Friday Freebie - Chapter 2 of my book Sold Above Market

By
Real Estate Agent with Mosman Neutral Bay Realty, Sydney Australia License #1398412

Sold Above Market Book Cover2. CHOOSING YOUR AGENT

 

MANY SELLERS are of the opinion that all real estate agents

are the same, until they hire a really good agent who delivers

six-star service, a great sales experience and the result they

were after. Let’s be clear: not all real estate agents are the same.

A good real estate agent knows that sellers have a choice. In

fact, being a real estate agent is one of the most competitive

professions around, so the smart ones will differentiate

themselves from the rest and show why they should be your

first choice.

 

Making the right choice of agent will be a considered

decision not arrived at by accident. Just as achieving the

highest price for your property will be the result of following a

proven process, not taking a hit and miss approach.

 

Focus on following a process, not

the promise of a high price.

 

Types of ‘agents’

So where do you start? It’s really important to ask the right

questions to ensure you are working with the right type of real

estate agent. This may seem basic but the word ‘agent’ has

several applications:

 

  • Licensed real estate agents have studied courses and

completed their real estate license, allowing them to own

and operate a real estate office and sell real estate. They

may also have earned additional accreditation that allows

them to specialise and deliver a better overall service.

They work for the property seller (vendor).

 

  • Certified agents must have attained minimum

certification in their area, allowing them to work as an

agent while being employed by an appropriately licensed

broker or principal. This means they work under the

supervision of a licensed real estate agent. Again they

work for the seller.

 

  • Buyers’ agents are something completely different. They

will help you source your next property. They represent the

purchaser (not the vendor). They must hold appropriate

credentials to represent the interests of buyers in a real

estate sale. Universally, selling agents represent home

sellers and buyers’ agents represent home buyers. It

would be a conflict of interest to represent both sides of a

 

  • Residential letting agents are different again; they will

manage your property if you intend to rent it out to

tenants. Letting agents either work as a stand-alone

leasing business or as a division of a real estate sales

 

In Australia, the selling agent will list and sell your home and

will charge you a fee to do so. In the United States, the selling

agent may list your home but may not necessarily sell it, relying

on buyers’ agents to find the best buyer. In this instance, the

seller will be charged a combined fee which will be split

between the listing agent and the buying agent.

 

Most licensed real estate agents work as independent agents,

as the principal/broker of their own company, or as a member

of a brokerage or franchise office (we look at the difference

between a franchise and independent agency below). They

choose to either work part-time or full-time. The flexibility of

work hours allows many family-orientated real estate agents

the chance to work part-time. As a seller, one of the decisions

you will need to make is if you wish to hire a part-time or a fulltime

real estate agent to sell your home.

 

In Australia, there are no specialist designations; we are all

just real estate agents. In the US, there are many different

professional designations which show that agents have taken

additional courses in specialised fields and they are permitted

to put accreditation letters after their name. These include the

courses supported by the National Association of Realtors

(NAR), such as:

 

• CIPS – Certified International Property Specialist

• CRB – Certified Real Estate Brokerage Manager

• CRS – Certified Residential Specialist

• GRI – Graduate Realtor Institute.

 

If you’ve lived in the US and wonder why there are no letters

after the real estate agents’ names in Australia, this is the

reason why.

 

Franchise or independent office?

Real estate offices are either members of a franchise group or

they operate as independently owned offices with no franchise

affilia tion. Principals or brokers who own and operate a real

estate office are business people and they have costs and

overheads to cover so part of every sales transaction by

individual agents in any office goes towards the running costs

of the business. It should be remembered that selling agents do

not keep all the fee that they earn when selling a property and

the proportion they keep will vary with their experience and

volume, whether they are working for an independent or a

franchise office (more about fees and charges in chapter 6).

 

According to the most recent Australian Bureau Statistics

survey into Australian real estate services at the time of

writing, 53% of real estate industry workers were employed by

fran chised agencies and 47% by non-franchised agencies. So

it’s almost half and half.

 

So when choosing the right agent you will likely consider

agents from both groups and will find that many independents

started their careers as agents in franchise groups where they

received excellent training, systems and practices that gave

them the confidence and experience to start out on their own.

There are good and bad agents in all offices so the choice is not

so much franchise or independent but rather the agent who

you feel is offering you what you are looking for.

 

Should you choose a brand or an agent?

