Choose wisely and don’t be fooled by cheap offers
When property listings are scarce, it is tempting for some salespeople to offer enticing deals to get you to list your property with them.
There are a lot of logical reasons why a property owner should think carefully, and should indeed pay for their own marketing.
Real Estate salespeople are paid a commission to SELL a property. They are not salary earners.
This fee is for the investment of the Agent’s time and expertise in advising the owner, creating a marketing strategy and showing the property and eventually negotiating a sale.
Remember, the Agent does not earn a commission until the property is sold unconditionally. They might have to show hundreds of buyers to get an offer that goes through to an unconditional contract.
And it can often happen that they will have to sell it several times through no fault of their own, but perhaps due to the buyer’s finance not being approved. It could also be due to a problematic building inspection, which might cause the buyer to cancel the contract.
There are a lot of reasons why a property sale will fall over.
An experienced agent understands the importance of seeking the property owners’ commitment in investing in the marketing of their own property.
It means that the owner is a committed seller and is eager to get the highest possible price.
Selling Real Estate is not a guaranteed income
Logically, there is no other profession that spends its own money to perform a service that is not a guaranteed income.
Agents are not financiers and should not be in the business of funding their clients’ marketing campaigns.
But there are more important legal and ethical reasons why the property owner should pay for their own marketing costs.
They are founded in the agents fiduciary duty of care to their client, their vendor in this instance.
An Agent’s fiduciary duty to the client requires the agent to always act in the client’s best interests.
It could therefore be argued that when an agent pays for a client’s advertising and promotion, the agent’s interest will be in conflict with that of the clients.
In effect the agent has lost their neutrality in the client/agent relationship, and in effect has become a business partner with the client, rather than a broker who can objectively guide and advise the client.
It can be also strongly argued that a sale cannot be fairly negotiated when an agent’s vested interest needs to be recovered. The agent’s interests take precedence over those of the client’s. This is clearly a conflict of interest.
If the property owner owes the Agent money and the repayment is contingent upon the sale, the property owner may be put under more pressure to sell on terms not totally within their control.
In summary, when an agent pays for the advertising, they essentially become a business partner with the property owner rather than an independent third party offering professional advice and service.
Now that the agent has a vested interest in the client’s property (in the recovery of their financial investment) the agent may compromise professional neutrality and objectivity in the transaction.
It is important to market to a wider audience to invite multiple offers
Unfortunately, when an agent pays for a client’s marketing, the property will rarely have the correct marketing exposure.
Not many are normally in a position to invest between 0.5 % and 2% of the anticipated selling price in marketing or promotion.
The fact is, when an agent offers “free advertising” the agents advertising campaign will usually be underfunded. As a result, the property will not receive the promotion it deserves, and risks not being seen by the right target market.
Because the agent is paying for the advertising, it can be strongly argued that the seller loses a great deal of control over the marketing content and placement of advertising.
In other words, if the seller is to maintain active control over the sale of the property, they should be paying for the advertising and demanding full accountability from the agent for the entire marketing campaign.
In summary, properties that are under-funded and under-promoted usually sell for less than properties that have a specifically prepared, well funded campaign, where the client maintained control of the advertising content.
It can be argued that by offering other incentives like “Property staging” all come at a cost. What part of the agent’s service will have to be cut to recover that cost, if they are already offering a discounted commission?
The odds dictate that you cannot get a lucky break all of the time, because if something looks too good to be true, then it usually is.
Food for thought?
He who hasn’t a penny sees bargains everywhere
© 2020 e-propertymatters.com| Author|Kathryn