Property Point 20 June

When people need something important done, something that really matters, they tend not to simply find out who offers the cheapest quote and go with that option.

If someone owns a classic car, for example, you will never hear them do a ring-around of mechanics or spray painter shops to see who is the cheapest.

A conversation you’ll never hear at a pub: “Hey fellas you know that beautiful 1968 HK GTS Monaro of mine that I’ve had forever, well it needs a paint job and I rang around and found someone who’ll do it for hundreds of dollars less than everyone else. Booked it straight in.”

When a professional sportsman has a knee injury their focus is not on arranging the cheapest surgeon to do the job.

Matildas captain Sam Kerr injured her knee a while back and this was not the conversation at the time.

Matildas football manager: “Sam, we’ve rung around and we’ve found a really cheap orthopedic surgeon in Mt Isa who reckons he can get you in for surgery next week. It’ll be thousands of dollars cheaper than the other options.”

Sam: “Sounds great, book me in.”

That conversation will never happen because the team and the player know there is a price to pay for going with the cheapest option.

It’s not how much you pay, it’s how much it hurts the player and the club to go with someone who is not going to create the best possible result.

It’s the same for the owner of the HK Monaro. The car is too important for the cheapest option and you will probably lose money in the end.

Which is why it’s so odd that, in real estate, you will often get a call along these lines: “Gidday mate, I’m planning to sell my house and I’m just ringing real estate agencies to see who can offer me the best deal. What’s your commission?”

Now I know that the cost is important. Agents get paid well and the cost of commission is absolutely something that a seller needs to factor in. There is no reason for someone to charge over-the-top commission that’s higher than everyone else. That’s a rip-off.

Agents have to justify their commission, produce a result that means the investment in commission is a good one.

The truth is that the person who does a ring-around to find the cheapest agent, usually ends up with the person who has one trick up their sleeve; low commission. A bit like the cheap spray painter and the cheap surgeon. Not very good but cheaper than everyone else.

And the problem is that saving money at the start can cost you in the end. You can save $1000 on commission but lose $30,000 on the sale price because the stupid agent didn’t know how to create competition for your property and negotiate the best price.

Good work by the agent can produce a result that means the difference in commission between that agent and the cheaper one is not only irrelevant but completely justified.

I recently sold a three-bedroom, one bathroom house in Beaconsfield with no pool and no shed for $590,000 after getting 38 groups of buyers at the open house and receiving eight offers on the property.

The sellers were hoping for something in the low $500,000s and comparable sales reflected that expectation.

The thing is that the sellers were not thinking about whether my commission was $1000 higher than someone cheaper, they were thinking about the result.

I know I am not the only agent to get better-than-expected results in this market and I mention this one, not to brag, but to simply illustrate that cheaper isn’t always better.

Well, maybe to brag a bit. Oh, shut up! At least I didn’t start off with it!

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