Firstly, understand this undeniable truth…
Because without your listing – they have ZERO chance of taking a BIG commission.
“No Sale – No Fee” is one ploy the industry uses to encourage more of you to put your property on the market.
It’s pitched along the lines of…
“List your property with us… we’ll give you free advertising, work hard on your behalf, act in your best interests, etc … and you don’t have to pay anything, unless we sell it for the price you want … You’ve got nothing to loose … just sign this paperwork and we’ll get underway ”
As you can see, it’s sold as a benefit to put you at ease.. and sure, on the surface it seems like a good deal. If you choose not to accept what the market will currently pay for your property, or change your mind and decide not to sell at all – then offering your property ‘for sale’ will cost you nothing.
However take a look at the bigger picture…
It’s one reason why it costs so much – when you do sell.
This is just common sense. We all know there’s no such thing as ‘FREE’ goods & services. Any business that gives away time, resources or products to some people – must recover it back from others. Somebody has to pay – who do you think that might be?
You’re onto it … the fees from clients who do sell need to be high enough to cover the losses incurred for the clients who don’t.
Lets say you make a product that costs $1,000 to produce. As a special promotion, you offer it to 100 customers with a “one in 3 chance to win their money back” (effectively 33 will be given away for free). How much would you have to charge the other 67 customers in order for you to recover your production costs? Answer: $1,492
Thats right, the paying customers would have to be charged a whopping 49% extra, just for you to break even – let alone make some profit. ($1000 x 100 = $100,000 Total costs / 67 = $1,492)
This is effectively what is happening in the real estate industry with ‘No Sale – No Fee’.
It’s simply not Fair – The Genuine Sellers subsidise the Non Sellers.
Here’s the facts… statistically around 70% of clients do sell. Yet they are forced to use a scheme that favours the 30% of people who then choose not to sell?
You may have noticed I used the word “forced” … this was intentional. Because the traditional real estate industry does not give you a choice – it’s their “No Sale – No Fee” scheme or nothing.
It removes your ability to increase the PROFIT from your sale.
The traditional real estate industry wants you to believe that it’s all about getting you the ‘highest sale price’.
“We’ll get you more than other agents because we’re the biggest, do the most advertising… etc etc”
This is a misdirection… it’s not the ‘sale price’ that’s most important … it’s the PROFIT – which is how much you end up with in your pocket – after all expenses.
They don’t want you to focus on Profit – simply because you will then question the true costs of selling and your ability to affect them.
Consider two neighbours with properties worth around $400,000…
Ken and Barbie accept ultimate responsibility for selling their property. They understand that their actions and decisions affect the outcome. So present their property at it’s best and price it realistically. Within two weeks they get multiple offers and sell for a premium of $400,000. They were dream clients. Their agent only outlaid $600 in expenses and 7 hours of direct work on their behalf.
Mike and Clare on the other hand accepted no responsibility for the sale of their property. They put little effort into presenting it well and were unrealistic in their asking price. After 3 months of constant advertising, open homes every weekend & turning down two fair offers… they finally relented and accepted a sale at $400,000. The agent outlaid $3,500 in expenses and 20 hours of direct work.
Yet because of “No Sale – No Fee” they both had to pay the same commission.
It creates a conflict of interest – Who is the agent really working for?
Imagine you are buying a property and want to get a builders inspection report. The inspectors job is to protect your interests and find any major faults with the property. But what if you didn’t have to pay for the builders report – UNLESS you went ahead with the purchase? Meaning, if the Builder found a major problem that caused you to cancel the contract – they wouldn’t get paid. Could you trust the builders report? NO… because they would be punished for giving you the right advice.
With ‘No Sale – No Fee’ – you are putting your agent in the same boat. They stand to loose a of lot time and money – if you choose not to sell. This makes it very difficult for the agent to focus on working in your best interests… why do you think the real estate industry is so poorly trusted by consumers?
We are not saying that you should never engage an agent on a ‘No sale – No fee’ basis… Ultimately how you hire an agent is your decision – depending upon what you believe is best for you and your situation.
We just think that your decision, should at least be based upon the full picture and transparent choices.
At Restate, we believe you (the clients we serve) do not want to be ‘Sold’ on whats best for the real estate industry.
What you really need is advocacy. To be advised, represented, coached and guided. To have your best interests put front and centre. To have your agent focussed on achieving your goals, not their personal sales targets. You want to be empowered with unbiased advice, so that you can make wise decisions for you and your family. To have a true professional acting on your behalf – One that maximises your profit, by using proven strategies to increase your selling price and reduce your costs.
We also believe that in order to offer you the things stated above, our industry model and culture needs to change. A truly client focussed culture and the traditional sales / commission only culture cannot coexist – simply because of the underlying conflict. Commission Only = Self Interest
So we’ve totally rebuilt our service on a consultancy based model. We are creating a real estate business more like a legal or accounting firm. We judge our success on protecting your interests, maximising how much profit you receive in your hand, and our client referral rate – not the amount of commissions we take. We charge fair and transparent fees that are related to the actual amount of work needed to help you achieve your goals. The benefits are proving to be significant for our clients and us.
It not only removes the conflict of interest – leading to a much higher level of trust and a more professional relationship with our clients, it’s also inherently more efficient. Which goes a long way to fixing the other big chestnut in the traditional real estate industry – fee’s that are hugely disproportionate to the actual work and expenses involved in helping you sell just your property.
“Restate’s new system of selling real estate has proven to be a fantastic new concept and a complete success for us. The consultancy method we chose made for simple easy to understand fee structures and a clear outline of what to expect. Carl and his team were very professional at all times and did exactly what they said and kept us informed at every turn. When you’re ready to sell your home there’s no doubt you should give Restate a call first, if you’re serious about keeping more of your hard earned money in your pocket.” – Dale & Tina
Dale & Tina banked $8,910 extra profit