We have all had an experience (or several) where we have realised that cheap goods or service cost you more in the long, and sometimes very short, run. Be it a cheap t.v. or whitegoods that fail just after warranty expires; or maybe it was that accountant that gave you a $99 tax return that saved you $50 to $100 in initial fees but you in actual fact have missed a lower tax bill by $500 to $1,000; or maybe it was that real estate agent that promised to sell your house for a lower fee, but then another property in your street gets sold a month or two later by a different agent, and it wasn’t as nice and big as your one but they got $20,000+ more.
And the reason why this happens in real estate lies in the motivation of the agent; do they just want your business and money or do they genuinely want the best result for you. Anyone who provides the same service to two clients yet gets paid less for one will logically provide a lower quality service and therefore result to the one paying less and they won’t be willing to go the extra mile to get you the best price possible. They will be looking at you like a number, another one in and out of the system as soon as the agent gets the price that will get them their commission, not what is the best price that I can get for the client.
You may have already experienced this if you have sold before, or if you have an investment that is managed by the cheapest agent you would have likely found that rent reviews were not regularly conducted, or that the repair to leaking roof cost a few hundred dollars more than what it should. According to the REIV, the current (June Quarter 2017) Melbourne median house price is $822,000 and the median rental is $420 per week. A real estate agent that would sell your house for half a percent more would equate to $4,110 in higher fees, one $10,000 bid at auction would cover this and then some; or a property manager that is a percent more in management fee would equate to $219 in higher fees, miss one $10 per week rent increase and it would cover the agents higher fee for two years approx.! And when you factor in potential tax benefits, the reasons for using the better agent are even greater.
But be weary of some premium agents too, sometimes they may just be “mutton dressed as lamb”. So next time you look at an agent solely based on fee, think about how much they might be costing you in the long run. Avoid the temptation of the “quick fix” of getting the cheapest fee, focus on using an agent that has passion, wants the best result for you, is or has created a brand and legacy, has history of great results and not just a great number of sales.
If you need any advice regarding the sale or management of your asset please do not hesitate to contact us.