March 18, 2022 Luke Russell

THE DEATH OF THE LOCAL AGENT

IT'S NOT THE POSTCODE THE AGENT WORKS IN THAT MATTERS ... IT'S THE PROCESS THEY USE

In the 1980’s, the local agent had all the secrets, knew all of the local sales data and without their help it was difficult to buy or sell.

The only way to buy was to either shop for your new home in the local agent’s office window, search for a new home in the newspaper or to travel around the local area all day in the agent’s car.

Those days came to an end with the advent of the internet and online listing and sales data portals (like realestate.com.au and RP Data/Pricefinder). Every agent in the country uses these tools to know as much, or even more than your ‘local agent’.

The transition from the pre-internet age to the internet age decimated the value of the local agent.

Today, the local agent’s secrets and ‘database of local buyers’ has lost all meaning.

Nowadays, every agent’s buyer are every other agent’s buyers.

The largest database of active buyers is now found on sites like www.realestate.com.au and the local agents source their local sales data from the same place non-local agents get it from … the sales data service providers.

"The internet and sales data services have decimated the value of the local area agent."

LOCAL ‘AREA SPECIALIST’ MYTHS

  • Local agents achieve higher prices.
    • False. If this statement were true then every local suburb’s average sale price would be on a constant upward trend as every local suburb is predominantly ‘farmed’ and filled with local agents selling local properties. If being a local agent was the basis of increasing prices the data would clearly show it. It doesn’t.
  • Local agents have the largest database of ready to go buyers.
    • False. This is particularly false for residential home buyers, as opposed to the database of buyers that agents maintain to sell investment properties (a separate topic). Almost all active residential home buyers utilise online listing portals and social media channels. The problem local agents have, in relation to their database of ‘active residential buyers, is that once a buyer has purchased a new home they become a useless (and inactive) potential buyer on the agent’s database.
  • Local agents know the latest sales better than everyone else.
    • False. If knowing the local area, such as the location of the bustops, local school catchments and anything else easily found on google or online listing portals now is an agents core skillset then this agent may have more utility as an uber driver. The reality today is that active local buyers (the target buyers for your home) who have seen and touched the inside of every recent open home have a greater knowledge of the local area and its characteristics than every local agent.
  • Local agents with the highest volume of sales and the highest number of listings provide the best service and provide you with the best chance you will sell for a high price.
    • False. If you choose to list with a local agent who already has 30 listings, exactly what process will they be using that gives you the confidence that your listing (as the 31st) will be the ‘special one’. Most sellers do not understand that most agencies are built for volume, not for value. They are conveyor belts. Transaction warehouses. The concept of limiting their listings to ensure they are working at-capacity, not over-capacity, is not the way most agencies are structured. Given that they have no ‘skin in the game’ and can tell potential sellers whatever they need to, to secure the listing, is just one of the reasons the failure rate (or listing to sale ratio) for agents all over the country is approximately 50%!

LOCAL AREA TRUTHS

  • It is not the postcode an agent lives and works in, it is the process the agent uses that counts.
  • Although no agent receives any training in relation to pricing or valuing properties as they complete their real estate license courses, out-of-area agents who have the skills and competencies to analyse and understand local area sales data are far better placed to advise sellers about the true market of the seller’s home and about how the seller can secure an above-market buyer.
  • It is not the location of bustops, local shops or the knowledge of school drop-off zones that incentivises a buyer to increase their offer for your home. It is the nature and management of the emotional and competitive environment that decides your final sales price.
  • Debating buyers into a higher price using ‘local sales comparables’ is a sure-fire way to destroy your emotional premium. Using technical sales analysis with buyers shifts any buyer from an excited and emotional state into a subdued technical state. This is why it is the management of people and their needs, moreso than the technical knowledge of every home in the area, is what determines a good or a bad sales result. No buyer can debated into loving a home. It’s emotion that creates above-average sales outcomes, not the location of a bustop or the analysis of a selection of other local sales.
"A Selection Of Cape Cod Residential 2021 Multi-Suburb Sales"

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