How can you tell when your property broker is thinking more about you than their commission?
What do you actually want from the sale?
By default, the basic purpose is to convert real estate into money. I present the basic ideas of most property owners concerning what an estate agent should do for them: Get the property on the market; arrange viewings with interested parties; agree with a serious interested party on specific conditions of sale; guide you through the sale of the property and reregistering of utilities. And last but not least, that your money will end up exactly where it belongs! In a nutshell, to make easier work of finding a property and learning what needs to be arranged, and ease negotiations with people, etc. These are the main reasons property owners decide to work with a property broker. Is this your situation? In part or in every aspect? In any case, read on!
But what does the real estate broker want from a sale? The same?
The basic reason every broker does a given job is for reward, whether it's the money or the feeling of a job well done. For the vast majority, let's be honest, it's money so they want to turn their work into financial benefit. For the rest, it's still the money, plus the good feeling (everyone has to pay bills.) And they do this by looking for property owners who want to sell. Then try to find a property buyer as quickly as possible, for as much money as possible. Once they have secured such a buyer, they would prefer to move on, because the subsequent service will no longer earn them money.
So what are your mutual interests?
1) The first really mutual interest for both of you is to make money from the business.
2) Everyone would like to make money as much as possible and as soon as possible, and that is another mutual interest - to get money as soon as possible. Here, however, your interests will start to diverge slightly, as well as in negotiating the price for the property. If you sell an apartment for 3,000,000 CZK and the broker's commission would be 5%, i.e. 150,000 CZK and an interested party comes in and says, "I would like to buy a property for 2,700,000 CZK", the broker sees an opportunity to sell the property right now and not wait, for example, another week or two for a better offer and so he makes the calculation: The owner will get 2,700,000 CZK, I will have 135,000 CZK. Therefore, they will probably try to convince you to accept the discount. Such a discount will cost you 300,000CZK, but them only 15,000 CZK, a relatively large difference in numbers and motivation ... And this is one of the moments which can reveal if the broker was really thinking about you in the first place.
Now you are starting to diverge more in other aspects. Imagine there is really a serious applicant who is ready and willing to pay the full price of our example, i.e. 3,000,000CZK. To do this, they will have to sign a reservation agreement and hand over a reservation deposit. While the broker would like everything to end with the reservation and they can spend his time on the next trade, you want them to exert themselves to the full during the transfer, so that everything goes smoothly and without a hitch and you have as little as possible to worry about with the transfer itself. Isn't this the case? This is another point in proceedings where you can find out that a broker is not acting with the best of intentions. But it's a little late to find out at this stage. It's better to recognise such a broker at the very beginning and not start off with them at all!
As we can see, some interests are the same, but the further down the road as the process continues, the more they diverge and the harder it is to deal with. At any job interview, the employer has a huge amount of requirements, questions, etc. You are hiring a person who has the fate of your life savings in their hands! Shouldn't you check them out a little too? You have every right and you could even say a duty to do so. Far from every real estate agent is a professional who really understands that idea! But almost every one of them is a good salesman, so in initial meetings it is extremely difficult to know who is who…
But what if I tell you that you can recognise such a broker in the first week of cooperation, for example, and quickly reconsider your choice? Or, on the contrary, that you can confirm you have a real professional on your side and so have peace of mind that you can continue onwards in selling the property? Yes, such a system works and it's not that complicated!
Test No. 1.
References. A broker who has a lot of sales behind them and has the interests of their clients to the fore should also have a whole crowd of people giving them positive references. So ask a broker for them! If they have them on their website, mention a name you read during the interview! If they speak in generalities, ask if they can put you in touch with someone specific and if he can put you in touch with someone whose business didn't go so smoothly? Then sit back and observe the reaction of your potential broker. Will they give them to you without further ado and with a smile? That would be a great sign! Will they tell you they have to get them together but will send them to you later? If so, and they really send them in one or two days, that's good too! (After all, it is good practice from their side to ask these people if they can give you their contact). Will they make excuses about GDPR, some other law, or a broken pencil? In that case, they simply do not want to give them to you. What are they afraid of? Well, only that you would learn the truth about his previous deals…Or that they actually had no genuine references and just pretended to be a professional…In any case, it's the first sign you should turn on your heels and head out of their office!
