Brendan Wong and Stacey Moseley
Agents need to resist the temptation to discount fees to win business, according to an industry thought leader.
Managing director of independent agency Morton&Morton and Australian Real Estate Awards 2013 Thought Leader, Ewan Morton said in a competitive environment, agents need to stand firm with their fees.
“In the past, we have been a bit too keen to get the deal done, so the net effect of that is you end up giving away a fee when potentially you didn't need to. I think agents need to understand their moment of power really is when they've actually got the buyer and the deal's going to be done,” he told Real Estate Business.
Mr Morton explained that the mentality to discount fees had been the result of the global financial crisis (GFC).
“I think what happened was that we got used to it being at a lower fee and that takes away the margin with the business,” he said.
“Obviously, if you take away revenue you've really got to operate on a lower cost base or you're going to make less profit.”
Another factor was the increasing sophistication of consumers in the marketplace.
“I call it the Bing Lee factor," said Mr Morton. Everyone has been into Bing Lee to fight with the sales team about their television set and that's given them a new set of skills to negotiate everything.
“There used to be a time when people were embarrassed to negotiate … but now people don't care about it and you've just got to be prepared for it, and you've got to manage your expectations of both buyer and seller.”
Mr Morton said he had seen some agents discounting their fees as low as one per cent post-GFC.
“As an industry, we've got to get past that and see the value of what we're doing, and I do think it's a question of everybody being confident about what they're doing and believing in what they do," he said.
“I think as an agent, if they've got a good process that goes around how they sell property and they've got the ability to negotiate and they work hard, then they're worth the fee and I think the vendors will pay it."
Mr Morton said his agency had a conscious strategy to be firm with their average fee, which was two per cent, and that they had been significantly firmer than they were 10 to 18 months ago.
He added that this would continue to be a focus for the group next year.