A typical property sale scenario
A FOR SALE signboard with a photo of a smiling listing agent / salesperson: interested buyers who come to inspect are quizzed as to their occupation, asked what they think the property is worth, and also asked “Are you looking to buy now?” Offers are invited, even offers well below the ‘price range’ may be written up for presentation to the vendor(s). Elementary ‘price negotiations’ are conducted, subtle or forceful pressure applied to the vendor(s) for an offer to be accepted ( “Think about this offer carefully, it may be the best you receive, the market could go backwards … “); the agent / salesperson is anxious to ‘close’ the deal and earn a huge commission calculated as a percentage of the sale price.
The stark reality of this scenario
The broad smile of the agent / salesperson on the signboard is understandable; apart from trying to convey an impression: “I’m a friendly person to deal with” – she / he is eagerly anticipating a sale commission equivalent to an ordinary worker’s ANNUAL SALARY, or half a yearly salary, and at the same time trying to entice other prospective property sellers to list their properties with him / her so another ‘mega’ commission can be earned. However, the way the real estate industry goes about listing and offering property for sale, involving ‘price negotiations’ aimed at ‘brokering the sale’, is highly flawed from a vendor’s perspective.
The industry’s approach does not guarantee maximum possible sale price.
The traditional approach is markedly in favour of buyers and the listing agents / salespersons; the loser is invariably the vendor who is not only SHORTSOLD, but also hit by a ‘double-whammy’ by being required to pay a ‘success fee’ – a very high commission calculated as a percentage of the property’s sale price. There is a much smarter way of selling property involving input from the most highly qualified professional personnel whose fees are calculated on a time basis; collectively, their fees (+GST) amount to only a small fraction of a sale commission calculated as a percentage of a property’s sale price plus GST. The superior sale method is the Buyer’s Highest Offer.
Real estate consumer conditioning / brainwashing
Helped by huge adverting budgets funded largely by property sellers, the real estate industry has conditioned (conned?) all sectors of the community – including the business community – into believing that only estate agents and their sales ‘consultants’ / sales representatives can “sell property professionally” and “get you the best deal”.
This is not so because such claims are untrue.
Highly qualified property professionals can facilitate any property sale much more effectively and for far lower cost than estate agents and their sales ‘consultants’ / sales representatives. The result for vendors for all types of property – from a $400,000 town house, to a $10 million mansion, a $50 million rural property, a $250 million shopping centre, a $500 million holiday hotel resort, to a $1 billion CBD office tower – is far superior to the real estate industry’s approach: GUARANTEED maximum sale price, NO sale commission (and therefore no 10% GST surcharge on a commission), NO ‘wheeling and dealing’ / haggling over sale price, NO stress or frustration on the part of the vendor. The Buyer’s Highest Offer electronic Document available for immediate download details every real estate reality which property vendors face constantly. The Buyer’s Highest Offer method of selling property eliminates / overcomes every single problem vendors invariably encounter when they list their valuable property for sale with an agent or salesperson.
SALE COMMISSION INSANITY
Real estate commissions in the order of $10,000, $15,000, $20,000, $30,000, $50,000, $60,000, $80,000, $100,000 (PLUS 10% GST) for residential homes are quite common – and may be for just 10 or 20 hours ‘work’ on the part of the agent / salesperson. For high priced rural, industrial,commercial, hotel & leisure property, the sale commissions charged are in the order of $150,000, $200,000, $300,000, $500,000, $1 million, $2.5 million, $5 million or higher, PLUS 10% GST.
The Buyer’s Highest Offer sale method does not require vendors to pay any sale commission because the professional personnel who facilitate the sale of the property for guaranteed maximum price are paid a fee based on a fair hourly rate, NOT as a percentage of the property’s sale price.
The injustice of property sale commissions
The most highly qualified professionals who perform valuable services for the public are specialist doctors who have spent 12 years or longer gaining their professional qualifications and undergoing advanced clinical training: physicians, surgeons, obstetricians, oncologists, paediatricians, anaesthetists, dermatologists, radiologists, pathologists. They do not charge single fees in the order of $30,000, $50,000, $60,000, $75,000, $100,000, $250,000, $500,000 for their highly skilled medical services, YET estate agents and their salespersons, some of whom may have undertaken a real estate training course of JUST A FEW WEEKS before being granted their real estate sales certificate, charge vendors single sale commissions in the order of $30,000 to $5 million and higher (PLUS 10% GST).
The purported ‘special skills’ of estate agents and sales representatives are ‘price negotiations’ and ‘brokering deals’. Such ‘skills’ are on par with ‘price haggling’ / bartering’ common at flea markets / bazaars, thereby putting real estate ‘mega’ commissions into proper perspective: irrational, unjustifiable, absurd; property vendors looking to maximize investment capital should not hand over such huge amounts of money for an elementary and flawed service.
