the most?  Seriously?

If you’ve ever had an appraisal, have you not found it strange that agents come to your home with a pre-printed appraisal containing so called “comparable sales”?

How could they know what’s comparable BEFORE seeing your home?

This is why valuers inspect your home first and only then find comparable sales.

To find out how you can easily achieve a much higher sale price than ANY of your local real estate agents – without the usual risks, click here or go back to the 10 Hidden Traps.

6. A Good Real Estate Agent Makes Selling My Home Convenient

Do you believe that selling your home starts with the marketing campaign?

Or do you also consider the preparation of your home for sale to be part of the sale process?

Are you more likely to achieve a higher sale price with a better prepared and presented home?

If you answered “yes”, then preparation and presentation are part and parcel of selling.

Preparation and presentation could include many things such as repairs, painting, replacing carpets, decluttering, and styling etc.

Does a real estate agent do any of these things?

Even if they help organise these through the contacts they have, is it convenient to live in a house that is being repaired, painted, re-carpeted, styled, decluttered, and optimally presented for sale?

If the sale of your home feels convenient, then you haven’t prepared and presented the home properly, and you will most likely undersell it.

It’s OK to prioritise convenience when selling your home, as long as you accept the fact that you will undersell it in the process.

No agent can change that.

Keep reading about the other 4 traps of selling your home.

To find out how you can easily achieve a much higher sale price than ANY of your local real estate agents – without the usual risks, click here or go back to the 10 Hidden Traps.

7. A Great Real Estate Agent Has The ‘Gift Of The Gab’

Many people believe that if a real estate agent can convince them to sell, then they will convince a buyer to buy.

This is why many people believe that the ‘gift of the gab’ is indispensable to a good agent.

Did you buy your home because a real estate agent talked you into it?

If you answered “no”, then you have something in common with every buyer.  Nobody buys a home because the agent talked them into it.

As a matter of fact, there are countless people who bought their home despite the agent.

Most people don’t like to be ‘sold to’ or ‘talked at’, so why put your ideal buyer through this pain?  You may even drive them away.

Remember that agents do most of their talking to prospective buyers behind your back.  Agents who talk a lot often say things they shouldn’t (about you or your circumstances).

Like you read in Point 4. above, there is a formula that makes homes become buyable, and it is also this formula that is responsible for achieving the highest possible sale price.

To find out how you can easily achieve a much higher sale price than ANY of your local real estate agents – without the usual risks, click here or go back to the 10 Hidden Traps.

8. Only Local Real Estate Agents Can Achieve The Highest Sale Prices Because Of Their Local Knowledge

A good local real estate agent should know their ‘patch’ like the back of their hand – and most of them do.

Why is this important to sellers? Because they make two assumptions. Firstly, they assume that a strong local knowledge equates to a strong knowledge of local prices.

Secondly, they assume that this strong knowledge of local prices automatically equates to the agent achieving the highest possible sale price.

Let’s start with the second assumption.  As you read in Point 1. at the top of this page, science has proven that real estate agents undersell properties by around 4% because they have little incentive to achieve the highest sale price.

The majority of agents are local to their areas so it is clear that simply knowing local prices does not lead to achieving the highest sale price.

This also makes the first assumption irrelevant.  Even if a strong local knowledge meant that an agent has a strong knowledge of local prices, what use is this if they undersell anyway?

Not even the ‘best’ agent in a suburb will sell every property.  So, unless that agent researches all the properties that were sold by others, they won’t know local prices as well as someone who has done that research.

These days, anyone can have access to this data with a subscription to the likes of RP Data.  It’s not access to the data that matters, but how much time and effort is put into dissecting and analysing the data.

Local knowledge is helpful to better understand why one pocket (or even which side of the road or end of the street) in a suburb is priced differently to another.

However, these differences are reflected in the recent sale prices that are revealed by thorough research anyway.

To find out how you can easily achieve a much higher sale price than ANY of your local real estate agents – without the usual risks, click here or go back to the 10 Hidden Traps.
Auctions

9. Auctions Achieve Higher Prices By Creating Competition, Urgency And FOMO

Auctions are one of the least understood and most misunderstood methods of selling a home.

There are two main reasons why an auction leads to a lower sale price than what could otherwise be achieved.

Firstly, auctions rarely discover the highest price that a winning bidder is willing and able to pay.

