There's one constant in almost two any industry and any market: change. With such profound changes in the way that buyers and sellers go about the selling process now, it's caused the private sale method to roll around again. It seemed like a good opportunity to grill One Residential's owner, Michael Forzatti, on some curlier questions.
Each revolves around a similar thought: "Are agents still relevant today”. We hardly expected the answer would be 'no', but it didn't stop us asking a few questions and unearthing some interesting responses along the way.
6157: What can an agent do that a seller can't?
Well, the traditional answer is quite well known and, fundamentally, nothing has changed. As an agent, I am the only non-emotive member of the triangle formed by the buyer, the seller and the agent.
The triangle contains an emotionally-invested owner wondering how much they can realise for their property, an emotionally-invested buyer who is wondering how little they can pay for it, and the agent - the bridge between the two of them. The agent represents the seller but, overwhelmingly, wants a result that's optimal for each party. That's what makes a sale.
6157: Nothing much has changed then, right?
Well, what I have noticed in recent years, is the degree to which many buyers are highly educated in the area of property contracts of sale. Some are well versed in the legal conditions of sale and use conditions to their advantage in a way that, unchecked, can penalise the seller.
Buyers can take unfair advantage over a seller if they come into the negotiation with a head full of legal knowledge about what's possible - particularly if the seller on the other side of the table is not so well equipped.
An experienced agent can prevent the seller being unwittingly disadvantaged. It allows the agent to stand up for the seller in a market where the purchaser often believes they carry all the cards.
6157: What about right now?
In the current market, buyers want (and feel they can demand) their pound of flesh. They're not satisfied with a low price; they want all the fruit that goes with it. All the one-percenters that, in a strong market, you don't get the opportunity to demand.
The current attitude for many buyers is that 'they own the market' and with some less experienced agent, that attitude is enabled and facilitated! It merely reinforces the perceptions.
6157: Surely the agent plays a role in that perception?
I think there's a representation problem there that needs to be corrected. A strong agent in this market is still capable of taking a deep breath and saying 'no, that's not acceptable for this contract'.
Things like conditions, the way a contract is negotiated, stalling tactics, trying to withdraw offers - all these are cheap tactics that buyers might try on in this market.
The genuinely successful agent in this market is not desperate. They continue to represent their owners. They take a deep breath, stay resolute and negotiate the best contract in the current market. That's how an agent proves their worth to their owner.
In a market like this, this demands hard work. Good contracts, good results? They're time-consuming. The good agent doesn't walk away from that work because they're patient. They know when to work swiftly and when to give space.
There's no doubt there's some 'emotional massaging' required on both sides of a transaction, and the agent is the only one capable of fulfilling that role when each side has such vested interest in the result.
What can a seller do today that only an agent could have done in the past?
Well, the Internet has changed a whole lot around the areas of property promotion and market research. The quality of information now available to the general public is far more than anything that used to be available to the agent. It's available far quicker as well.
In a bygone era, the agent held most of the information; it enabled the agent to colour the market as they wished. The sheer weight of data available now (usually quantitative, not qualitative) makes for very savvy buyers and sellers. This is a good thing, not a bad thing!
Private sellers can add their home to the various online portals through different services that offer a bare minimum of support from a property promotion point of view.
It's caused some owners in the market who have seen nil or negative growth in the last few years to entertain private sales as a way of limiting the damage. It's seen a bit of a surge in private selling in some areas as people try and cut their losses.
The problem with this continues to be a false economy of saving on fees yet losing to an even greater extent on the negotiated price.
6157: Let's talk private sale - are there any market conditions where it could be beneficial to sell privately?
Honestly, I think there is. In the red hot and overheated sellers' market, I believe that my 12-year old son could literally sit at a home open and hand out contracts. The buyer would fill it in, and the job would be done in 15 minutes. Prices are great; conditions are minimal, and it's a sellers' market. I've only seen those conditions once and twice and fleetingly at that, but they happen!
6157: Would you sell your own property?
I don't sell properties; I only buy them! Good Italian stock - buy, don't sell! So I've never sold any properties I've bought but, hypothetically, I wouldn't sell my own property. I'm too emotionally invested in my own assets, and I'd let that cloud my judgement. I don't think I could handle people being critical of my own home and the styling decisions that our family may have made, without the smoothing filter of an agent to soften the blow. I totally understand that some of that is simply a tactic by the buyer, but after all I've heard over the years about feedback properties I was selling, I'd definitely have an agent representing me.
6157: What do you see out there right now that concerns you?
Buyers right now expect the agent to be the battering ram for the owner. To soften them up and prepare them for something that's often unreasonable as they feel they hold sway in the marketplace.
There seems to be an expectation out there right now that the agent is there to represent the buyer. If the agent is desperate enough for the sale, they can reinforce this expectation, and it's the owner who loses out. When that starts happening, the owner is bullied by the agent that is supposed to be representing them. It's all the wrong way around.
A familiar tale I hear at the moment is the owner whose listing had expired telling me that when they initially listed their home, the feeling of overwhelming positivity was incredible - they felt on cloud nine. A week after the sign went up, though, it seemed like that agent turned on them. My house wasn't good enough, the price needed to come down, the negative feedback just piled up on top of each other.
Why couldn't the agent have been transparent from the start? Well, the answer is simple enough - the agent is scared and desperate for a listing. That's of little consolation to the owner, though.
The best agents in this market are the best in any market - the ones who work tirelessly for their owners and continue to remember that they are the client.
6157: What's your observation of the success rate with private sales in the market?
It depends on the state of the market, but my general observation is a success rate lower than 10%. In the majority of cases, the seller later engages an agent to do the job. Private sales account for around 2% of the sales in the areas that we sell - quite rare around here.
6157: Stick with the yellow signs then?
Yep, stick with the yellow signs.