One of the biggest points of contention between property vendors and real estate agents is price expectations, and how they are determined.
From the real estate agents’ side, the stereotype goes that every vendor thinks their home is worth more than it is. Agents are therefore set up to fail when they cannot achieve – quickly – a sale that is 20 per cent over the median in a market that is 30 per cent worse than the last price peak.
From the vendors’ side, agents are overpaid smooth talkers who will tell you anything to get you to sign, and then spend the entire campaign trying to talk you down to get you to accept an insulting offer. Pricing, in the view of vendors, is a dark art that most agents practise poorly.
No wonder real estate agents rate so poorly in consumer trust surveys (such as Roy Morgan’s Image of Professions Survey), when the core of this push and pull is not a debate over the facts, but an argument over opinions and trust.
But the recent Consumer Perceptions of Real Estate survey by CoreLogic – the first survey in Australia to specifically examine the satisfaction levels of vendors in their engagement with agents – shed some light on how conversations about price and the old stereotypes can change.
The survey of more than 300 vendors who had used an agent (most within the past two years) found that the majority of vendors (74 per cent) actually achieved the price they expected – or higher.
The survey further identified that the agents with the strongest communication, negotiation and customer service skills were most likely to be rated ‘excellent’ by their vendors and receive glowing testimonials.
One of the most interesting findings was the level of vendor satisfaction achieved by agents who demonstrated best-practice use of key data and market insights.
Put simply, the agents that took the time and trouble to explain their market to vendors using data – not opinion – were significantly more likely to be rated excellent than those that did not.
At the other end of the spectrum, the agents who sought to keep their vendors in the dark, showing them as little data as possible, were most likely to receive a ‘poor’ or ‘unsatisfactory’ rating.
The survey revealed five key findings:
• 79 per cent of agents showed their vendors recent sales in their area, but only 54 per cent showed their vendors recent sales of properties similar to the one they were selling.
• Only 51 per cent of agents showed their vendors recent sales that their own office had made.
• Only 28 per cent of agents showed their vendors data that explained what the current time on market was in their area.
• Only 55 per cent of agents presented suburb information such as median prices and price growth to their vendors.
• Only 11 per cent of agents talked to their vendors about auction clearance rates in their suburb (although about 30 per cent of vendors chose this method of sale).
This insight has sparked rigorous debates with some agents, who tell me vendors can’t be trusted to understand property data correctly and that providing information around price just misleads them.
Here’s the thing: the internet has made this argument completely void. Vendors – and buyers – have access to property data now, whether or not their agents approve.
Rather than stopping your vendors and buyers seeing data, your efforts will be best spent in directing and guiding their interpretation of it.
The comments from the survey highlighted that this is exactly how the best agents do it. They know their clients have access to information, so they work with it.
Best-practice agents get ahead of the data curve by sharing with their vendors links to websites that they believe offer trustworthy data insights. They show their vendors easy-to-understand charts and graphs that help them create realistic expectations of price.
Top-rated agents walk their vendors through the data that they used, to show them how they came to the price they did. And if the data changes – through changing market conditions – they give them a fact-based update with revised recent sale insights. They don’t just have a chat. Trust is not achieved by asking for it, but by demonstrating trustworthy behaviour.
Kylie Davis is the principal at Real Content and author of seven landmark reports.
She is a 'data queen’ whose research helps agents, property managers and principals better understand customers, markets and themselves.
She is also a keen observer of the tech trends changing the way we work.