What are you really buying?
Agents are taught to use Vendor Paid Advertising to increase their professional profile and have their property owners financially committed to a sale.
Although any advertisement can potentially find you a buyer, a lot of marketing products are not worth the money.
Be aware that when you agree to pay a marketing campaign, you are agreeing to pay that irrespective of the result.
To protect yourself, refuse to sign any agreement with an agent that commits you to paying them advertising or commission when there is no sale.
“You can’t sell a secret”; “You should invest at least 1% on the advertising campaign”; “You need to cast as wide a net as possible”; “ You need to spend money to make money”; "It's a numbers game"
These are just some of the lines home sellers are given when the topic of marketing comes up. It is important to note that some agents are taught two things about advertising schedules:
Build your professional profile with big marketing campaigns.
To get your sellers committed make sure they spend as much as possible upfront.
Ask some friends that are actively in the market to buy where they find the properties they are interested in. You will quickly discover that the “standard” real estate model for marketing does not always target the buyer you are looking for.
Have a look at the suggested marketing campaign below. Most of which is for the purpose of achieving the above two goals:
When this campaign was first shown to the prospective sellers, it was doubtlessly delivered to them with certainty, confidence and an insistence that every aspect was necessary to ensure that the best buyer is found.
Now imagine it's a month down the track and the auction has just gone silent. The price you were promised hasn't been reached and now there is a crowd of buyers and curious neighbours waiting outside. The agent walks in and proceeds to tell you how "you need to meet the market" and "if we don't sell now we will need to run a new advertising campaign". You are essentially being given two choices:
Accept a lesser price than you were promised or pay the $9000 advertising bill.
If you accept less and sell, you can move on. If you hold your ground and refuse to sell, then you must pay your current agent out, find a new agent, and potentially go through the same process again.
The pressure is so high at this stage that most people give up and sell for whatever the market provided them on the day.
What if you refuse?
There are some circumstances where a seller, so incensed by what has happened to them, stands their ground and tells the agent that they refuse to take the lower offer and also refuse to pay the marketing bill. They do this because they feel justified - "the agent didn't fulfil their promise, so why should we have to fulfil ours?"
This is where the relationship between the agent and seller can really take a turn. The unethical agent now has one last trick up their sleeve that will turn the screws on the seller and force through the sale. The threat of debt collectors and the lodgement of a caveat on the property.
Below is a letter that was sent to and lady who had been through the scenario detailed above and decided to hold her ground. When you read letters like this, there it is no suprise that agents have developed a bad reputation:
So what is the solution?
In no way is this page intended to characterise every agent you meet as being as unethical as this. However, be very wary when an agent makes price promises that seem too good to be true and then asks you to pay for the advertising costs irrespective of the result.
As a lot of the marketing products available are more targeted towards boosting the agent's profile, ask the agent how each item will find more buyers. When you look closely you will discover that it takes a lot less than you think. The golden rule to protect yourself is:
Never commit to paying any money for commission or advertising unless you receive an offer you are happy to accept. At Scott Collins @realty we commit to the following:
There are absolutley no charges for commission or advertising UNLESS SOLD.