Real estate agents

“I talk to a lot of real estate agent mates from all over Sydney. We all say: the days are gone where you can open the door and properties will sell for way above expectations without the agent doing any work. As an agent, you have to do your client follow-ups and do the work to get the people there. That is a normal market.”

Rush of Sydney spring listings widens the gap between inner and outer suburbs

I am yet to meet a real estate agent that's worth even a third of the commission paid.

If there is a big correction, I don't see how these folk won't be completely disrupted.

 

It happens every cycle - the seasoned salespeople with sales skills stay in the industry, the Johnny come latelies disappear.

Can't list, can't sell = glade that they're commission only.

This is why many agents only last a few years.

 

I reckon thats going to be a big factor in the fallout from a downturn in Sydney Property. Luxury cars, luxury F&B, shopping, etc.. all gonna be hit when the easy money doesn't flow down anymore. Which will end in job losses, and guess what happens to the multiple IPs these REAs own.

 

Same thing happens with mortgage brokers.

 

What skill or value ad does a real estate agent bring. I can see value in a house sprucer uperer recommending cosmetic and presentation enhancements that maximise return on investment. An agent really seems like nothing more than a glorified shop attendant. They fail to present any meaningful information on the property when probed and ask you to do your item research withn the council!

 

They'll add as much value as the vendor is prepared to swallow.

 

Remember that most sellers are clueless too.

 

I know one

 

My parents used an excellent rea in Melbourne last year to sell their IP. She listed it and the offers started rolling in. For each offer they told me, oh, that is more than we wanted! We should accept that. I told them to relax and let the agent do her job. The agent worked and worked and worked all the buyers and the offers went up and up and up. The final price was much higher than the original offer. My parents would not have negotiated a price anywhere near that.

So, I nominate negotiation skills as value that a good agent adds. I agree there are very few really good agents though.

 

Thats called an auction. Frankly an unkept troll could have sold a public urinal for a fortune in a rising market

 

It wasn't an auction actually, the house was sold by private treaty. From listing, it was all over and done faster than an auction would have been (4 week campaign then auction). I reckon the agent got perhaps a little higher than it would have gone for at auction based on comparable sales in the area at the time. Remember private treaty can have B&P and finance clauses where auctions do not.

You asked "What skill or value ad does a real estate agent bring."

Good agents bring negotiation skills to the transaction that sellers won't necessarily have. You don't have to like that if you don't want. It is a reality for some whether you like it or not.

Just like forum posters, where there are some who really just whinge and there are others who really add value, there are many agents who don't really do much and there are other agents who really add value.

 

I agree with @Perthguy.
A great real estate agent brings money to the table.
A great agent understands the seller's motivations so they will know how much the seller needs to sell and recommend to accept offers or not. They can recommend enhancements to a home to increase its saleability. They know how to talk to the seller, and to extract the last dollar from the buyer.

I've sold three properties all in my local area, one in 2010/11, and the other two in 2016 and my experiences differed. The first one I didn't feel the agent necessarily did the best job for me. She didn't recommend any work to be done to the place (I personally hated the carpet). I didn't feel the sales price was necessarily the best possible but she didn't offer any guidance that there would be a better one, nor advice to me to how to extract the last dollar.

The more recent ones (a house and a unit), I was very happy with my (different) agent, and I felt she did a really good job. Even with the unit that I was selling, she took offers but early on she would say for me to not accept some low offers that were being presented even though it would have meant she got a quick sale. She knew my motivations. Agents also know the each sale they get is a reflection of their sales ability and if I was an agent I would not want my record to show a string of less than optimal sales prices.
As a vendor, this time around I chose my agent based on the quality of sales prices already achieved.

As a result, I would happily use this agent again.

 

What people don't understand is that the flat percentage of sale price commission works very much in the agents favour.

The first 90% of the purchase price of the house is easily achieved without any marketing whatsoever. If you want the agent to work for you, they should be incentivised by being offered 20% of anything over the agreed high water mark and costs only for realistic target - 10%.

QUOTE="Gockie, post: 499260, member: 111"]I
agree with @Perthguy.
A great real estate agent brings money to the table.
A great agent understands the seller's motivations so they will know how much the seller needs to sell and recommend to accept offers or not. They can recommend enhancements to a home to increase its saleability. They know how to talk to the seller, and to extract the last dollar from the buyer.

