The best agents will always be able to introduce buyers to your property without asking you for any money. If an agent claims to have a buyer, as most real estate agents will, that should negate the need for spending money upfront on advertising. Unfortunately, many agents will initially ask a seller to spend money advertising their house and the agency.
While market conditions are healthy at present, the best buyers will always make themselves known to most of the agents in the area they wish to buy into. They are the ‘best buyers’ because they are keen to pay a good price to secure a property now.
An agent who can introduce buyers without cost or risk to you, protects your position in the event that you decide against selling, or if you don’t accept the offers that are submitted.
Exhausting your agent’s database prior to committing hard earned dollars on needless advertising, allows you the option of spending it later, if you feel that the campaign is lacking in exposure. Few people need to take this path though. Once they hit the market, they realise very quickly that the internet does the heavy lifting at a minimal cost – a cost the agent should be able to carry.
If you spend big dollars up front on advertising, you have probably spent big to advertise to a buyer already known to the agent. The cost to send an email to a database of 15,000 buyers is almost nothing. The best agents have large databases full of current and active buyers.
Many properties are selling within three weeks of hitting the market at present. An agent who confidently claims and can demonstrate to have potential buyers therefore needs to be scrutinised on another level. Can the agent negotiate well? You don’t want the best buyer negotiating with the worst agent. In reality, that could end up costing a lot more than a needless advertising campaign.
As a home seller, you should only pay for advertising once an agent has delivered the sale at or above the promised price.
The agent’s model
Here is how many agents selling models work – the agent quotes a high price to the home seller. The home seller likes the figure and says, ‘Great, how do we go about this?’
The agent claims it is only possible with a heavy advertising campaign and an auction. At this stage, a $5,000 advertising spend for a $1 million house seems largely insignificant.
When the auction fails to meet the seller’s reserve, the seller either accepts less or passes the property in, wasting the $5,000 spent on an advertising campaign. Heads the agent wins and tails the client loses.
The agent doesn’t want or need your $5,000 to find buyers. They want your $5,000 to increase your motivation to sell, i.e. drop your price on auction day. They also want your $5,000 to promote their brand to others in the community. Make no mistake, regardless of whether you spend $5,000 or not, buyers will come, ready or not, once your home hits the market. If an agent cannot introduce a buyer without cost or risk to you, the problem is theirs, not yours.