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Sales Technique Article - Estate Agents: Win more business and higher fees
This is a detailed valuation presentation training article for valuers, listers, senior negotiators and managers who attend properties going on the market. Allow between 1 hour and 1&1/2 hours at the property. You will take with you evidence of properties for sale and sold and examples of your marketing brochures. You should not discuss fees in commissions but in real monetary terms (i.e. not 2%). There are pieces of the presentation missing which you should add according to your company's listing policy. This includes how you advertise and where, your business hours and other USP's specific to your company. The reason the appointment may last over 60 minutes is because the potential client will need to know what it is you do in detail. The old quick look around the house, set a price and go inside 20 minutes is dead and buried.
How often have you been to a valuation or market appraisal and told by the prospective client, "your valuation is too low and your fees are too high"?
Yes? It happens to us all!
But before we look at the reasons why this conversation has occurred or what your competition is doing, lets take a closer look at you.
The Market Appraisal and You
As a lister/senior negotiator or manager your responsibility is to generate instructions, this is probably about 50% to 70% of your day. If you are spending less than 50% of your day generating new business then you are in the fortunate position of having no competition, lots of referred business and clients with no eye on the costs, therefore this article is of no interest to you whatsoever. If on the other hand you are in a highly competitive environment with all the opposites of the above then read on.
Before you visit your next client you need to do some research on properties for sale and actual sold prices in the vicinity. This is not for your benefit but for the prospective client. I recommend 2 websites that I think are indispensable for this - Rightmove and nethouseprices. The first will generate properties recently for sale/under offer, the second will list all house prices achieved in that street. Obviously in rural areas you will need to widen your search but both sites can offer a lot of useful information. You will also be taking brochures of other houses similar to the one you will be selling. If you haven't got any like it then just take a couple of expensive looking brochures to show the client how you put property details together.
The Market Appraisal
Once at the property (and on time) you will introduce yourself in the time honoured way. Next is very important, you do not look around the house but look for a comfortable chair for yourself and the client to sit down and discuss the procedure (ask if you can have a quick chat before looking around the house and where would they like you to sit).
The Quick Chat
This can take between 5 minutes and 20 minutes.
The reason for this quick chat is all about qualifying the client and why you are there. You can open the discussion with, "Am I here to put your house on the market?". If you want, a more open question: "When do you plan to place the house on the market?".
SET THE AGENDA
The response is often "quite soon", "next week maybe", "next month" etc. In most cases the client is not about to give the game away with "today", although even if he/she does the agenda remains the same.
"Thank you for allowing me to visit your home today. I have brought with me some homework to share for you and I to decide on the most likely selling price of your home. I am not going to give you an exact price because whilst we have a good idea on achievable prices we are not mind readers to what the next buyer is thinking. So instead we are going to discuss possible prices, a strategy based on 'what if' and an overall plan of action to have your house sold in the next few weeks. Our objective is to sell the house within a reasonable time, to reasonable buyers at a reasonable price. We do not want to sell the house to unreasonable buyers at an unreasonable price (i.e. too high or too low) as we know the buyer will in most cases behave unreasonably."
At this point you still haven't looked around the house but you are going to discuss prices.
"As you can see from the information I have with me today" (this is the information you generated from the internet prior to your visit and you make two copies, one for you and one for your prospective client), "we can see houses around here seem to be selling at an average of (example price) £350,000!".
At this point you are now looking into the eyes of the potential client for some kind of reaction or remark such as "is that all" or "that much!".
Your response will be,
"Now you must remember that at this point I have not actually looked at your house, therefore this guide is merely that, a guide, not a fixed price and not to be taken too seriously. We will now look around the house and you and I will decide on possible prices based on what we find, keeping in the back of our mind this price of £350,000. But please remember, this is not my house and not my money but yours so we will endeavour to see where this leads us and ultimately what prices you and I think buyers might want to pay for your home. In other words we are going to second guess what the property buying public out there are thinking."
Please remember the vendor has a likely selling price in their mind. This is a good time to ask for their price opinion. How you phrase this is quite simple:
"As an estate agent I see lots of properties from small flats to large houses, I have a reasonable overview on prices but I don't live in this road or in this house, therefore as the owner of the property you may have some ideas of your own to add to the discussion - your input is just as valid as mine".
At this point, do not take your clip board with you, nor your camera, but do take your measuring device. Ask for a guided tour (unless the client is physically unable) and undertake permission to do so. The client will now show you around the home, starting at the top of the house or bedrooms if a flat. You will then look keenly at the view from the window and any interesting features in the room. If it's a small room (box room), take a measurement to determine whether a single bed can fit in easily with a cupboard or chest of drawers. Your comments will be of the following type, "I like the view from this window", "that en-suite to master bedroom is very nice/spacious" etc. With the small room you will either say "excellent, yes a bed can fit in very easily" or not if that is the case. With each remark you are looking for acknowledgement from the client to agree with you. You are also asking about any special features you may have come across and what the owner thinks of them, again you are looking to agree and acknowledge their comments back. At the end of the tour (including garden, garage etc.) you are now heading back to where you first sat down; again ask permission to have a sit down chat.