 

The attraction for many real estate agents to work with a

franchised real estate office is that it will be a recognised brand.

 

Many brands are well known because they have the financial

capacity to advertise and promote their brand so that you feel

familiar and comfortable calling an office of a brand that you

see on a day-to-day basis. A great brand can make you feel joyful,

inspired, hopeful, nostalgic (or at least that’s what branding

experts would have us believe). A great brand is often regarded

as the local authority, an innovator, being in touch and involved

in community activities, the home of creative communicators.

 

Real estate agents are salespeople with a purpose and to

achieve their individual goals they may choose to change from

one brand to another from time to time. The good ones continue

to be successful and the not so good ones continue to think the

grass will be greener at another brand, so your choice should

be the agent who impresses you most and the agent’s choice

will be the brand that represents them best.

 

Number-one office agent

 

Every real estate office has several real estate agents and they

all want to be the number one agent in their office. There are

internal competitions each quarter to determine the number

one agent working not just in one office but working under that

 

Each office in the brand has a public face and is known in

its own marketplace through its corporate advertising and

promotions. Within each brand there will be high-achievers

who embrace the culture of that brand and who are known for

their market share and sales success.

 

However, equally, there will be many agents, even in the very

same office as the high-achievers, who are struggling to get

listings and make sales and who are only just earning enough

commission to pay the bills. So it is important to recognise that

any agent, regardless of their brand, who is desperate for your

business, may be willing to discount fees for you but this could

be at the expense of them cutting corners and they are unlikely

to be the best person to sell your property for you for the

highest price.

 

Irrespective of brand it’s the individual you’ll

be working with

 

Despite the hype and publicity surrounding a brand, there will

always be a huge gap between the survivors and the champions

working at any real estate agency. Every individual agent has

their own skills set, experience, motivation, training, compe -

tency, negotiation ability, support network and attitude to set

them apart from every other agent.

 

Above all, make sure the agent you choose puts your best

interests before anything else,

whether they are part of a branded office or an independent.

Selecting an agency brand that you’ve heard is a market

leader will not necessarily mean you will end up with a high performing

agent. While the brand structure may manage the

agent’s accountability, it will be the agent’s individual skills,

competence and attitude which will determine their success in

selling your home for more.

 

Choosing a well-known brand does not guarantee you will get a good agent.

 

That being said, the strength of your agent may be limited

unless they have a strong office behind them.

Understanding how an agency works

 

When trying to choose an agent, some sellers will simply

telephone a big name brand office and the office manager will

assign an agent to their enquiry. This is often done on a ‘farm’

area basis. But what does that mean?

 

Well, real estate offices are generally suburb or postcode based

and each office has an area of homes that makes up its

core business area. Each suburb or district is serviced by one

franchise group office of any one brand and it’s likely that

another office of the same franchise group will service the

adjoining area/suburb. These offices pay the master franchise

or head office group to set up business in that suburb so they

actively ‘farm’ the suburb they are paying to work in to try and

get as much business as possible. That core business area is

made up of streets with a mixture of apartments and houses.

Some streets may have prestigious waterfront homes while

other streets will have small houses on a main road. The value

of the homes on each street varies enormously, however, they

are all part of that agency’s farm area.

 

Within the agency office, the salespeople are each assigned

a geographical area of houses and streets to look after or farm.

The highest-earning agents will typically be given the highest earning

streets to look after. Offices often feed the best agents

while the rest have to take care of themselves. Within their own

office, individual agents, who are all effectively running their

own small businesses, are competing with each other for houses

to sell in their assigned suburbs but are only allowed to actively

market themselves in a specific group of streets.

 

The individual agents are allocated streets and are instructed

to contact the owners of the homes in their farm, which could be

somewhere between 500 and 1,000 properties, and make

themselves known to those home-owners so that if they’re

thinking of selling the owners might consider that agent to

represent the sale.

 

Assigned agents attempt to take ownership of the homes in

their farm through any means possible, including door knock -

ing, letter-box drops, cold calling, sponsorship and local area

advertising. They work to be known to home-owners so that if

they are thinking of selling, the home-owner may be more

likely to invite their farm area agent to meet with them. If the

agents don’t demonstrate ownership of their office-assigned

areas, then those farm areas will be re-allocated to another

agent in their office.

 

The level of competition inside one franchise group office

between individual commission agents is fierce. In each suburb,

you could easily have four to eight franchise brand name

groups and another six or more independent offices all doing

the same thing – allocating streets for individual agents to farm.

