More importantly how NOT to. If you’re ever going to sell, you want to be aware of this.
“If only they knew… It’s not right… You have to tell people about this…. You have to warn them”.
Liz was of course talking about warning you… everyday sellers who don’t have a clue what’s happening to them.
Unfortunately, “If only they knew…” is a phrase often expressed in our office. Sometimes with just a sigh and shake of the head. Other times we get quite riled up, you could say ‘angry’ about it. We hate seeing people get shafted, even when they’re not one of our own clients.
But one things for sure, stories like this strengthen our resolve to lead positive change in this industry. We’d love to see the day when that phrase is seldom uttered. In the mean time, as we perfect our approach, they give us real life case studies we can discuss, learn from and improve as a team.
This particular case relates directly to two of our core purposes – Protecting you from such costly mistakes and maximising your profit.
In order to bank the most profit, you must first get your sale price as high as possible. Achieving that, requires the competent execution of 5 key steps. One of those, is the ‘Negotiation’. The bit between the buyer making an offer and the final terms being agreed upon.
Adam has recently been helping Mike and Sue (names changed) sell their property before finding one more suitable for their retirement. Although not quite officially sold, theirs was under contract and looking like another great example of our approach in action.
They were now in a strong position to secure their next home and had found the one they wanted. It was listed with a traditional agent for $399,000. Before making an offer to the other agent, they spoke to Adam for some guidance. Instinctively his first question was “how much will you pay, if needed?“… “$395,000” was their walk away price. Keep this in mind as you read on.
Knowing the style of negotiating most salespeople employ, he gave them some inside tips on how to possibly turn that to their advantage, as buyers. You’ll be amazed at the outcome.
They made an opening offer to the sellers agent of $380,000. She said she didn’t think her clients would take that – but without asking for more, went off to find out.
A short time later she arrived back with a counter offer from the sellers of $390,000.
So at this point they were $10,000 apart and already $5,000 under what Mike & Sue would’ve paid. You can probably guess how it goes from here… They ended up ‘meeting in the middle’ and secured the home for $385,000.
As buyers, Mike and Sue were thrilled. They got the home for $10,000 less than they were prepared to pay. Interestingly they also commented to Adam about how nice the sellers agent was … “So helpful and easy to deal with”. He couldn’t resist pointing out that she had indeed been great for them… not so much for her client, the sellers.
And that’s what riles us about this common scenario. Those sellers don’t have a clue what just happened to them. They have no idea that their agent just effectively burned $10,000 of their equity. On top of that they’re probably paying her a traditional $12,000 – $15,000 commission for the privilege. That is one very costly selling exercise.
Now don’t get me wrong, yes I get angry that agents can be so negligent of their duties to their client. It gives us all a bad name. But I don’t believe it’s necessarily her fault. Unfortunately she also doesn’t have a clue. I bet, like most salespeople, she has never had any real negotiation training. They are just doing what this industry teaches them to do.
You see, I blame the industry as a whole, the ‘Commission-Only’ business model and ‘Sales Culture’ that drives it. That is where these problems begin. The industry teaches it’s agents to be ‘Salespeople”. It teaches a style of negotiating which is designed to get a deal as quickly as possible – to get a commission – not the best price for the seller. It focuses on the lowest the seller will take instead of the most the buyer will pay. It’s often about persuading the seller to accept the buyers offer, rather than encouraging the buyer to pay more. I’m sure many of you will have experienced this phenomena.
Frankly, if you’re going to engage an agent who negotiates like that, it would be a lot more cost effective for you to pay for a taxi to drive the contract back and forth directly between you and the buyer.
Those sellers could easily have banked an extra $10,000 with a better handled negotiation, not to mention the $2,000 – $8,000 they could have saved with our more efficient ‘Smart Fees’.
Arghh… If only they knew…