Vendor Advocacy….What is it and how does it work?
Vendor Advocacy is relatively new to real estate in Australia, as is buyer advocacy. The service of Vendor Advocacy is growing at rapid rate in Australia because home sellers are not being told the truth by the very real estate agents who are supposed to be representing them. The agents have a tendency to quote high estimated selling prices and once a vendor is committed to them, they apply extreme pressure on them to accept offers significantly lower. Today many agents still use selling techniques that are not only outdated but also go unchecked. Agents also have a conflict of interest because they are dealing with both the seller and the buyer.
A Vendor Advocate acts exclusively for the home seller and appoints the selling agent on their behalf. This process takes the control away from the agent and puts it back in the hands of the seller. By having this control, the home seller is assured that selling agents will deliver on their promises – meaning they will market the property with professionalism and competence, act fairly when introducing buyers and charge a commission that is fair and reasonable. When a home is successfully sold, the agreed commission is shared with between the real estate agent and us, so using our vendor advocacy service is at no additional cost to the home seller.
Agent Selection
Just like in every business or service you are likely to use throughout life, there are varying degrees of professionalism and expertise of real estate agents. We make our recommendation of the best selling agent based upon the vendor’s requirements and circumstances.
All too often vendors focus on the price the agent quotes and the commission they will charge as being the benchmark by which to select a selling agent. These can, and usually are the biggest mistakes a vendor can make. Entrusting your home to someone who is unable to negotiate a reasonable fee for themselves usually means they are very unlikely to negotiate the highest price for possibly the largest asset you possess.
The difference between an average result and an excellent result is largely due to a vendor engaging an average negotiator over a top negotiator. Before our recommendation is made, we ensure that we have thoroughly researched the agents through our stringent selection criteria. The agent we recommend may not always charge the cheapest commission, but what we are looking for is excellence in service and excellent sales results, rather than saving perhaps a few hundred dollars in commission. Saving a few hundred dollars could cost a Vendor several thousand, or even tens of thousands of dollars in the final selling price.
Negotiating Commissions
We have all heard the expression “You get what you pay for”. Well it’s true with almost everything you buy today, including the services of a real estate agent. Many vendors say that they were able to negotiate a really cheap commission. What these vendors should really be asking themselves is – who have they hired to sell perhaps their most valuable asset? It is important to know that if an agent is discounting his commission and undercutting his competitors, it’s just to get the listing at any price, even if it means surrendering his own money. Is that who you really want working for you? We too can get you the cheapest agent, but only if that agent is the best agent to look after the sale of your home. By undertaking our stringent selection process, we want the best agent, not the cheapest.
When going through the selection process, we review the commissions and marketing costs as well as the sales results that the agents have disclosed in their submissions. We discuss the agents’ submissions with the vendor as well as the differences between the agents so that the Vendor is made fully aware of the reasons for our recommendation.
Assessing Marketing Costs
A vital component to the overall success of the sales campaign is to have an effectual marketing campaign. It is, however, just as important to not go over the top with the advertising expenses. Many agents will propose extravagant and expensive marketing campaigns – but these campaigns actually promote the agent more than the property. We review the agents’ proposals and make our recommendation based on achieving a successful marketing campaign without overspending. Advertising and marketing costs vary greatly from suburb to suburb and market to market. With our guidance, we will ensure that a property receives the right amount of exposure in the current market to achieve a successful sales result.
Providing Independent Advice
We are vendor advocates. We work for the home seller and our role is to ensure that the agent delivers on his promise and achieves the best sales result possible. If the selling agent is not serving a vendor’s best interests, or if a vendor has issues with the selling agent, we can take care of the agent by removing him and replacing him – so that there is no stress on the vendor. As vendor advocates, we are there to look after the vendor’s best interests.
Reviewing Offers
When offers are presented by agents, they tend to exert extreme pressure on a vendor to sell at the price that has been brought forward. During the marketing campaign there will be situations where we may believe the price and/or conditions of an offer are not favourable for the vendor to consider. When this occurs we will recommend that a vendor does not accept. We are continually involved in the negotiation process to ensure that when an offer is being presented, it is on the best terms and conditions for the vendor. If we consider that an offer is not on the best terms and conditions, we will advise the vendor not to accept it. We will continue to work with the selling agent until we receive an offer that is at the highest price and on the best terms and conditions. It is only when we are confident that we have achieved this level that we would recommend that vendor accept an offer.
Finally, it is important to remember that not all real estate agents are the same and the same is also true for vendor advocates. There are some high profile advocates that use scare tactics not unlike some of the selling agents they purport to protect the vendors from. These advocates even claim that they do not cost any more than using the services of a real estate agent, yet some vendors have paid bonuses which were bigger than the base commissions. Are these advocates really looking after the vendors’ best interest, or their own hip pockets?