Test No. 2
How do they negotiate the sales price with you? This is important because you need to set it correctly right from the start with a good estimate of the market value of the property. The right price to start is the absolute basis for a successful sale! So what about "your broker"? Do they have a clear idea of how much the price should be? Can they support this with real data - a comparison with others in the local area, previous sales, etc.? Then you should listen to them well. Although they might still claim that your property is worth less than you want for it, this data can show that they are a professional in their field and will avoid agreeing to a discount proposed by the first serious applicant, as in the aforementioned case. He will stand firm on the price and know that if someone offers less, they are just fishing and that in the end everyone knows they will pay the asking price because it corresponds to the market value. If they set the price of the property cleverly to your advantage, it will be to your benefit!
However, if the broker automatically agrees with your proposed price, then something is wrong. It shows they don't know how to set the price at all, and even during the viewings they will be unsure whether to negotiate with potential buyers about them offering more or to negotiate with you about having a discount. Another "Get away quick" signal! A large number of owners get duped at this stage. They get buttered up by the promise this broker will sell your property for, for example, half a million more…and it's a trap! A trap that will only cost you a lot of time and stress. In the end you will often get less than with a properly set up process where right from the start you work with a professional.
Test No. 3
While the previous two points can be revealed at the first meeting, for the next one you need to be involved in some cooperation. But after a short time you can verify the following:
Has your broker spent money on the promotion of your real estate? After the first week, you can see the results of a broker who is acting in your interests and one who may be doing so, but it is not completely clear. First off you should ask: Have they spent money to help the sale of your real estate? Did they bring a professional photographer to your apartment? Did they ask you firmly to clean up beforehand? And did the five photos take almost two hours to shoot and half the apartment was rearranged for them? When you open an advertisement, are you interested in your property among others? Do you learn everything about your property from the description and is it, most importantly, all correct? Then you have stumbled on a broker who wants to sell your property for as much as possible and does not hesitate to invest their own money in promoting it. Here is an example of how such good practice works: The original estimate of the price may be 3,000,000 CZK. The broker helps you enhance the apartment as described above. It is advertised for 3,200,000 CZK. Thanks to that, an interested party arrives on the scene and offers 3,100,000 CZK. This broker has earned you 100,000 CZK. The difference in their commission is 5,000 CZK plus, which doesn't even cover what they invested in advertising. So you are up 100,000, and the broker is only rewarded with a good reference for the future and they still feel it was all worth it! Are you looking for this? Or rather a classic chancer:
The broker will take a picture of your property themselves. They don't even need a tripod, though maybe they at least have an expensive looking camera? Without a wide-angle lens, but whatever. Or do they want to show how amazing the pictures they take on their new iPhone are? Well, why not? When advertised, does your apartment look like a beige option among the others? Hey, it doesn't matter, people will buy everything today! Unlike the previous broker, they promised you a sale price of 3,500,000 CZK, but the advertisement states 3,490,000 CZK plus a commission of 5% + VAT? That's just marketing, and you don't understand it. During the first week only one potential buyer had a viewing and another wanted to come at the weekend, but your broker was away at their countryside cottage, so it wasn't possible? Nevermind, others will come. No? After three weeks, the broker claims that the price is too high and you have to reduce the price? Ideally to 3,200,000 CZK because that's how the prices of similar flats decrease, so it's logical? Well, why not then? But how come crowds of buyers didn't come running while a comparable property, maybe even worse, appeared in the same ad and was gone in a week? Well, logically we will discount it to 3,000,000 CZK because after five weeks they would really like to get rid of it, and advertising is expensive, etc. Well, congratulations, there is a real person interested, who offers 2,900,000 CZK.
After that, you get to the stage where it's probably better you don't get an offer. The apartment has been advertised for a long time, and people have got used to it. They think there must be something really wrong with it when it is so cheap and not sold yet, or those watching closely the whole time know that you are probably desperate when you offer this discount and so make an even lower offer… and you should definitely take it! Hooray, you sold it! And now you want to sort out a notary where the buyer can send the money to be held? So you will have to pay extra, the commission does not cover it. Do you want to transfer the utility company contracts over? Then go and see them and they will arrange it for you…
Does the story seem far-fetched? Please be aware that this latter tale is actually much more common! And not at all exaggerated. This happens on the Czech real estate market today and every day! This is precisely because the owners do not know how to recognise such a broker before it's too late! I'm sure you can see the difference between the two examples and the point where it can be discovered in time.
