8 Questions Sellers Have To Ask An Estate Agent Before Signing A Sole Mandate
Category Selling Your Home
Selling or buying a home or an investment property is not the same as making an online purchase of any other movable household item - you simply cannot conclude the transaction online with your credit card and expect "delivery" the next day.
It is possibly the most complicated and emotionally draining transaction a person makes with potentially the biggest impact on their financial well-being. This transaction occurs on average only every 9 years for those South Africans who can afford to be part of the formal property market - meaning that the average seller rarely becomes a property market specialist.
The "human" touch needed by the majority of buyers and sellers means that they rely on a trusted advisor who guides them through the sale or buying process by not only acknowledging their feelings, but also by working with their best interest at heart.
Sellers therefor need to commit to estate agents who can proof a wide range of skills - of which property market knowledge and related technology and human driven marketing services is only a part of the package needed.
Appointing an estate agent to market your property necessitate spending time and effort to establish who is the most knowledgeable, efficient and free (independent) to provide a world-class and empathetic service to yourself. The selection or lack of a selection process (interview) is often the difference between selling your property or not.
In the absence of a reliant referral by a third party (previous client of the estate agent whom the seller knows), the seller need to ask the right questions to get to the bottom of the estate agent's skills set and marketing plan.
An estate agent who cannot differentiate him- or herself from the other estate agents during the interview is often caught in a situation where he or she is either personally or "systemically" limited to navigate you effectively through the whole process. It is very important for the seller to understand not only the range and quality of the support structures of the estate agent's estate agency, but also
- the extend of the freedom allowed by the estate agency with which the estate agent can operate to market your property;
- or the restrictive marketing rules (hidden agendas) of the estate agency which the estate agent is subservient to. This can include a variety of operational rules which the estate agency contractually enforces upon the estate agent of which most have a limiting effect on the marketing efforts your estate agent can employ to give your property the maximum coverage to buyers.
The following questions will cut to the chase very quickly. Does the estate agent:
1. Provides proof of qualifications & experience?
A unique and valid Fidelity Fund Certificate (FFC) is by law a requirement for the estate agent (and his or her estate agency) to practise - check for the current calendar year on the FFC and double-check its validity on the EAAB website (www.eaab.org.za )
2. Provides proof of his or her recent sales record?
The proof is always in the pudding! An estate agent who cannot provide you with proof of any recent successful sales of similar properties by him or her in the area where your property is located, needs to:
- provide very convincing reasons why he or she has not sold in the last month in that specific market;
- commit to a new marketing plan which will be different from the one he or she has been using unsuccessfully of late. The estate agent cannot turn the tide on his or her recent low success rate in selling property - without laying out how the existing marketing tools at her or his disposable will be employed differently with your property and which new tools will be employed for your property.
3. Provides list of references from last 6 sales?
References provide you with the best possible testimonials - i.e. testimonials which can be "questioned".
Ask for (1) contact details of sellers (2) address of property (3) price obtained vis-a-vis original marketing price (4) period or days it was on the market
Not only will they confirm the estate agent's professionalism (or not), but it offers you the chance to confirm the crucial answers to questions 3 & 4 above. Measuring your agent's negotiation skills is very important. The percentage of the asking price (he or she has proposed to you) the estate agent has achieved as a sales price during the last year will be most telling in that regard.
4. Provides proof of area expertise?
- How many competing properties (same price / size / area) are at present in the market and which of the properties offers the best value for money relative to yours and why?
- How many similar properties have sold during the last year in the same suburb - how does your property compares in terms of:
- the price per square meter achieved;the size of the property and erf
- What is the capital growth achieved in your suburb and town during the last year and over the last decade? Is your marketing price in line with the capital growth of your suburb - or is it above or even below?
5. Provides a complete marketing plan?
A printed marketing plan spelling out a detailed roll-out program of the marketing tools which are going to be employed as well as the optimal timeframes for each tool, the cost of each tool and the frequency with which the tools will be used.
The variety of marketing channels is very important and a breakdown of how and from what sources the estate agent's have been sourcing buyers for his previous 3 successful sales transactions will be most telling about whether your property will be receiving coverage in all possible channels or not.
Sellers need to establish whether the marketing plan is set-up in such a way:
- to exclude buyers from other estate agents - to prevent sharing the commission (especially if the estate agents is on a commission split whereby he or she earns less than 70% of gross commission on the sale from his company);
- to sidestep marketing costs by focussing only on the top 2 or 3 effective marketing channels which delivers usually about 60% of all buyer leads (again to avoid spending time and money on marketing channels producing the other +- 40% of the buyer leads).
or whether it is designed to effectively reach the biggest possible potential buyer group.
- make sure their property will be uploaded onto all the biggest property portals in South Africa in terms of traffic ranking and the amount of property listings available on it (1) Property 24 (2) Private Property (3) Gumtree (4) Myproperty (5) Tivvit (6) Immoafrica;
- ensure that the estate agent will employ a comprehensive social media campaign to market the mandated property - not only on Facebook, but also on Twitter, LinkedIn, Instagram and Pinterest;
6. Commits to a structured feedback process during the mandated period?
This is the most effective way to measure the estate agent's professionalism is to contact and verify with the previous owners / sellers of his or her last 2 sole mandates his or her feedback diligence.
Weekly feedback is a non-negotiable and the feedback process should include:
- all leads generated via the property portals;
- all leads generated via the social media channels;
- all leads generated via the buyer pool of other estate agents / agencies working in the same suburb (i.e. both via the agent's colleagues and from other estate agencies);
- all feedback received from potential buyers and other estate agents who has visited the property.
7. Prevent potential buyers from other estate agents access to the mandated property?
Most estate agents work with a few buyers at any given moment - i.e. buyers who are looking for a specific type of property according to their specific needs and preferences. It is therefore very important for the seller to:
- ensure that the "complete databank" of buyers looking at any specific moment for a property similar to that of the seller will be informed about the new listing coming onto the market. That means - not only the mandated estate agent own buyers, but also:
- the buyers of the other member estate agents of the same estate agency;
- as well as estate agents from all other estate agencies working in the suburb.
It is of the utmost importance for the seller that as many as possible qualified buyers will be introduced as soon as possible to the property and will have access to the mandated property (i.e. not be denied access by the mandated estate agent who are trying to prevent a split of the commission).
- In the event of the mandated agent asking for an "exclusive period" to source his or her own buyers, sellers should never allow this period to exceed a month and should in fact insist on the mandated agent sharing the commission with other estate agents on a fair basis - preferably on a 50/50 basis.
- The majority of estate agents of the bigger franchises in South Africa work for only 50% to 70% of the total commission. The lower this percentage split is, the less the estate agent will earn when he or she shares commission and the less inclined they will be to open the mandated property to outside estate agents. The more the mandated is "kept away" from all the other estate agents specializing in the suburb, the less potential buyers will be introduced to the property - this can be a crucial mistake during a buyer's market when there are much more property on the market than buyers looking to buy.
8. Employ the latest technology in marketing the property?
Showcasing a property with a mix of:
- A 3D virtual reality tour (which includes a 3D dollhouse model) allowing potential buyers in different parts of the world to virtually walks through the house. CCH has literally sold homes to buyers who has only "virtually walked" through the property - as they has already seen the property from any possible angle (both inside and outside). The 3D completely immerses visitors so they can create an emotional connection - allowing even for dynamic and informative experiences by embedding text descriptions, video, audio and photos into the 3D space.
- Aerial pictures (where possible) to give an area location perspective;
- 360 degrees panorama photos of especially open areas around the property and its views (to be especially employed on social media marketing).
Author: Benhard Wiese