WHY AGENTS LIE
..and why they really shouldn't
‘97% OF REAL ESTATE AGENTS GIVE THE OTHER 3% A BAD NAME‘
Yes, we know it’s not true (and not because the real figure is higher), and that it was penned for another profession, but it’s worth a laugh nonetheless.
Good natured banter aside, the home truths that ‘our lives are a sum of all our choices’, ‘we are what we repeatedly do’, ‘perception is reality’ (even where wrong), and that ‘muscle memory’ applies as much to the brain as to the muscles it controls, are inalienable and universal. There really is no escaping them.
Like all professions and perhaps more than most, the real estate industry attracts all types harbouring all manner of beliefs and prejudices (learned or inherent) with behaviours to match.
Prejudices brought to the industry are often reinforced by industry practises (as opposed to teachings) that are as flawed as the belief structures that created them.
Five widely accepted ‘myths’ that greatly detrimentally influence agent’s behaviour and results are:
1 ~ BUYERS ARE LIARS (and sellers rarely tell you the truth)
CONSEQUENCE – Agents are conditioned to believe lying and deceit is normal in the industry
TRUTH – Like so many things in life, perception is reality. Whatever agents believe to be the case, is
2 ~ SAY WHATEVER IT TAKES TO GET AND KEEP A LISTING and hang the consequences. Once you have got the listing, say whatever it takes to keep it and let dogged conditioning and attrition do the rest (which is why certain agents have always got a buyer about to make an offer)
CONSEQUENCE – The broadly poor reputation the industry has is given oxygen
TRUTH – Agents with something to offer don’t (need to) do this. The others believe they do so they do
3 ~ YOU MUST TELL BUYERS YOU HAVE ANOTHER OFFER TO GET THEM TO MAKE ONE
CONSEQUENCE – ‘Cry Wolf’ syndrome. The lie is so common and so widely abused, it generally has the opposite effect to the one intended. More on that below*
TRUTH – You don’t, and because it’s almost universally disbelieved, it is often wise not to say you have another offer ever if you do
4 ~ YOU NEED TO QUOTE A LOWER THAN EXPECTED (PRICE OR RANGE) TO GET BUYERS INTERESTED
CONSEQUENCE – You attract the wrong people for the wrong reasons and set the wrong value in the buyer’s mind which of course translates to a lesser or much lesser outcome than would otherwise have been possible. Authorities interstate realising the debilitating effect the practise has on the market, have taken aggressive action to prosecute agents caught doing it (imposing massive fines) but as yet here in Queensland where the practise is at least as rampant as anywhere else, agents practicing the deceit have thus far largely gone unpunished (more on this in an upcoming report)
TRUTH – If you’re good at what you do and sell on suitability as opposed to cheap price, optimum sale outcomes go from being rare to probable
5 ~ AGENTS KNOW WHAT PROPERTIES ARE WORTH
CONSEQUENCE – Because most agents think the public thinks they ought to know what properties are worth (which most don’t), they convince themselves they do. That of course is a nonsense as nobody can know what someone they haven’t met and whose circumstances they also don’t know with will pay for a property they haven’t seen
TRUTH – No-one can know what value someone else will place in a property at a given time
* The ultimate Industry Cry Wolf ~ ‘I’ve got another offer’
So abused has this typical agent rubbish been that just about the surest way you can convince a buyer you don’t have another offer on a property is to say you do (and conversely the best chance you have of having a buyer think you might have one, or at least have genuine interest, is not to say you do or simply to state there’s a lot of interest in the property but in fairness to all parties we don’t discuss other offers).
A riverfront owner was recently denied a probable sale when their agent known for always having another offer when finally getting someone genuinely interested in their property blew it by not being able to help himself but to say the fateful words, I‘ve got another offer (in this case $2.8million).
Ignoring any thought the buyer may have had of offering more or much more than that or the property which would have disappeared the instant the agent quoted the claimed offer amount, the much maligned, mistimed and always mistrusted line also had the immediate effect of putting the buyers guard up and putting them offside with the agent, muddying what had been keen interest in the property.
The level of distrust in the agent soared when after the buyers said ‘any offer we make would have had to be conditional’, the agent seeing he had bought himself a problem completely about faced and said he would be happy to take a conditional offer even if only fractionally above his ‘unconditional’ offer.
