Tip about business learnt from buying & selling your property
When we recently had to buy and sell a residential property, we learnt a lot of lessons which are applicable for all businesses.
The lessons from this exercise were twofold – real estate agents showed what do well and what they do not so well and, they gave some good insights into what we should do or not do in our own businesses.
Let’s get started.
Buying & Selling Your Property – Should you leave it to the Real Estate Experts?
When you are buying and selling a property, it is generally the single largest transaction you will be undertaking, except perhaps for buying or selling a business.
For this reason, it should merit a fair chunk of your time and involvement to get it as right as possible.
The difference between a good purchase/sale and an average one might be as much as 5% to 10% of the value of the property. When you think about most deposits being 10% to 20% of the property’s value, this sort of difference equates to a sizable portion of your own equity is at risk if you get it wrong.
In other words, you should take the time to get it right.
The question most people have is, “Not having done this type of thing very often before, what is the right thing or best thing to do?”
That’s a good question and is the subject of many books and research. Many people, however, effectively hand over responsibility to a real estate agent on the grounds that they are ‘the experts’ and, they operate on a commission so “it is in their interests to get it right”.
But is this logic correct? My view from our recent experiences is “No”.
Many so called real estate experts are not experts at all. Length of time in an industry does not an expert make. Results and happy customers (buyers and sellers) are what you should be measuring – but that data is not so easily available as most agents do not ask for nor keep available their track record nor customer references.
Also, you should be aware of a common misconception about anyone selling under a commission structure – selling at a price which gives them the highest financial result from one sale is not necessarily the best thing for them personally. What is best for them is balancing the commission per sale with the number of sales they can achieve in any given period of time.
For the commission agent, it is often best to accept a result which is slightly less than the maximum they could earn but to complete the transaction as quickly as possible so as to increase the number of transactions in any one time period.
An increase in the number of transactions completed will often more than compensate them for any potential loss of commission on one transaction.
Some Additional Lessons for Your Business
If you utilise commission agents, get to understand what is likely to motivate them. Otherwise, you might find your interests are not as aligned with theirs as you would have first thought.
Always ask for feedback from your customers. And, publish it so prospective customers can see the sorts of comments others have made about you.
Not all Real Estate Agents are hungry for your business
Whilst we had had a long relationship with an agent, Sue Solier, Sue Solier Real Estate, from a property management perspective, we decided to go through a formal evaluation process for the sales process to identify the best agent to sell our property.
Sue was all the things you would want in a property agent (reliable, communicative, had a great relationship with our tenants as well as us as landlords). However, she was a ‘one agent business’ who could not boast the marketing power of a large agency brand and, she was less experienced in the public sales cycle (although she had sold many units off the plan over the previous couple of years).
As we were looking at paying out about a $10,000 to $15,000 commission for this property sale we thought our request to agents to meet with us to find out what they would do for us in the sale of our property would be met with eager responses. Wrong!!!
We researched all the local real estate agents and to save them some initial questions and to give them some initial data, we sent them all an email with details of the property (all the features, when it was purchased, the purchase price etc) and what we were seeking from them. We asked the agents to meet with us to let us know what they thought of the property, how they would market it and what they thought it would fetch in the current market place.
Of the six agents we contacted by email, only two went through the steps necessary to even get to a meeting with us. Some never responded at all whilst others responded but made it all sound too difficult to even contemplate working with them.
To add to this experience, when we were looking to buy a property, we told a few agents we also had to sell another property in order to buy the one they were showing us. Very few showed any interest in assisting us and those that promised to assist us never followed us up on their offer.
After a review of all the relevant factors. we chose Sue Solier Real Estate. The fact we knew Sue had demonstrated a high degree of integrity in our dealings with her as well as the fact she gave each matter her personal attention were critical factors in our decision making as were her inclusive approach to the development and refinement of the marketing strategy and her ‘do whatever it takes attitude’.
Some Additional Lessons for Your Business
Keep close to your customers and go the extra mile for your customers – it worked for Sue Solier Real Estate and it will work for you.
Make sure every customer contact point is a positive one. If you have one or more negative or disinterested contact point, the chances are your customer will walk to someone else the moment they don’t need you.
Market Research on Successful Marketing Channels is Thin on the Ground
When we were buying, we attended a number of Open for Inspections and the agents presenting these properties asked for our name and phone number – that was about it.
It was only when we were looking to sell a property that we started to ask what we thought was a fair question to agents: “What marketing channels work when selling a property and what is your personal experience?”
Common marketing channels used in real estate in Melbourne are print media (mainly The Age and to a lesser extent it would seem, The Herald Sun), the internet (www.realestate.com.au (the main one), www.domain.com.au , www.myhome.com.au , www.realestateview.com.au ), email alerts (attached to the websites), fliers and letter box drops as well as the agent’s weekly publications, web sites and e-alerts.
So when we asked real estate agents what actually worked, the answers surprised us.
No agent we spoke with had done any research of their own as to what channels worked best for them in this geographic area in attracting potential buyers and in selecting the potential buyer.
One of the larger better credentialed agents showed us statistics supplied by The Age and the main internet site (www.realestate.com.au ) but could not verify this with their own experience for Open for Inspections and of course sales.
The standard approach was to offer advertising in The Age and via the Internet. Not much else was offered and no verifiable support was offered for the proposed marketing mix for the campaign.
Why agents do not ask for the source of the inquiry at the Open for Inspections I do not know.
When I talked to a few agents they all talked about doing this but none of those we visited for Open for Inspections when we were buying actually did it.
We asked our chosen agent, Sue, to track the marketing channel statistics for us.
Sue’s research during our sale process showed that the internet was by far the most sourced marketing channel; The Age: nil (a real surprise but supported by our own research when we were looking to buy – we did all our research via the internet); A mail drop in the surrounding suburbs: some enquiry; A mail drop to fellow residents in the unit complex: good (some looking for superannuation investments and some converting from being a renter to an owner).
Some Additional Lessons for Your Business
There is always some anecdotal research which can be done to disprove the old adage “Only 50% of advertising works, the question is which 50%”. Anecdotal evidence may not always be as statistically valid as you would like but it gives good indicia as to where you are more likely to get bang for your marketing buck.
Some sales people who can earn good salaries become extremely lazy in doing their own research to improve their hit rate. Find out who in your team goes the extra mile for their customers. These team members are more likely to be your future successful leaders.