A Foundation of Honesty
Below are snippets are from surveys conducted by Roy Morgan over a 17-year period. I have been following these surveys for 25 years and note the position of our industry moves very little in the list of most trusted professions.
Most Respected Professions: Nurses, Pharmacists and Doctors
Least Respected: Car Salesmen, Journalists and Real Estate Agents.
Roy Morgan 2000
Directors of Public Companies on 25% (down 1%) and Business Executives on 18% (down 2%) are both mid-ranged in the overall result, but well ahead of Real Estate Agents who have equalled their record low rating of 7% (down 3%) and perennial cellar-dwellers Car Salesmen on 4% (unchanged).
Roy Morgan 2017
Yet over the past 30 years I have met many thoroughly decent real estate people, far more than the ‘other type’.
So why does our industry have such a poor reputation? We know the answer:
- Overquoting to sellers
- Underquoting to buyers
You can argue as much as you like about whether this happens, but a recent spate of $800,000 fines on some Victorian agents for over or underquoting should be ample evidence that this practice is alive and well. And I wouldn’t suggest it stops at the border into NSW, Queensland or South Australia.
Character issues aside, let’s think about why it happens. One reason alone:
Salespeople do not know how to handle PRICE.
Salespeople know that regardless of the market – boom or down-turning – sellers almost always expect more for their properties than they are worth. Honest agents who give honest price appraisals risk sellers’ displeasure and risk losing listings. So, the weaker and/or less ethical adopt the attitude, “If you can’t beat them, join them”, and quote high because “that’s the way it’s done”.
But now they paint themselves into a corner. They have begun the relationship on a foundation of dishonesty. By allowing sellers to believe that their unrealistic expectations are achievable, salespeople now must use techniques to persuade sellers to retreat from their high prices. Enter buyers.
Salespeople lure buyers with low price ranges – “Offers above $x” – their argument being that they will get buyers to their open inspections and, once they get offers, they “can negotiate the offers upwards”.
The fault with this thinking is that if you quote low you will get low offers. And when you negotiate from a low base, you will always get a lower price than you’d get had you started high. Any negotiation expert will tell you that.
Agents then present these low offers to sellers saying things such as, “Market feedback is lower than we expected”. It used to be called ‘Conditioning’. Now it’s called ‘Educating’. The technique is the same – deliver good news during the listing and bad news during the marketing campaign, with the hope of getting sellers to reduce.
How often have we seen buyers who have been given low price estimates pay for pest and building reports and then attend the auction, but never get an opportunity to bid because the price has galloped beyond the lower price estimate given to them by an agent?
These are disgraceful practices and agents who indulge in them should be struck off for life, not merely fined.
Foundation of Honesty
The smarter approach is to lay client relationships on a foundation of honesty. Tell sellers the truth about the likely sale price of their property. I realise that this is easier said than done: it takes skill.
I have often said, “To tell the truth in real estate and still win the business, you had better be an outstanding presenter”. There are techniques that will allow you to handle price honestly, with both buyers and sellers.
Learn these techniques and you will make sales and keep your integrity intact. You will enjoy a successful real estate career.
Don’t let anybody tell you that it cannot be done. Handling price and laying foundations of honesty make for a rewarding and prosperous career, and meaningful client relationships.
Many agents do business this way and you can too.