The ‘spin’ attached to a SOLD sticker attached to a FOR SALE signboard
The agent or salesperson or ‘dealmaker’ who has ‘brokered’ the sale / ‘closed the deal’ would like everyone who has taken an interest in the property (including the ‘underbidders’) to believe it was his / her exceptional selling ability / real estate skills that were responsible for the sale, and without his/her input / participation, the property would not have sold but languished on the market for weeks or even months beyond the sale date.
Nothing could be further from the truth as to why any property sells
It has absolutely NOTHING to do with what any agent or salesperson says or does. The property would have sold had the Buyer’s Highest Offer sales method been used, but for a significantly higher price, for ZERO COMMISSION, and most likely within a shorter time frame.
The futility of an UNDER OFFER sticker attached to a FOR SALE signboard
The real estate industry’s practice of taking a property off the market while a buyer seeks mortgage finance disadvantages the vendor because his/her property could be off the market for up to 6 weeks. Then if the sale falls through, the vendor needs to start again to secure another buyer. The Buyer’s Highest Offer sales method does not suffer from this huge drawback and therefore does not disadvantage the vendor.
The majority of properties sold through auction, ‘price negotiation’, or other methods favoured by estate agencies are SHORTSOLD by HUGE amounts –
by $10,000, $20,000, $30,000, $40,000, $50,000, $100,000, $250,000, $500,000, $1 million, $2.5 million, $5 million, $10 million, or more. This is because vendors give their consent for listing agents or salespersons to ‘broker’ deals on their terms and out of earshot of the vendors. Such terms run counter to the vendor’s interests. Missed opportunities for vendors to achieve from $10,000 to $10 million more for their valuable properties have been substantiated by investigating specific property sales across Australia over the past 30 years ( details in the BHO Document ).
The Buyer’s Highest Offer sales method guarantees maximum sale price for every type of property and has two important added advantages for vendors: NO SALE COMMISSION (and therefore no added 10% GST), and it allows the vendor to Beat the Tax Man legally by avoiding the property wealth levy / indirect wealth tax.
The fact that Buyer’s Agents help their buyer clients acquire property for prices below their limits at auction or through ‘price negotiations’ should ALERT all property vendors to use a sale method that excludes Buyer’s Agents and thereby prevents them from driving down the sale price; the Buyer’s Highest Offer sales method does this. Self promotion by Buyer’s Agents in community newspapers confirms that their role is counterproductive to vendors, e.g., “Benefits of using a buyer’s agent”: “Buyer’s agents can save you money by ensuring you don’t pay too much; I negotiate on your behalf and give you the upper hand in any sale ……… “
Real estate commissions calculated as percentages of sale prices are analogous to Property WEALTH LEVIES / Property WEALTH TAXES, with the ‘TAX MAN’ receiving a large share every time a property is sold through an estate agency. Every property vendor who chooses the Buyer’s Highest Offer sales method will be able to ‘beat the Tax Man’ legally.
The real estate industry does not send out Tax Invoices for its selling services after conveyancing for a very good reason – most vendors would object, some would refuse to pay the huge commissions calculated as a percentage of the sale price – even those commissions claimed not to be ‘OUTRAGEOUS LIKE OTHER AGENCIES CHARGE’ ( e.g., 1.75% of sale price). Prospective property sellers should draft and print out their own hypothetical Tax Invoice from the template in the Buyer’s Highest Offer Document, then look at reality long and hard before deciding on the best method of selling property.
News report February 2014
A Victorian real estate agent pleads guilty to misusing trust account money totalling $155,000 and receives a 12 month jail term. Since 2013, three other Victorian estate agents have been found guilty of trust account abuses and have been imprisoned; one agent used the trust money for gambling. No estate agent can ever get his / her hands on trust money of vendors who use the Buyer’s Highest Offer sale method.
A recent issue of an online property newsletter carried a report of exaggeration by real estate sales personnel, e.g., home buyers needing to stand on their toes to glimpse a “fabulous water view” or inspected a “spacious apartment” only to discover cat-swinging would be extremely hazardous. A tendency to misrepresent is believed to be responsible for real estate agents being ranked close to used car salesmen on the scale of least trusted vocations.
One can only wonder how much lower the reputations of real estate sales personnel will fall once real estate consumers become aware of the extent to which such persons SHORTSELL / UNDERSELL all types of property. How many, if any, vendors will entrust a ‘price negotiator’ / ‘dealmaker’ to oversee the sale knowing that the real estate industry’s favoured sale methods FAIL to achieve maximum sale price? How many, if any, vendors would be prepared to receive anywhere from $10,000 to $10 million LESS than maximum market price through auction or ‘price negotiation’, knowing the the Buyer’s Highest Offer is the only sale method that does guarantee top price?
In the light of all of the above points, claims by the real estate industry of “Trust us with the sale of your property” / “Top price every time” / “Put your property in the hands of a professional selling agency”, etc, etc, CAN NO LONGER BE EXPECTED to automatically result in a continual flow of new listings. When prospective sellers of all types of property – commercial, residential, rural, hotel & leisure, and special purpose – read the BHO Document, they will become highly skeptical of the industry’s hype and claims.