Property should please

Have you been disappointed lately? If it wasn’t the Kriss Kringle present, or the quality of “conversation” in your family over the holidays, perhaps the problem was a disappointing result when you sold some property some time over the past 18 months … or even during the boom times.

Perhaps it went something like this. The auction ends, your property is passed in, the agent is pressing you to accept the measly $5000 extra the winning bidder is offering ... or to put it an even sadder way, the addition 1 per cent (or less) of the sale price! You take it and feel really, really bad because you know it’s worth more.

It’s time to talk to a vendor’s advocate.

I’ve often wondered why vendors accept an extra five grand after their place is passed in. I mean why bother to haggle. Now I know. They were not haggling hard enough. Vendor’s succumb to their own agent – the person they are paying to represent them in the sale – putting them under pressure to close the deal.

A good vendor’s advocate, on the other hand, will walk away. Or so I have been told.

Greville Pabst is the chief executive and founder of a property valuation consultancy, WBP Property, which is branching out into advocacy for both vendors and buyers. Although he prefers the term adviser to advocate.

Pabst argues that since the folk at his national company are valuers – they do the numbers that the banks use when approving your mortgage – they are not going to agree to a price unless it’s the right one, or higher.

I know it seems incredible that you need two people to represent you in a sale. After all, the real estate agent is on your payroll. But consider this: chances are you won’t be a customer for your estate agent for another five to seven years ... if he sells you down the river, he misses out on a few grand commission, while you miss out on fifty grand ... and there’s always another sucker round the corner. If you employ a vendor’s advocate, however, who is back dealing with that agent again next week or next month, your estate agent is not going to want to piss your advocate off.

Righto! But hang on. Why should your advocate care about your occasional business?

Well, people like Pabst are going to see if they can interest you in property as an investment. They want you to get reasonable, good, or even excellent returns on your property so that you buy more and more property and buy it through them. They have a vested interest in you doing well so that you become a repeat offender ... I mean, investor.

And how much does this cost you? Nada. Nought. Nothink. Your real estate agent is going to share his/her commission with your advocate. I know, it is starting to smell whiffy. The argument is this: the hardest part of any sale for the estate agent is winning it; selling it the easy part (just stick the office receptionist on the job, for example). So, with Mr Pabst referring clients every week or two, cutting the agent’s cost of sales, they can afford to pass on a share of the commission to the advocate.

Well, it does stretch the belief. You don’t want one estate agent paying a higher commission and getting the job. So, yes, you must insist on complete transparency about the commissions paid to each, and no, you should not pay anything extra. Your advocate needs to have a real estate agents licence, too, and professional indemnity insurance. Even better, a valuer’s qualification, such as a Bachelor of Business in Property.

Real estate is full of sharks just waiting to bite a piece out of your nest egg, which is why both buyers and vendors are increasingly turning to advocates to represent them. The current property market is an opportunity – prices are low – but it’s also harder to make a return, so more people are asking for advice.

About time, too.

Do you agree? Write and tell me your views.

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