| Zeroman 2006-09-01, 9:25 am |
| Or survival of the most dishonest
Real Estate agents are regarded poorly by the general public. To be
fair, there are many conditions that impact on a real estate agent.
These impacts can either spit them straight out of the industry or have
them evolve into sharks. In many cases it becomes survival of the most
dishonest.
Now before all the trustworthy hard working real estate agents groan
and moan, about another person giving their industry a hard time,
please read on. I believe it is the system in many cases that is
broken, and it is that system which shapes many a real estate agent
into that predatory shark.
Firstly, becoming a real estate agent isn't difficult. Most states
within Australia have a real estate institute where you can complete a
course in under a week.
(I completed my course by distance learning in one night and I am no
mental giant. The before mentioned groaning agents are really agreeing
with me now!)
In the US you can complete a course online and be accredited. All it
costs is $99 US.
We are talking a very easy entry point to become a real estate agent.
Now that you are a real estate agent - with your suitable
qualifications, you expect people to trust you with their single most
expensive asset, typically their home! Sounds a little bit out of whack
right from the start doesn't it?
Now from an external point of view, real estate looks like a pot of
gold.
Commission rates of between 2.5% to 3.0% to sell a house. A property
worth $500,000 represents a commission of approximately $12,500 to
$15,000.
"WOW, I should be able to do one of them each week and earn $650,000
per year. Finally an industry that pays me what I am worth."
And thus the evolutionary cycle begins. You have an easy entry and the
prospect of a huge amount of money. Sounds damn perfect. In fact so
perfect it attracts a huge amount of willing entrants with that simple
view. Most may I say have the full intention of doing real estate far
better than what they have experienced when dealing with real estate
agents themselves. Ahhh the noblest of intentions.
The problem is, it attracts far too many people.
Now we have a vast amount of agents all vying for that property sale.
The industry cannot support all the agents that are working within it.
People rush to enter this industry and there simply is not enough
property sales or money to go around.
Now we have the 2nd most critical issue in the evolutionary cycle from
person with best intentions to shark real estate agent. COMMISSION
ONLY.
Most agents are on commission only. This means they only get paid when
they make a sale.
Any agent competing against a vast number of agents for any one
property sale, if they don't say the right things, they won't get
the job. Which means they don't get paid. It means agents learn to
say what ever it takes to get that property listed for sale and then
whatever it takes to get it sold. It 's the only way they get paid.
It's survival of the most dishonest, because many times, potential
buyers and sellers really don't want to hear the truth.
Yes, I can hear Jack Nicholson bellow out to all buyers and
sellers..."You can't handle the truth"
Typically agents will say the property is worth more to the owners.
This way they will have those owners sign up with them. Because most
owners like to think their property is worth more. It's a simple
human trait called greed. (Michael Douglas just stepped in and added
his line "Greed is Good")
But for the real estate agent it's a simple numbers game. The more
properties they have for sale the better the chances they will make a
sale and therefore get paid.
Guess what comes next? Agents learn that it is far easier to sell
something cheap.
Everyone wants to buy a bargain so the agent pursues a process of
marketing the property with such clich=E9s as "marriage bust up",
"owner desperate". "bank instructs to sell" and "owner wants
all offers". They are simply aimed at attracting the most buyers with
the lure - BARGAIN BUYING. Now the poor owner at this stage is
horrified at this approach, but the agent convinces them it is the way
to attract the most interest. They should know - they completed a
course within a week!
Conditioning follows, stage 3 in the evolutionary process. The agent
will now try to get the owner to accept less for their property. The
buyers won't offer more - because they are the bargain hunters, so
the agent tells the owner with all sincerity - this is all the market
will offer. Cheap is easy to sell. The faster an agent can convince an
owner to accept less the faster they get paid. This is largely the
whole auction process. Auctions are designed by agents to get paid as
fast as possible.
The sad thing about most of this is that the larger franchise groups
have corporate training which promotes these processes as the best way
to get a result for their clients. Many an agent is brainwashed with
corporate training that simply focuses on evolution of the shark.
Now whilst all these activities are occurring, we have the 4th issue in
the evolutionary process. VALUE FOR MONEY.
Buyers and sellers assess the agents' activities. Most buyers and
sellers will have at least one unhappy experience with a real estate
agent to describe. Yet they both know the agent is paid handsomely.
The owner has the added grief of being very aware, that they pay for
the advertising, the sign, the internet, the brochure, which will
attract the buyer that they then have to pay for again. Yes, that is
exactly what occurs. Sounds quite stupid when you say it like that! The
agent may throw it around they can organise a better sign or get a
cheaper ad etc, but usually the owner is required to pay. They have
training for this process as well. It's called Vendor Paid
Advertising.
Lets not even talk about agents suggesting they have better negotiation
skills. They do, it has been finely honed by corporate training to get
the owner to accept less and pay for all the advertising.
So, with all these processes in mind, the general public are very
dubious about the honesty and integrity of any agent they deal with.
The agents counter this with expressions such as "Buyers are Liars"
and "Vendors are Benders".
And the evolution is finished. You have a shark or you have someone
leaving the industry. Survival of the most dishonest, well it would
make for a funny reality tv show.
Da dum, Da Dum, Da Dum, I think I hear the agents circling my home
right now.
Michael Eroz
Property Analyst
http://www.zeroagents.com.au
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