Instead, auctions discover the maximum that the last loser is willing or able to pay.

Please read those last two sentences again before I illustrate this with an example.

Imagine that your home was worth around $1M and you were selling it at auction where there are three keen bidders.

Each of those bidders (like all bidders) will have a maximum budget that they are willing and able to reach to.

However, this budget is almost always different for every bidder.

Let’s assume that the first bidder cannot pay more than $950K, the second, $1M, and the third, $1,050,000.

If the auction started at $900K, you would have three contenders, but if the bids reached $950K, the first bidder would drop out.

If the remaining two bidders took the price to $1M, then the second bidder would also drop out.

So, assuming that the reserve has been reached, how much would the last remaining bidder have to pay to own your home?

$1,001,000? Or $1,005,000?

If they can buy for $1,005,000, you will have undersold and lost out on $45,000, because the successful bidder would have been happy to pay up to $1,050,000.

The second reason why auctions lead to underselling is because to be able to buy at auction, you need to be a cash buyer with no conditions.

Cash, unconditional buyers usually represent a relatively small portion of all potential buyers.

By making your home available to only this small pool of buyers, you are limiting the competition for your home and lowering your chance of achieving the highest price.

In addition, you are also likely to miss out on buyers who would be happy to pay significantly more than the strongest bidder at an auction – albeit with some reasonable condition that you would be happy to accept.

Next time you see an auction, don’t pay attention to how much it exceeded the arbitrarily chosen and artificially low reserve price.

The reserve price is meaningless (for vendors). It is only important to agents and buyers.

Instead, have some sympathy for the vendor, who has just likely undersold.

This is why auctions are only used to fire sale properties in every other part of the world.  

Real estate agents have conditioned Australians into believing that auctions are a great way to sell, when in fact auctions benefit mostly the agents.

To find out how you can easily achieve a much higher sale price than ANY of your local real estate agents – without the usual risks, click here or go back to the 10 Hidden Traps.

10. The Agent With The Most Sales Is Usually The Best One To Use

Agents make more money by selling more homes quickly than by selling your home for the highest sale price.

Please read the above sentence again because it is the best kept secret in the industry.

Especially in large franchised agencies, the more homes agents sell, the greater portion of the total commission they keep.

For example an agent who sells 20 homes a year for $600,000 gross commission keeps 60% of that commission ($360K). 

Conversely an agent who sells 10 homes for $300,000 gross commission, only keeps 40% of that commission ($120K).

In other words, agents can make three times as much money by selling twice as many homes.

Do you think they will care more about the last $50K – $100K of your sale price or selling quickly to move onto the next listing?

Which do you think is more difficult for real estate agents to do?

To sell a house or to win a new listing?  If you answered: “win a new listing”, you’re right.

This is why most agents spend most of their time and effort on getting new listings, and not on selling your home.

It is also why the most successful agents are those who get the most listings.

Naturally, the agents with the most listings will have the most sales.

This means that the most successful agents are those who are better at…selling themselves to you…to get your listing.

There are various industry ploys and tricks for this, such as promising a sale price you want to hear (see Point 5. above), or enticing you with their large “database of buyers” (see Point 3. above)…

…or to plaster their faces everywhere you look, including for sale signs, the premier ads you see on realestate.com.au, bus stops, billboards etc.

They know that the more often they are seen, the more successful they appear.

So what does this have to do with achieving the highest sale prices?

ABSOLUTELY NOTHING!

Most people simply believe that the only reason they are seeing the agent’s face so often is because they are popular, which “must be” because they achieve the highest sale prices.

Did you know that none of the industry awards given to agents are based on the actual results they achieve for their clients?

Industry awards reward agents with the highest number of sales and not the highest sale prices.  These awards certainly don’t take into account how ethical the agent is.

It is well known in the industry that the agents with the highest volume of sales usually prioritise quicker turnover and churn, rather than the highest sale prices.

The reason why agents work so hard on their branding and visibility is because they know that it is a great way to bypass your critical thinking faculties.

Those who pick an agent based on their ‘cult of personality’ or branding failed to use critical thinking in choosing their agent.

If you read Point 1. at the top of this page, you would understand the other reason why real estate agents have little incentive to achieve the highest sale price for properties.

To find out how you can easily achieve a much higher sale price than ANY of your local real estate agents – without the usual risks, click here or go back to the 10 Hidden Traps.

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