Goulburn Real Estate Blog

News

February 15, 2019

For Sale? At What Cost?

By Peter O’Malley 
Author of Inside Real Estate

When you are interviewing agents to sell your home, you are likely to be offered a raft of advertising options and ‘packages’. With most packages comes an inherent assumption, the vendor pays upfront and takes on the financial risk. In a good market, prospective vendors give little thought to the campaign failing to achieve a sale. The cost of the campaign, whether it be $500, $1,000 or $2,000 - seems inconsequential relative to the value of the asset being sold.

However, when clearance rates are below 50%, the risk of an advertising campaign failing to produce a buyer makes the advertising campaign more of a gamble.

There is good news for anyone looking to sell a property, you don’t need to risk thousands of dollars to find a buyer. You are at your most powerful when an agent is pursuing you for your listing. You need to use this courtship period to negotiate a reward structure that does not penalise you, if the agent’s campaign fails to produce a suitable buyer.

Selling real estate has always been a results business.

As a home seller, pay the agent to achieve a higher price in less time as opposed to ‘selecting an advertising campaign’ package. One option is a ‘pay on result’ path whilst the other is funding the sales process.

If the agent is able to achieve a sale at a fair price for you in the current market, they deserve to be paid. Avoiding campaign risk is different to begrudging the agent a fair fee for achieving the sale.

Real estate agents are addicted to advertising. Excess advertising is more about promoting the agent and their company brand than it is about promoting the vendor’s home.

Vendors who sign up for the ‘premium marketing package’ are often sold the line they are buying exposure to a wider market of buyers. Unfortunately, they are simply increasing the chances of financial loss.

If you increase the number of bets at the roulette wheel, you ‘enjoy’ a marginal increase in chance for an exponential increase in risk, relatively speaking.

Many home sellers are acutely aware that excessive advertising expenditure does not increase the chances of a sale. Off market campaigns whereby the agent markets the home, to their database of buyers, have increased significantly during the downturn as a result.

In the digital age, all agents should be able to match qualified and genuine buyers to a property without the vendor risking between $500 and $5,000 in the process. When interviewing agents to sell your home, ask all agents, what risk and whose risk?