19 Jan 2015
Words Alex Cook
Less is Less & More is More
Whilst perusing through the November edition of the Resort News, I was very interested to come across a thought-provoking article written by Robert Collins, a fellow management rights agent at RAAS Rights.
In the article, Mr Collins reflects on the current state of brokerage within the management rights industry. Echoing the sentiments of many of our fellow professionals, he voices deep-seated concerns about the emergence of several newcomers to the brokering sector.
Moreover, he voices concerns over the ability of these ‘new agents’ to do the job properly and the negative impact that their unprofessionalism is having, and will have, on our industry. Even though these newcomers may be able to lure some unsuspecting vendors with the carrot of cheap commission, the end result is far too often one of disappointment and tears.
I thought I would take a little of space in this edition of The Informer to expand on the article and to offer some personal commentary. Within brokering circles, we understand the critical importance of using an experienced broker from an established firm. We also recognise that our commission rates represent very good value when our level of service combined with our ability to achieve the best price are taken into account.
But why? What are we able to do that newcomers will simply be unable to emulate? In all honesty, I could probably write a book on the subject. But here are a few thoughts.
Firstly, it is important not to underestimate the importance of the firm that sits behind the individual broker. At Resort Brokers, we have a team of 26 brokers, with another 11 support staff and key associates working alongside them. The ‘behind-the-scenes’ side of our business obviously translates to higher operating costs, but it is critical to providing the best service to our clients and to supporting the ongoing stability and growth of our industry.
The ‘non-brokering’ side of our team enables some critical things to take place. We are able to train our staff to a very high standard, as well as providing on going support to them. We are able to ensure our brokers meet regularly to discuss each other’s listings and to troubleshoot any issues they might have. We are able to organize and run seminars across to country to help bring new operators into the sector. We are able to carry out extensive PR, to ensure our industry is well represented in the wider media. We are able to produce high-level marketing material for our clients (including the magazine you are reading now). The list goes on.
All these factors feed through into two key areas for a prospective seller. Firstly, a professional and established firm is able to present your property to the market in a far more professional and engaging manner. Only they have the industry knowledge and marketing processes in place to do so. This will attract better buyers, who are prepared to pay more for properties that they perceive to be better.
Secondly, once your property has been taken to the market, that same firm is able to generate a lot more interest. As any agent will testify, the best way to get the best price for a property is to create a sense of competition. One of the new agencies that we have referred to may tell you that ‘they have a buyer’. That may well be the case. However, with 26 agents across Australia working together, we will have more. And that, quite simply, will get you a better price.
However, achieving the best price for a property is really only half the battle. As Mr Collins rightly points out in his article, accommodation businesses are often not that hard to sell. What sets the men out from the boys (and women from girls!!) in our industry is the skill and knowledge required to hold the sale through to settlement. Our fall over rate is negligible. Most sales have their speed bumps, but we almost always get there. The fall over rate with these new fledging firms is quite alarming. Big promises are made, expectations are set high, but far too often vendors are left with nothing but a big legal bill.
First and foremost, experienced brokers understand the importance of using other respected industry professionals to assist with the sale process. A sale can often live or die from having picked the right lawyer, the rights accountant and the right financier. Understandably, inexperienced agents simply do not get this. After all, if they are operating without extensive knowledge and experience, who’s to say that the other professionals can’t do the same thing. Good brokers will not only be able to guide prospective purchasers to the appropriate professionals, but they will have the know-how to ensure that they actually use them. Personally, I will simply not allow a sale to proceed to contract unless I am happy with the professionals that the purchaser is using.
From signing a contract, through to the settlement of a sale, your broker really is the glue that holds a sale together. I regularly say to vendors that my job only really begins once a contract is signed. As I mentioned above, although the vast majority of our sales settle, they are very rarely without their issues. The simple fact of the matter is that an experienced broker will have faced a similar hurdle in the past and will know how to jump it. Moreover, a good broker will monitor the sale process so closely, that he/she will be able to foresee and deal with an issue before it even raises its head. I am sorry to say that I have heard several war stories of vendors using an inexperienced agency, only for the sale to fall over for an issue that could have been very easily avoided.
I would conclude this article by suggesting a very simple idea to the many owners who regularly read this magazine. When you get around to thinking of selling your property, put a broker’s commission to one side. However, do concern yourself with what you are going to walk away with, and how long it will take you to get there. I find the old saying ‘you get what you pay for in life’ is very rarely incorrect. Experienced agents from professional agencies will never be able to compete with newcomers when it comes to commission rate. However, we will almost always blow them out of the water when it comes to the end result.