I've sold three properties all in my local area, one in 2010/11, and the other two in 2016 and my experiences differed. The first one I didn't feel the agent necessarily did the best job for me. She didn't recommend any work to be done to the place (I personally hated the carpet). I didn't feel the sales price was necessarily the best possible but she didn't offer any guidance that there would be a better one, nor advice to me to how to extract the last dollar.

The more recent ones (a house and a unit), I was very happy with my (different) agent, and I felt she did a really good job. Even with the unit that I was selling, she took offers but early on she would say for me to not accept some low offers that were being presented even though it would have meant she got a quick sale. She knew my motivations. Agents also know the each sale they get is a reflection of their sales ability and if I was an agent I would not want my record to show a string of less than optimal sales prices.
As a vendor, this time around I chose my agent based on the quality of sales prices already achieved.

As a result, I would happily use this agent again.[/QUOTE]

 

Negotiating skill? What are they throwing in... paint protection, leather guard and free servicing? The product is fixed! Negotiating is you say less i say more. A 4 yr old in the sand pit picks up that savvy

 

Pick the agent/s with the solid sales history.... the ones achieving the outstanding sales prices.... don't bother with anybody else.... they are the ones providing the real value add. If you can't do that, then that's your fault.

Yes, negotiating is a real skill. Quite funny, I interviewed a few agents when I was looking to sell.
I asked about what would you do to maximise the sales price. One agent said hide any defects in the property with furniture. This agent also had really cheap advertising.

Others provided advice that would entice emotional PPOR buyers to want to buy the home.
Style the place with appropriate furniture. e.g. Glass dining table, make the place feel bigger. Add an extra skylight. Paint. Tidy the garden.

Anyway, for our house, our agent managed to extract from a buyer an extra 45k more than their original offer, and we would have been happy to take the original offer. That's adding value. It was not an amazing house by any means... weatherboard, low side of street, it would cost an extra 100k or so if you were to knock that house down and rebuild due to the slope of the block.

 

What you have described is a very basic level of negotiation skills which any average real estate agent has. That is not what sets your average "order taker" agent apart from a really great agent. That said, many sellers don't even have that level of negotiation skills which is why there are so many very ordinary real estate agents around. I have negotiated with some of the best agents around and they are fantastic. Unfortunately, they are rare. Actually, that's probably good for us as property investors. If every agent was good at their job then we would not be snagging those good deals.

 

Haha...thanks...are you an agent?
They are acting in the vendors interest and provide no other function other than to relay sellers desire to extract more. Often they massage vendors expectations down to close the deal and collect commission.

 

Nope. Besides investing in property I have nothing to do with real estate. But I have dealt a lot with property including buying and selling both residential and commercial. As I said, really good agents are rare but I have dealt with some and they definitely add value.

That's what your average agent will do and I agree that an average agent adds no value. Talking the seller down and the buyer up a little takes no skill and is not what a good agent will do.

A really good agent does add value. I have seen this myself a few times. In the case of my parents, the agent talked the buyers up in price and talked the sellers (my parents) up in price. That's the opposite of what you say an agent does.

I can give you an example of a transaction I was involved in:

Agent A was trying to sell Building A for Seller A. Buyer A wrote an offer for Agent A to present to Seller A. Agent A refused to present the offer to Seller A because he claimed the offer was too low. Buyer A contacted Seller A and arranged a meeting. At the meeting Buyer A and Seller A negotiated a price that both parties were happy with, wrote up the contract and signed it at the meeting. The sale was subject to conditions which unfortunately could not be met and the sale fell through.

Buyer A contacted Agent B to see if Seller A would be interesting in engaging Agent B to sell the building. He was and Agent B listed the building. Agent B found a buyer and negotiated a price that was higher than the original contract price. From memory, I the final sale price was at least $20k higher than the original contract on a final sale price of $485,000, which should have covered most of the commission. I was Buyer A in this transaction.

So, Agent A did not act in the Vendors interest, by refusing to present an offer. He didn't act in his own interests because he lost the commission and lost the listing. Agent A added no value to the transaction. Not a good agent.

Agent B negotiated a higher sale price than the seller could negotiate for himself. The is all the evidence I need to see that sometimes a good agent can add value. It happens. I would not say it's common though.

 

Have you had a bad experience? Sure, bad agents overpromise and underdeliver. Condition the seller so that they will accept less than what they initially promised (oh, the market has turned... oh, this type of buyer does not like this market, and so on)....

That's where you need to do your research on the agents in the first place. Choose someone with a great track record of securing the best prices in the area. You are selling something worth 6 or 7 figures... it's worth the time to do the research on the agents. Don't just pick anybody.