This is Why You Will Lose Money By Underselling Your Home, Without Ever Realising It......Even If You Think You've Done Well...
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Conflict Of Interest Between You And Your Real Estate Agent…
When you sell your home with a real estate agent, you WILL probably sell for less than you could.
Without ever knowing it.
If you’re happy with the result it will only be because you’ll have absolutely no idea that you could have sold for more.
This is because of a hidden conflict of interest between you and your real estate agent.
This conflict of interest is far more expensive than any real estate commission you will ever pay.
And even though it’s right under your nose I bet you’ve never thought of it.
Have a close look at the next image:
Imagine that your home was worth $1 million.
At an average 2% commission a local real estate agent will charge you $20,000 for selling it.
But of that $20,000 the agent would only receive $2,000 for the last $100,000 of your home’s value.
Now, do you think that the last $2,000 is as important to the agent as the last $100,000 is to you?
90% of the commission, or $18,000 is based on the first $900,000 of your home’s value.
Do you think it would be easy to sell a million dollar home for $900,000? Of course it would!
A scarecrow in the front yard holding a sign could achieve that result.
So why reward a so-called professional with 90% of their commission on this easy part of the sale?
When you do this, you’re discouraging your local real estate agent from fighting for the rest of your home’s value…
…the cream, the premium or the last stretch.
Proven Lack Of Incentive To Achieve The Highest Possible Sale Price
Scientific research and studies have proven that traditional real estate commissions encourage agents to achieve a quicker sale INSTEAD OF the highest sale price.
More specifically, one of these studies has shown that a percentage based commission leads local real estate agents to undersell properties by around 3% on average.
That’s around $30,000 less on a million dollar property.
It is critical for you to understand that the last stretch of the sale price of your property doesn’t make much difference to your agent’s commission.
How much incentive do you think this really gives them to find all the ways to increase the sale price of your home?
If an agent charges you 2% commission to sell your $1M home, it only costs them $1,000 (in lost commission) to convince you to lower your price by $50,000 in order to achieve a quicker sale and still pocket $19,000. (Please read this sentence again and let it sink in.)
Would you engage someone to negotiate for you who doesn’t have a strong incentive to achieve the highest sale price?
This is exactly what you’re doing when you engage a local real estate agent to negotiate on your behalf.
What’s worse is that negotiations happen behind your back where you never see or hear what is being said about you or your property.
This is like entrusting your chickens to a fox and I hope you can see the problem with this.
Most people are blind to this.
Real Estate Agents Are Not Rewarded For The Most Important Part Of The Sale – The Last Stretch
If you are going to pay someone to help sell your home, you should only pay them to help you achieve the last stretch, the premium, or the cream of your property’s value.
This is the most important part of the sale price of your property not the first 90%, which anyone can achieve.
The problem is NOT with your local real estate agents.
There are many wonderful people among them.
The problem is that a traditional commission creates a conflict of interest between sellers and agents.
Even if your agent is an experienced, well known, nice and a seemingly helpful person who works for a prestigious agency.
Most sellers are easily fooled by all of this…
…not to mention the branding, the tight suits and flashy cars. (hint: buyers don’t care about any of this)
Commissions are just one of many, many reasons why the real estate sales industry is completely broken.
Is it any wonder that the real estate sales profession has the title of the least ethical profession in Australia? (according to the Governance Institute of Australia)
As a seller, you want the highest sale price, but the agent is encouraged to sell quickly at whatever price, because they will get most of their commission anyway.
If you are happy with your sale price, it’s only because you have absolutely no idea how much better you could have done.
Just think about it: Sellers are happy if they achieve or exceed their expectations, right?
But how do you know that you’ve achieved the highest sale price if the person helping you doesn’t have a strong incentive to do so?
This is why most happy sellers are oblivious to the fact that they have left a ton of money on the table.
What makes this worse is that nobody rings a bell when you sell for less than you could have. This is why most sellers have no idea and are often ‘happy’ with their friendly and helpful agent and even recommend them to their friends and family.
The symptoms of underselling are everywhere you look:
- An off market sale to someone on a local real estate agent’s so-called database of buyers.
- A sale in under five days, especially in a strong market.
- An agent encouraging you to sell as is, claiming that the next owner will make changes according to their taste anyway.
- And believe it or not, even auctions.
If you don’t understand how all of these lead to you selling for less than you could, then you are part of the majority. (read more about these symptoms)
But this is NOT your fault.
We have been conditioned to believe all this over many generations and decades for one reason:
It serves the interest of the real estate sales industry.
The Other 2 Costly Risks Of Selling With The Real Estate Sales Profession
There are two further risks of selling with the real estate sales profession that will cost you 5-6 figures without you knowing.
You can read about them on the following page (no opt-in required).
On that page, you can also discover a proven, safer method that has been helping home sellers across Australia for 10+ years secure 5-6 figure premiums for their homes by avoiding the risks, pressures and regrets of agent or D.I.Y. selling
Click the button below to discover more.