Test No. 4
How do they deal with potential buyers? Establishing this requires a bit of planning and proactivity from you, otherwise you probably won't find out. Anyone can come across an advertisement, so why not try to ask a friend of yours: "Please call about this advertisement, arrange a viewing with us, and then tell me if the broker had a positive or negative affect on you". Do you have a friend like that? Then use them! There is nothing worse than a broker who acts completely differently with you than they do with potential buyers. And it happens and it happens more often than you would think! Grill your friend after such a viewing. Not only ask about how the broker went about their work, but how they acted, what did they promise, how did they act? Did they try to have something signed unnecessarily? Were they pushy and made your friend feel uncomfortable? But above all, did they promise your friend something you hadn't agreed on? It often happens that the broker promises the interested parties after the viewing: "If you sign the reservation agreement today, I can give you a 100,000 CZK discount on this apartment!" Or you can expect them to call you in the evening and say, "The potential buyers are really interested, but we have to knock 100,000 CZK off the price." Ask yourself, who lost you the 100,000 CZK? Do you really want to continue the sale with this broker?
Test No. 5
We'll leave the best till last. This is a tip on how you can find out quite convincingly that the broker is focused on selling the property to benefit you and not their commission. Again, it requires a friend or anyone else, but you will have instant results after a single phone call! They should call your real estate broker advertisement hotline and introduce themselves as another real estate agency to find out the following: Whether your broker cooperates with them or not. So what does it mean? If he says collaboration is not a problem, then it's good news. This simply means that they are willing to share a commission with another agent in order to get more potential buyers interested! If they don't cooperate, it means that the profit of the commission is more important to them than getting people interested in your property!
I will explain with an example. So whoever you choose picks up the phone and calls your broker and says: "Hello, this is Mr. Kupka. I'm calling about an advertisement for an apartment (obviously your apartment). I was wondering if the apartment is still available and if it would be possible to cooperate and arrange a viewing for one of my clients”- This simple sentence will give you one of several answers: "Of course, no problem! When's a good time for the viewing?" Or perhaps some small negotiation: "Yes, sure, but it would be 80 to 20." or some other arrangement. It doesn't matter. What's important is the willingness to cooperate - it's great for you! Your broker is focused primarily on selling your property and not on their commission! On the other hand, you find out that they said, "I'm sorry. I have enough potential buyers and don't need any more." Alternatively that they have already arranged 10 tours there this week, so perhaps call back in 14 days, or another similar excuse. And then ask yourself, did you really have so many viewings in the last week that your broker can afford to turn other interested parties away? If it’s true, you probably don’t even need to conduct such a test using your friend. But if you do conduct the test, your broker should agree to your friend’s viewing request because every potential buyer counts. You should stop working with them. And fast! Cooperation between real estate brokers is typical and your broker can really deprive you of a large number of potential applicants!
In addition to those listed by me, you will certainly come up with your own "tests", with which you can "test" your broker. Finally, a very important tip: Do not sign anything for anyone in the first phase of the sale! There really is no law or regulation about this so nothing forces you to sign anything and certainly not at the first meeting! There is no such thing as signing a contract because they claim their boss wants to have it. No! Nothing! It's actually good for a great broker to sign an exclusive contract later rather than sooner because then they will then try harder. A great broker also understands that you waiting to sign their contract in a week or two is actually not a negative, but rather it gives them the chance to show what they can do for you! A lousy broker, on the other hand, will claim that if you don't sign the contract right away, you have no chance and you have a problem - they'll say anything just to get your signature there and be sure that it will have either a fat commission or a contractual penalty… And your interests? They don't really matter.
In conclusion, I must admit that the overall situation in the real estate market is a little more positive and has really improved in recent years. Although it is not yet perfect and the above advice may still be really useful to you, it is not so bad that you should be downright terrified! Good luck with your choice!