The Presentation (allow between 15 and 30 minutes)
At this point you have a pretty good overview of the property; you will have discussed its merits, strengths and weaknesses whilst on the guided tour, so now to price.
Gut Instinct on Price
"We have had a good look around the property and there are a few things that I think will help sell the house and a few we should discuss."
Highlight the positive ones first and ask the client to highlight the negatives. With each negative you say, "Yes but not everyone is going to be put off by this", or "I don't know whether people would find it such a big problem, however with careful feedback from each viewing this will soon tell us what they think and whether we can overcome these objections".
"On the price my gut instinct tells me around (example price) £345,000 rather than over £350,000 but either way we still need a plan of action before you put your house on the market."
That plan should be based on 'What If'.
"There are three prices we need to talk about. One should be the initial asking price, the second a price drop and the third and final price drop."
The top price and the bottom price should be no greater than £5,000 (please note: properties for sale over a million should be £10,000).
"The question we should be asking is WHAT IF? What if no one comes to see your house? What if we generate low offers and what if we get more than one buyer?"
At this point you can expect comments from the client like: "Don't you have people on your books looking for houses like this already?"
"The reason we have to ask what if before you go to market is because whilst it is quite true we have people registered looking for similar houses, we still can't make you an absolute guarantee they will buy, nor at a reasonable price. Therefore we should ask these questions now, have a strategy in place and therefore you and I are backing each other up when talking to prospective buyers. What we can't have is no plan of action before going to market, no actual prospect of getting you moved in a reasonable period and essentially wasting your time and mine because we ignored all the possibilities."
So lets start with "What if no one comes to see my house?"
"Generally people buy according to location and price, so the first question is, what is the location like, sought after or not? If sought after and if we are generating enquiries (albeit no viewings) and the house has been on the market less than 10 days then we would advise you to hold your price. If after 4 weeks I would be asking other questions like - is it being marketed enough? What feedback are we getting from prospective buyers about why they won't look at the house?"
Then you have: "What if I get low offers?". Tell the client they are not obliged to take the offer.
When placing a house on the market, the vendor must have a sales strategy in place before going to market. As an estate agent you need this strategy in place at the valuation. The strategy is based on WHAT IF.
Therefore the top price and bottom price are agreed by the estate agent and client at the valuation. "What if no one comes to look at my house? Then after 4 weeks a price drop should be considered, what if I get a low offer? Then a price drop must be considered. BUT HOW MUCH? The top and bottom price is no more than £5,000 with a middle price of £2,500."
This will give you three prices. The vendor must know this too as he/she will often be present on the viewing and may be asked the best price. The answer given is always BID PRICE also known as the asking price. "Is this negotiable?". "Ask the estate agent, that's their job" is the answer.
As an estate agent, always look for agreement from the vendor when discussing these issues, ask the vendor for their input to price too. How you phrase this is very simple: "You live here in this house and in this street. You know far better than I or anyone else who might buy your home and for how much. Your input to price is just as important as my suggested prices".
How much do you charge?
The estate agent is in control. The vendor is buying into your sales pitch, do you go high or do you go low? You go high and you talk in real money not percentages. "As an estate agent I will sell your house for £345,000 and will charge you £7,000 plus VAT". The owner will have an answer: "But I can get this service for 1.5% from another agent!" Quick calculation - 1.5% of £345,000 is £4,750 roughly. At this point the vendor may feel he has you on fees, you must smile and say this: "I understand your position, may we discuss what we do for your £7,000?" Please note: "WHAT WE DO FOR YOUR MONEY" because it's the vendor's money and you haven't earned it yet.
Viewings: The estate agent will accompany the viewings. Why? "Because we are sales people and will be looking to close the sale on the viewing or generate feedback to find out why the house isn't selling." Please point out to the vendor that in some cases you will have viewing requests at very short notice where it is likely the agent cannot accompany. The vendor is not obliged to accept the viewing if he/she feels uncomfortable with this and further more the agent will never insist because the vendor is the boss and we the agent work for them.
Feedback: We are looking for feedback from viewings. From this feedback this will tell us if we are pitching the price too high, is there a pattern to the feedback i.e. no one wants to offer because the garden is too small.
CLOSING THE SALE
Finally we are now getting to the nitty gritty part.
