A top 20 agent sat down with REB to discuss the key challenge of having difficult conversations with vendors regarding price expectations and agent fees.
Ben Collier from McGrath Edgecliff said that while agents can give a realistic snapshot of where a property sits on the market, vendors and agents alike can never know for certain where the real value lies in a fluctuating market.
“Provided that you’ve given them the right information up front, if the feedback from the market is to suggest that it is within the range that you’ve suggested to the vendor then all that does is indicate your position,” he said.
“You can always add, ‘If the market reacts differently and we feel that we can negotiate the sale beyond that range, then so be it’.”
Mr Collier noted that pricing a property appropriately is paramount, since this is essentially where the agent sells the house.
“It’s not the day before the auction or the day of the auction,” he said.
“It’s when you have your first meeting with the vendor because you’re setting the tone for the whole process and how it will unfold in the coming weeks.”
It’s important to not shy away from hard conversations, according to Mr Collier, particularly since most vendors already know their position.
“They just want to know, ‘Do we have a buyer? And if we don’t have a buyer, what do we need to do to find one? Is it price-related? Have we received any constructive criticism over the past three or four weeks that we can do something about?’ Telling them that the buyers aren’t interested because the property doesn’t have parking – they know they don’t have parking, so you don’t need to keep harping on about that.”
According to Mr Collier, delivery is vital in affecting how difficult news is received, so agents should articulate clearly how the market is reacting to a vendor’s property.
“If it’s constructive criticism from potential buyers, then discuss it, but if the criticism is things that you can’t do anything about, then it’s not relevant to [the] conversation. Most vendors are aware of the positive and negative aspects of their home, so they don’t need you to keep reminding them.”
In Mr Collier’s experience, vendors generally appreciate it when agents deliver difficult news, since they are hired to get the best possible result for them.
“As long as you’re always on the front foot on what you think you can be doing the whole time and always thinking about how you can put forward ideas and suggestions on how they can get a better result, the more they see that you’re doing everything you can to sell the home.”
Regular feedback and research go a long way in helping agents to stand their ground and show vendors the right path, Mr Collier said.
“Face-to-face vendor meetings are a very important part of that process, as well as daily calls. They need to be able to feel at the end of this whole process that, when you are discussing an offer on the table, neither they as the owner presenting the home, [nor] you as the agent could have done anything more to get the best result for that house – therefore the offer that’s on the table is probably worth considering.
“You want both sides to feel that way at the end of the whole thing and say, ‘We had amazing editorial, we spoke to you every day, we knew exactly where we sat with things and you’ve had 1,000 people through it; this is the best number that we can get, so we probably need to have a chat about it’.”
Mr Collier noted that another challenging conversation many agents face is discussing fees with potential clients.
“Most owners don’t mind paying the fee you’re requesting if it’s reasonable, provided that you have been able to articulate and demonstrate that you offer value for what you’re requesting in terms of commission,” he said.
“If you haven’t articulated or demonstrated that appropriately, then you’re going to struggle to get the fee you’re requesting.”
According to Mr Collier, while agents should stand by their fees, they can make concessions when entering a new and unfamiliar marketplace.
“If you’re trying to break into a new market, then obviously you don’t have as many runs on the board as the next agent, so you will have to look at your fees,” he said.
“If you are being compared with another agent, then sometimes you’ll look at sliding scales – so, a more incentivised fee structure – so they’re feeling as though it’s a win-win for everyone and you’re remaining competitive.”
While every client is different, Mr Collier said the key to minimising difficult conversations is to demonstrate value and fulfil any promises made.
“If you say you’re going to be present at that open-for-inspection, then you need to be,” he said.
“If you’re not delivering on what you promised, then obviously the wheels will come off pretty quickly. Everybody is different and you’ve got to customise your approach to the client.”
[Related: Top 100 Agents 2016]