 

It’s no wonder then that your letter box is chock o’ block full of

real estate promotional mail. The agents are forced to ‘get to

know you’, and the simplest way to meet their office managers’

requirements is to deliver a printed mail flyer in your letter box

on a weekly basis. If you’re like me, you simply transfer the

unsolicited mail straight to the rubbish bin without giving it a

second thought.

 

If, on the other hand, you actually know the name of a real

estate agent, then you are more likely to call them up to meet with you.

If you have a relationship with a particular agent then that relationship

generally trumps whether they work for a

franchise office or as an independent. It is more important that

you choose the right agent for you and your individual

circumstances than associate with a certain office or brand.

 

Nothing stays the same

 

You should be aware that real estate agents change brands and

offices about as often as anyone else might change their jobs.

The main reason is that sales managers at other real estate

offices are constantly monitoring rival agents who are currently

selling well and they then actively try and poach the most

successful ones to join their team. There is always the promise

of the ‘grass is greener’ on our side of the fence and if an agent

is feeling less than appreciated where they are, then they will

be open to the possibility of making a change.

 

Agents leave one real estate office and move to a competitor’s

office every other week. The culture of one office may

appear better than another, or another brand might be flavour

of the month; whatever the reason, it doesn’t always go well

and that agent might be changing offices again sooner rather

than later. Agents may also leave a branded or franchise office

to open their own independent brand office to make good on

their life-long dream of owning their own business. Many top

real estate agents find out the hard way that they are great

salespeople but not great at running a business, which requires

a different skillset.

 

Importantly, selling a property is a business decision and

we all choose to do business with people we like and trust, so

regardless of the brand or the promise, choose the agent who

you feel will stay true to you and your goals.

Local area specialist or out of area agent?

 

If you don’t know any local area agents, should you hire

someone you do know, even though they are an out of area

agent?

 

It’s a good question and one that only you can answer. On

the upside, if you feel confident about a real estate agent

because you have had a great experience with them before, but

they don’t normally sell in your area, by all means call and

discuss your options with them. If you are both comfortable

that the agent can represent your sale without compromising

the time and effort involved, then go ahead, hire an out of area

 

It could be argued that an out of area agent is not an area

specialist so they may not know all the ins and outs that make

your area unique and therefore can’t represent your sale with

the level of intimate local knowledge required. It could also be

argued that a local area specialist may have more local buyers

on their database and can call past-potential buyers in the area

rather than simply relying on new buyers from paid marketing

and advertising.

 

However, you could also argue that local area specialists

know the area so well that they might be guilty of boxing a property

in a certain price range without believing a higher price may be possible.

 

Out of area agents may be more willing to try a different approach

to pitch for a higher price that local agents and neighbours of the

property may not believe is

 

An out of area agent may try harder

to beat local price beliefs and can sometimes

achieve a higher out of line sales result.

 

On the downside, travel time to the property may restrict open

inspections, depending on how far the agent has to drive. Less

knowledge of active local buyers means more marketing to

attract the same buyers and if the agent does price the home

incorrectly then you could be in for a long campaign at the

wrong price.

 

Keeping it in the family

 

Some sellers have a relative in the real estate business and

believe they should be keeping the sale in the family. This is an

emotional decision, not a business decision, however, the real

estate industry has an accepted method of sharing the love.

Our industry offers a simple solution in the form of a paid

referral fee. If your relative is out of area and unable to manage

the sale for any reason, then they could actively help you

choose the right local area agent and refer you to that agent as

their client. As a referral client, the listing agent can choose to

pay a referral fee to your family real estate agent. The fee varies

but is often set at 20% of the selling agent’s fee. This allows your

relative to assist you in selecting the right agent to sell for you

and still receive a fee for their involvement. This keeps part of

the sale in the family, making it a win/win for everyone. This

referral fee is not just for families; if you have a great

relationship with an agent and they can help you find the right

agent to sell for you then they deserve a referral fee too.

 

 

Local area specialists are best

 

No-one will know your local area like your local area specialist

real estate agent. Ideally, your agent should be selling property

in your area all the time and will, therefore, have a list of buyers

who are ready to purchase in your immediate area. A local area

specialist should be able to drop everything and literally be at

your property within a 15-minute drive.

 

Every real estate agent works in a local area. Usually, they

work in a radius around their office location so that when you

come to sell, you should be able to find a local area expert at

any of your local real estate offices.

