Real Estate Market Wrap 🗞️ Shifty Commissions & Incentive Schemes

⚠️ Vendors: Use THIS Incentive Scheme to find out how much your house will truly sell for

05:18 – Today has been my most successful auction day in years. Clearance Rate: 11/11 

Buyers all met the reserves – no adjustments

One property SOLD for $700k over reserve 

FOMO was in the market today. But one hot day doesn’t make it Summer

07:31 – The Zero Commission Listing

I'm heading to speak at a few conferences in Europe. See you in a few weeks!

Transcript

Strategic Commission Schemes

Speaker 1 0:00

Real estate commissions . I want to touch on this . The vendor asked me what would I do as a commission scheme if I was selling my house . And let me tell you what I would do . What I would do is I would actually say to an agent when they came over what do you reckon you'll get for me ? Let's assume they said we'll get you 1 million .

Speaker 1 0:26

I know real estate agents are often optimistic when they're trying to secure your business . So you know what I would say to them you reckon you can get a million , million . And I'm going to , hey , mark Mark , congratulate you . I want to . You know , I just finished an auction with you and I'm going to congratulate this guy . I've worked with him for a long time and I just had a look on realestatecom . He's done 291 sales . Now I've got to tell you that's an extraordinary effort . That's an extraordinary effort by any real estate person in this country . So what would I do ? I would go 1% up to a million and then what I would do is I'd say over a million , give me a bonus , give me 10% over a million . I would say I'll give the agent 10% , and then what I would look at is look at the reaction . Look at the reaction of the agent , because if the agent is confident that they can get the $1 million or thereabouts , they'll say I'll take that , but if they're not , they're going to want to muck around with your 1% . That's what I would do . I would use a bonus scheme and if you are using a bonus scheme , you make sure the bonus scheme is agreed to at the time you sign up the listing . Because I can tell you , right around Australia I've heard of instances where real estate agents on the day of the auction set up a bonus scheme right . But you need to understand that's not right , because usually the agent has had four or five weeks using a term called vendor management or some agents call it conditioning , which is a disgraceful word for it , and what they do is they , you know , erode the vendors expectations down and then , in a vulnerable scenario , on the morning of the auction , they'll put in a bonus scheme having the lower reserve , whereas if you set it at the time of the listing you can say , no , we agreed at 1 million .

Why Cheap Agents Cost You More

Speaker 1 3:00

That's what I would do with a fee .

Speaker 1 3:03

Right Now , with real estate commissions , I have to say , if you're a vendor that's watching this , be very concerned about a real estate agent that drops their commission in a negotiation with you when they're at the house trying to secure the business . And I'll tell you why . You see , the first sign is that if a real estate agent is prepared to cave in on their fee , they're going to be caving in to the buyer that negotiates , because it means that that agent is not a 10 out of 10 negotiator . That's the first thing I'd be really concerned about . I'd be concerned about the fact that the agent might have dropped their commission by that . The agent might have dropped their commission by let's assume , the normal fee is 2% and they're prepared to do it at 1.5 , they're dropping it by half a percent . That is , in fact , they're dropping their fee by 25% of the total fee .

Speaker 1 4:08

Now I want you to visualize . This is the same person that's got to go out there and negotiate with the buyers and try and get buyers up . And I've got to tell you my experience is that some buyers are significantly better negotiators , significantly better negotiators than actually the agents . So you need to hire a good negotiator and a really big sign is the way that they manage their fee at the time that you secure the business . So the cheapest agent and the best agent is generally not the same agent and I've seen a lot of vendors lose tens of thousands of dollars at the time of sale because they tried to save half percent when they signed up the listing . Beware of it . The good news is , often people are negotiating and worried about the fee . Like , realistically , you're only going to be paying a fee when you're happy with the price that you get at the time of sale .

Speaker 1 5:19

This has

Record Auction Success Day

Speaker 1 5:20

been my most successful auction day in years . I'm letting you know today is 11 out of 11 , but that is not the main thing . The main thing is it was 11 out of 11 , with the vendors not having to adjust their numbers down . The buyers met the reserves I was given . In fact , there was one property that ended up selling , I think , around $700,000 more than expected , more than the reserve . I think . That was in the eastern suburbs , randwick , and I said it last week .

Speaker 1 6:11

We're in a patchy market because last week I think I did less than 50% and there are weeks where I've sold one or two out of 10 . And today it was this . Please don't jump into any conclusions 11 out of 11 is this week's result . Next week's result might be less Well , next week's result will be zero , because I'm actually not here . I'm going overseas , to the UK to speak at conferences and whilst I'm there , I'm going to get a bit of European sun in some other countries , including Greece .

Speaker 1 6:53

So I need you all to know one thing , and that is that today I hadn't seen it in ages . There was fear of missing out . There was fear of missing out . Now I'm not quite sure whether people are thinking to themselves that , as we come into spring over the next couple of months , whether there's going to be a lot of buyers out there and what people are doing is securing their real estate future by going in before them in winter . I don't know whether that's it . Having said that , I did have great properties .

Fear of Missing Out Returns

Speaker 1 7:40

I don't know whether that's it . Having said that I did have great properties , now I want to let you know .

Speaker 1 7:43

I've just been told by a vendor that they that they did it at zero commission . Get ready for this . The agent said I don't have any listings at the moment . I need to stay active . If you're prepared to invest in the marketing which they were , I'm happy to do it at no commission . The vendor said to me have you ever heard of a better deal than that . This vendor asked me what I think about the agent charging no commission and I said well , look , this agent obviously has got no properties . He's doing it for free with a view of meeting people coming to open for inspections . He's doing it getting some marketing on realestatecom and domain and he's essentially doing it with the view that , listen , if you've got buyers , you can work with them . You'll sell that , you might pick up another listing .

Speaker 1 8:41

I don't like real estate agents that do that , and the reason why is that I believe the agent doing it for free and I've done it before . I've done things for free and sometimes

The Zero Commission Agent Problem

Speaker 1 9:00

I think you don't go 120% . I think you don't go 120% when you do something for free , I think you go 100% right , but , team , I wouldn't do it . Anyway , team , you can tell I'm losing my voice . I'm pretty excited . I'm off to the UK for an overseas tour and then I'm going to get a bit of sun . See you in a couple of weeks .