Issue 68 - The difference between a high price and the highest price. - November 2010

A high price, even one that delights sellers, may not be the highest price. No matter how high a price appears to be, the question remains ‘Is it the highest price?’ If more salespeople asked this question of themselves, more sellers would receive higher prices.

If a seller’s bottom line is $500,000 and the property is listed for $550,000 and then a buyer agrees to pay $520,000; the salesperson and the seller may be delighted. But - and this is a major point – if the buyers would have paid $530,000, then the salesperson hasn’t obtained the highest price and hasn’t really done the job.

If the salesperson sells the property for any less than they could have sold it for then the salesperson has not done the best for the seller. Your salesperson must be a skilled negotiator and have your interests at heart at all times. The best salespeople study sales, study negotiation and know how to obtain the highest price for you. Real Estate is not difficult but it does require thought.

I have said that a skilled negotiator is necessary. A skilled negotiator knows that negotiation begins when the salesperson first meets the potential buyer. Only by talking to the buyer can it be discovered what type of property the buyer is looking for and what they are prepared to pay for a property that most fits their needs. One of the many negatives associated with open homes is that the salesperson never really gets to know the buyers, never really comes to grips with what the buyers could pay for the right property.

Only after discussion, should the buyers be taken to properties that are affordable for them within a comfortable level of debt.  The sellers will never gain the best price from someone who is borrowing their utmost, and yet I have heard it expressed ‘take buyers to properties more expensive than they tell you – if they like it, they will find the money somehow’. Not necessarily true. More likely, the salesperson will take an aggressive stance towards the vendors in order to secure the sale at a figure that is more in the interests of the buyers – and the salesperson.

Many salespeople focus solely on the seller’s bottom line. That, combined with a certain amount of over-quoting to achieve the listing in the first place means that, almost invariably, it is the sellers who tend to have most pressure placed on them to ‘meet the market’. Unfortunately, this may tend to create a situation where the sellers are always wrong with their price – even when they are right.

Because of the tendancy for salespeople to focus on the sellers’ bottom line, we ask our sellers not to tell us their bottom line. We prefer not to know. That way, we can focus on achieving the asking price – at least. While that does not mean that we always achieve that somewhat elusive goal, it does mean that because we focus on the asking price, we are more likely to achieve a better price. Sometimes, we even achieve a price over the asking price.

There is one other aspect to achieving that higher price that we, at Glover’s, always strive for, and that is the element of competition. No offers are conveyed to sellers without everyone on the teams being made aware that someone is trying to buy a particular property. No exceptions. Ever.

Because our salespeople are not commission-based, they accept that this is just the way things are in our company. This is just part of our culture. There is no way that a sale could be snuck through without everyone being aware of it before it happens.  It may well be that the salesperson with the first offer, may not have the best offer for the property and another salesperson may, in fact, sell it. This is accepted as simply being in the best interests of the seller. We are fulfilling our duty to that seller.

Contrast this with the more usual commission-based approach, where it is rare for other salespeople to know about a possible agreement being signed until after the event, when it is too late. This means that in some cases, those other salespeople may well have had a buyer who would have paid more. We became aware of a notable example of this that occurred a few years ago. Sellers were presented with an offer that they signed rather reluctantly only to have another offer made, within hours, for a figure several tens of thousands more, from another salesperson from the same company.  Believe me – we do our utmost to ensure that this does not happen in our offices.

How then, to choose a real estate company that really tries to do its best for buyers and sellers? A good start can be made by looking at recent references for the company or salesperson. See what other customers/clients feel about the company and go from there.

References for Glover Real Estate, for example, may be found by clicking on ‘Selling’ and then on Happy Stories.