 

As discussed, individual real estate agents are allocated a

‘farm area’ by their office manager to ensure that their office

will be in touch with everyone living in the area at some stage

during the course of every year. Agents who concentrate on

marketing their services in a single ‘farm’ are more likely to do

more business with people they get to know in their own

allocated area. Agents who live and breathe an area of streets,

comprising often up to a thousand homes – and get to know

those homes better than any other agent – earn the right to call

themselves an area specialist.

 

An agent who knows the owners of a thousand homes better

than any other agent is going to know when one of those homeowners

may be thinking about selling ahead of others who are

not in touch with the owners on a regular basis.

 

If a buyer has told that agent he specifically wants to buy in

a group of streets, then there is a good chance that agent may

be able to connect a motivated buyer with a potential seller in

a quick and simple transaction that doesn’t even come onto the

public market. This type of ‘quiet’ sale only happens when a

local area expert really is in touch with their buyers and sellers

on a regular basis.

 

Single agent or an agent with a team?

 

Different offices support different business models for the

agents working there and one of those models is to encourage

team-based selling. The single agent working alone is limited

in their ability to manage a small number of properties at once,

while the team model allows for carrying more property

listings and higher volume selling.

 

A selling agent may start out as a single agent in an office

and when they gain sales momentum they then hire people to

help them. This allows them to offer a better service and achieve

more sales. As their team roles evolve, they either continue a

team structure successfully or the team members leave to become

agents themselves, so the selling agent may go back to

being a single agent again or having one personal assistant (PA)

as their support.

 

As the seller, you’ll be choosing a real estate agent to sell for

you that you believe will deliver the very best service and result.

Often, you don’t even know or care if the agent you choose is a

single agent, is an agent with a PA or is an agent with a team,

as long as they can demonstrate how they will deliver peace of

 

The business of being a real estate agent is one of continuous

personal development and keeping up with changes in the law

and legislation. Real estate agents have required learning with

annual Continuous Professional Development (CPD) and many

agents work with a business coach or trainer much like

professional athletes. Many of the trainers support the concept

of an Enterprise Business Unit (EBU) so they work with a single

agent to encourage them to build a team which starts with one

assistant to share the work load and may build to three or more

team members over time. Many brands prefer the team model

within their organisations because teams will generate more

sales and the lead agent building the team will carry the costs

of the additional team members rather than the owner of the

 

Individual agents who expand to create a business unit with

additional staff carry the cost themselves, increasing their

overheads with permanent assistants who earn a wage and a

bonus based on turnover of properties sold. While a single agent

(with some agency support) can only list and sell a limited number

of properties at any one time, team-based agents who

adopt the volume model by adding a team can manage many

more properties with the opportunity to multiply their income

 

If a team-based agent is working to sell four properties a

week, instead of four properties a month as an individual

agent, their time is limited on how long they spend on any one

individual property, especially as they have the increased

burden of managing staff and running their business as well.

Franchise groups are renowned for holding internal weekly

meetings and other distractions that make the team agent’s job

of providing an excellent sales experience to every seller that

much harder.

 

Many successful agents work in teams of two, three, four or

even five agents, all as part of the lead agent’s business goals.

This allows the lead agent to concentrate on listing homes in

his farm area and negotiating with the best buyers his team has

identified. One of the support team will concentrate on buyers,

one on compliance and paperwork, one on prospecting and

another on marketing, database and open home duties.

The real estate agent you choose will be your business

partner in your largest ever personal business transaction, so

you want to be sure your agent is always ready, willing and able

to be contacted when it suits you. Communication is the key to

a successful partnership, so you will want to know that your

agent returns calls promptly and is never too busy for you.

So, when choosing an agent, it’s important to know whether

your agent works with a partner, associate, PA or team and

whether they plan to take holidays during the time you are

listing your home with them. And you may not know unless

you ask.

 

Many agents with the overheads of additional staff find it

hard to put the right assistants in the right job and their teams

of people suffer churn-and-burn on a regular basis. It’s possible

that your sale will be represented by people you have never

 

There is no right or wrong model. It’s your decision whether

you hire a single agent or an agent with a team. And, just for

the record, if you were to ask me: “Should you hire a male or a

female agent?” I would reply: “Yes, you should.”

Posted by

Geoff Grist

Mosman Neutral Bay Realty, Sydney Australia

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