That sent the alarm bells that had already been ringing clamouring and their interest in the property through the floor. Needless to say, they put the purchase in the too hard basket and walked away (to buy elsewhere – to our delight).
Still on the river another owner was even more a victim of this when after more than a year their agent finally gets a buyer interested but again blows any chance of a reasonable outcome by coming up with the same dumb ‘I’ve got another offer’ you’ll have to beat act (in this case unconditional - just under $4million).
When as normal with smart people (which the vast majority are at the top end) that again didn’t work, true to form the agent completely back-tracked and took an offer from them many hundreds of thousands of dollars below his ‘existing cash offer’ claimed just minutes prior.
The agents challenge from there…? Well, as with most tangled webs, where do you start?
Firstly, he had to convince the owner to accept a wealth destroying offer many $100,000’s less than the property should otherwise have readily commanded, get them to publicly back the amazing ‘story’ as to why they would accept an offer many hundreds of thousands of dollars below another ‘existing’ unconditional offer; and thirdly, convince the buyer the same.
The latter he probably shouldn’t have concerned himself with as it would be extremely unlikely any buyer at any level of intelligence would have ever bought it. Beyond the bleeding obvious that it would be extraordinary for any seller in their right mind to consider such a thing in the circumstance of such a vastly superior alternative offer being on the table open for acceptance, it would be inconceivable that any agent acting in the interests of their client would take, present and have accepted an offer clearly vastly inferior to another (which were he to do so, beyond being crazy and fundamentally wrong, would leave him wide open to severe sanction for conduct clearly contrary to his client’s interests where he could be sued for damages – and much more than just the difference).
Further, as with almost all things river related, we know the buyer and they are particularly intelligent, indeed smart enough to recognise the economic benefit of playing along with the agent (if it means paying less for the property).
The strangest thing about all this is this and other agents who have been trained, evolved or otherwise chosen to operate this way, faced with a like situation and despite the mountain of evidence that to do so would be contrary to their (clients) interests, would likely do exactly the same thing again, to again get the same adverse outcome. As a mental form of muscle memory, habits, regardless of how counterproductive, are hard to break.
Rather than face the truth, the agents will rather put the results down to bad luck or just a price that has to be paid if you want to try and expand your marketplace. That of course is cold comfort to the owners who have missed out on a sale altogether or had their properties sold for far less than they otherwise might (which of course has a negative flow on effect for other properties in the area and the broader market generally).
Generally agents get away with selling properties for less than their real worth (this way and otherwise) because agents have polished the flawed practises that bring about such disappointing outcomes so well that it can be difficult for property owners to see through them. Often the only way an owner gets to find out how much more his property might be worth in the hands of an agent with a more transparent and ethical approach is to completely ignore all the noise coming from the current agent, and just make the decision to cut his losses and move on.
This actually happens far more often than people think (we have sold 13 properties in just the last 3 years where we were appointed in place of another) but nowhere near as often as it should because so many agents have become so very practised at keeping listings (per Myth 2 above), most often by modifying the buyer ‘I’ve got another offer’ story to the sellers ‘I’ve got somebody just about to make an offer’ equivalent. Beyond that of course, agents rely on the fact than many sellers are loathe to admit they made a mistake in engaging them which often means they will stick with them even when they really shouldn’t.
Blunting the need for agents to improve their game (morally and otherwise) is the difference in agents’ commission between selling a property for $3.5million and $4million is just $12,500 (at 2.5% of the sale price which is the average commission full service agents in Queensland charge) where for the owner of the property, that difference is $500,000. Hence the saying, ‘your choice of agent will make or cost you a fortune’.
As almost obscene the amount of commission income good agents earn can seem, the agent who can get $4million for a property in the same market where another can only get $3.5million even where the former’s commission is 3 or even 4% and the latter’s much less leaves an owner infinitely better off financially. Indeed even if the lesser agent worked for nothing, they would be better off financially engaging the better agent.
Unsurprisingly the agents who charge the lowest commission and get the lowest prices in the market are the same ones who’s practise it is to deceive (both buyers and sellers) to achieve their ends.
Why don’t or won’t they change? Well, for most it’s just too hard, will take too long, and perhaps prove too much of a gamble.
In today’s digital age as much as in all previous ages, we get what we pay for. That will never change.
END OF STORY