Quick property sales can lead to commission problems

This may come as a surprise to many people in some way involved in the residential property sector, but selling a home fast can lead to problems for the agent.

Discussing this recently Anton du Plessis, CEO of Vineyard Estates, said that most good agents have had cases where they sold a home within a few days of getting the mandate - even, in some instances, within a few hours.

"In these cases, one would expect the client to be wholeheartedly grateful to have been spared the worry and pain of a long drawn out sale campaign. However, experience shows that in some instances the opposite will occur: the client will feel that so quick a sale proves that little effort was required and there was minimal difficulty in selling the home - and that the agent should, therefore, reduce his commission.

"In other cases, the quick sale is taken as proof that the home was underpriced, although in today's market that is very unlikely."

These attitudes, said du Plessis, are based on misunderstandings of the property marketing world: the seller feels that because the agent has not expended much time or budget on the property, he should reduce commission. What the client fails to appreciate is that the corollary does not apply: the agent is not entitled to increase the agreed upon commission should the property take much longer than expected to sell.

"What some clients fail to recognise," he added, "is that the quick sale will often have come about because over a long period of time - possibly years - the agent has built up a rapport and trust with certain clients - and has grown to understand exactly what he is looking for. When the new property is listed he will recognise at once that it is ideal for his client. The buyer may have been picked up as a result of expensive and protracted marketing of other properties all undertaken at the agent's expense.

Sellers reluctant to pay a full commission should, he says, take into account that on other homes substantial sums will have been spent on advertising and much time expended on introducing them to the clients - without achieving a sale.

"Obviously if all sales were fast, commissions could come down. The reality is that most take time and effort for which there may be no recompense. An agent can spend a substantial amount marketing a home - sometimes years, and receive no compensation whatsoever when another agent sells the property.

"Another factor to be taken into account is that the agent's reputation built up over the years will make him capable of getting a sale where others might fail. If the agent is known to be truly reputable and honest, he has only to recommend a property to get the client to buy it."

Commissions, once agreed on, said du Plessis, are not negotiable. However, a smart agent will occasionally reduce commission where necessary to close a deal and assist where there is a genuine impasse between buyer and seller.

Clients may also not recognise that the style, wording and size of the agent's advertisement may be just that much more persuasive and effective than others.

"The expertise involved in drawing up compelling advertisements," said du Plessis, "is not that readily available and deserves reward."

Posted at 09:33AM Sep 09, 2010 by Editor in Residential  |  Comments[3]