One of the biggest bones of contention between property vendors and real estate agents is expectation over price and how it is determined.
From the real estate agent’s 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 a sale quickly that is 20 per cent over the median in a market that is 30 per cent worse than the last price peak.
From the vendor side, agents are overpaid, slick talkers who will tell you anything to get you to sign, and once done, will spend the entire campaign trying to talk you down to get you to accept an insulting offer. Pricing, in their view, is a dark art that most agents practice poorly.
No wonder real estate agents rate so poorly in consumer trust surveys (such as Roy Morgan’s) when at the core of this push and pull is a debate not over the facts, but an argument over opinions and trust.
But the recent Consumer Perceptions of Real Estate Agents survey – the first in Australia to examine the satisfaction levels of vendors in their engagement with agents – sheds 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 (the majority within the past two years) found that most vendors (74 per cent) achieved the price they expected or higher.
The survey found that agents with the strongest communication, negotiation and customer service skills were most likely to be rated as ‘excellent’ by their vendors and receive glowing testimonies.
The report also found a link between agents who demonstrated best practice use of data and key market insights and agents who had excellent communication and customer service skills.
Put simply, agents who took the time and trouble to explain their market to vendors using data, rather than opinion, were significantly more likely to be rated as ‘excellent’ than those agents who did not.
At the other end of the spectrum, agents who showed their vendors minimal data and them in the dark were most likely to receive a ‘poor’ or unsatisfactory rating.
According to the survey findings:
- Seventy-nine 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 clients about auction clearance rates in their suburb, although about 30 per cent of vendors chose this method of sale.
This insight has sparked debates with some agents who tell me vendors can’t be trusted to understand property data properly, and providing information about 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 you approve as an agent or not. Your best effort is spent not trying to stop your vendors and buyers seeing data, but in directing and guiding their interpretation of it.
The comments from the survey flagged that this is exactly how the best agents do it. They know their clients have access to information and they work with it.
Best practice agents get ahead of the data curve by sharing with their vendors links to websites they believe offer trustworthy data insights. They will show their vendors easy-to-understand charts and graphs that help them create realistic expectations on price.
Agents rated as ‘excellent’ walk their vendors through the data they used to show them how they came to the price they did. And if the data changes due to changing market conditions, they give them a fact-based update with revised recent sale insights. They don’t just have a chat. Trust is created not 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.