THE ASSUMED CLOSE
You have now spent around 30 minutes discussing the property with the vendor - it's good points, potential pitfalls, what you will do if instructed to sell the property. This article has missed out on advertising and marketing as your business will be different to the next but you will also discuss how you intend to market the property when discussing fees. As you will probably work on a no sale-no fee basis, you will discuss this too when taking about your fees. So now we will try the assumed close: "To put your property on the market we will need to see your passport or driving license and a utility bill, have you got them with you? Or I will need to take some internal shots of your living room, kitchen and bathroom but I noticed your loo seat is in the upright position (or there is a kitchen towel covering the cooker)." Which ever version of this you ask you are looking for the vendor to stand up and get the passport or move the towel. Now get your contract out ready for signing when the vendor returns. Do not then ask for the business the vendor has just been assumed closed.
ASKING FOR IT
Ok, we have discussed a fair amount today, is there anything I've missed out? No? Well are we ready to go on the market?
Here are a few typical objections:
I can't sign the contract because my husband isn't here.
You answer this simply:
"Can we get your husband on the phone?"
OVERCOMING PRICE OBJECTIONS
For the purpose of these training notes we will assume the valuer suggested £335,000.
I think the price is too low!
"The price set is decided by you the owner of the house, not me the estate agent I can guide you according to market conditions but I can't give you an exact price because it doesn't matter what I or you think the house is worth, it's decided by how much someone is willing to pay. Tell me what price would work for you."
We will assume the vendor wants £10,000 more than you had suggested.
"This is not a problem, but is that your top price or your bottom price? Do you need to walk away with this figure once sold or do you expect to negotiate the price?"
Vendor expects to negotiate £5,000 as an example. Go back to the 3 prices.
"So if we start at £345,000 as your top price then your bottom price should be £340,000".
Look for agreement.
"So based on 'What If' our middle price is £342,500."
Look for agreement again. Remind the customer about negotiating on "bid price".
"We only suggest the asking price to the buyer, we will never suggest a lower bid price so on that basis do you feel £345,000 is reasonable or would £342,500 be more reasonable?"
Look for vendor decision on this.
"OK so you think £342,500 is more reasonable. Shall we try that as our first price, £340,000 as our second price and £337,500 as our third price?"
Client decision is either "yes that seems fine" or "no still too low". If too low then say
"In that case we need to start at £345,000 as top and £340,000 as our lowest price".
Client agrees. "Right let's do that then".
OVERCOMING FEE OBJECTIONS
This is the oldest and most common objection. Before you respond to this objection I want you to think about the vendor for a moment and ask yourself a very simple question. Can I work with this person? The reason you are asking this question (in your mind, not verbally) is because you now have an issue of trust, reliability and compatibility. So now you can ask those three questions to the vendor:
Do you trust me and my company to look after your best interests?
I promise you will get some very revealing answers.
If the vendor does not trust you or thinks your services are not reliable, then you must ask what made the vendor think that. This could be from a previous experience, word of mouth from someone you dealt with recently or something you may have said in your presentation. Analyse with the vendor how you can resolve the issue and re-close again.
If the client feels your business is not compatible with their type of home then look for examples of houses you have sold that are similar.
If the client has no reasons to object other than fee then ask them how much they expect to pay. If the answer is 1% of the selling price then you simply need to reverse the proposition:
"Would you sell this house for £3,500 on a no sale-no fee basis to include:
and still have enough money left over to pay the selling negotiator a reasonable commission to keep him/her motivated to sell your house?"
You can even say:
"My company will not allow me to take on your house at this fee level and even if they did they would not pay me any money for selling it so either way I have no reason to do business with you. I know there are agents out there that will do it for less than I charge. But what can they do with this fee level? Put a for sale board up! Stick a picture in the window and that's about it. They are not asking enough on fees to have any money left over to pay for real advertising and marketing. Therefore rather than generating lots of interest they only get you one or two viewings. Rather than having a few interested buyers they only get you one. If that one buyer offers you £330,000 you will feel obliged to take it because no one else took any interest in your home."
"A low fee is a false economy. If you had a product to go to market and went to a marketing agency, their job is to generate as much interest as possible in your product. More interest equals more sales and better profits. If that marketing agency didn't spend any money on marketing, your product would fail. Estate Agents are like marketing agents except we just deal in property. The principle is the same, spend more to get more."
"So how much do you think we should be asking to do what we need to do to sell your home at a reasonable price in a reasonable time scale - it's going to be more than 1%."
Now re-close at an equivalent to 1.8% but in real money which is about £6,500. The vendor at this point may suggest to you £5,000. Keep going and settle for halfway at £5,750. If the vendor still refuses to budge then you just say to the vendor politely but firmly,
"I can't help you, there isn't any money in it for me or my company. If you change your mind I will happily help you to sell your home, but not at £3,500."
Stand up, close your folder, offer your hand and make for the door. You haven't lost the business but given it to another agent who will work for nothing, and that isn't you.
Do you have an article that delivers a message to the sales professionals working in today's market? If so, contact us with your article and we will include your name and your company website/trading name.