No Way Out.
As the property market has continued to tighten in the past few months agents have had to adapt and develop strategies in an attempt to try and survive.
That may sound dramatic but let me share with you some stats that will show you just how competitive it is out here.
According to Rate My Agent in Mosman there are 100 agencies with 179 active agents working in the area. In the past 12 months there have been 605 sales recorded. That works out at 3.37 sales/agent/year.
Now of course that’s not how the pie is divided, the top 4 agencies have approximately 47% of the market share. This leaves the rest to fight over the remainder.
The reason I wanted to draw attention to these figures is to demonstrate how this affects you as the end user.
The biggest side effect of this market pressure is how many agents are handling appraisals. Most estimates are too high and many people can’t resist the temptation.
The sales pitches can be convincing, national networks, exclusive Chinese buyers etc etc. The goal is to get the signature and then the business is secured.
Recently I’ve seen a pattern with some agents where they list a property in the first week that is way overpriced. Then within a week the indicative price is slashed. You may ask yourself why the owners would tolerate this, the answer is they have no choice.
Once you sign an exclusive agency agreement you are locked in and it’s becoming common for some agents to adapt the attitude of 'sign it at whatever price you can and then manage it from there'.
You need to ask yourself - if a so-called professional is lying to you to get your business imagine what they would be prepared to do to get paid?
There is a simple solution to avoid this happening to you and it’s to request an escape clause.
Before you sign a selling agreement why not request that the following be added? ‘The owner can cancel this agreement at any time by providing the agent with 3 business days in writing.’
The best agents will gladly agree to this. Why? Because they aren’t planning to ‘manage’ your expectations.
The agents that are misleading you or overpromising will feel very uneasy giving you a way out.
I’m sure that if such a clause became a standard term in agency agreements this would accelerate the success of some businesses and absolutely demolish the worst of the worst.
Final word of advice, when choosing an agent focus on the process not the promise.
Until next week,
David Murphy