Dealing directly with vendors?

We are often asked by prospective clients if we will door knock, or letterbox drop notes directly to owners. This is not a favoured approach, and for several reasons.

It is easy to imagine how a vendor will feel if they receive a letter in the letterbox from one buyer who is particularly keen to make them an offer to buy their home. They will get stars in their eyes and start thinking about how to spend their Powerball winnings.

It’s hardly an advantageous negotiating position for the buyer.

But when it comes to vendors reaching out directly to buyer’s agents, the challenges are significant. There are many reasons why we prefer not to deal directly with vendors who try to navigate their own sales campaign.

There are broadly four reasons why a vendor would choose to market and sell their own home.

The first relates to saving on agent’s fees. They run the sums and decide that the twenty or thirty thousand dollars is better off in their own pocket. There are portals that aid a property owner when it comes to arranging an online listing, and anyone can take buyers through their house. The question remains; is this a false economy? After all, many vendors don’t have extensive negotiation and buyer-management skills.

The second reason relates to their perceived real estate sales skill level. Some simply believe that they can do it better.

The third reason hinges around price expectation. Often, we receive calls and emails from overzealous vendors who have not accepted the local agents’ opinion on the likely selling price. These types of vendors are very difficult to work with for any buyer. It is no surprise that we often see long days on market when we spot a ‘for sale by owner’ advertisement.

The fourth reason is sometimes the hardest for a buyer’s agent to navigate. If the vendor is selling themselves because of a disdain for real estate agents, they will be less excited about dealing with another licensed real estate professional.

All four reasons can have their challenges for us and the main challenge relates to irrationality.

Even the most rational of vendor can be quite stressed and overwhelmed when navigating such a financially significant task.

Buying a property via the common method (that is, through a licensed real estate agency) can present it’s own challenges, but it negates the need to negotiate directly with a vendor. Many buyers underestimate the difficulty of negotiating with a highly emotional party.

Good real estate agents manage this, day in and day out. They understand the vulnerabilities, the emotional rollercoaster and the delicate ways in which they must manage negative feedback and bad news.

They often hold together negotiations that would otherwise disintegrate fast if the two parties were dealing with each other directly.

The sensitive and strategic way that price objections, negative feedback and lower-than-anticipated offers are relayed to vendors by agents is quite different to the delivery from the buyer.

The agent is an important conduit between vendor and buyer.

Unless a buyer is able to couch these uncomfortable conversations sensitively and directly enough, the wheels can quickly fall off the negotiation. Vendors who feel insulted or slighted by a buyer are subject to disengaging and walking away.

I haven’t even touched on the relevance of agent networks and buyer reach across multiple, concurrent sales campaigns. This article is purely focusing on some of the emotion-driven, negative impacts of an inexperienced seller taking on a sales campaign themselves.

I’ve negotiated successfully with vendors in the past, but I’ve had far less successes than would be anticipated. Some emotional vendors have insisted on only selling to home buyers (as opposed to investors). Others have agreed on a price and terms, and back-pedalled shortly after, reaching out to other prospective buyers. Some have negotiated for days, and then reverted to engaging a real estate agency for an auction campaign. And then there are the negotiations that have gone to plan, only to have a vendor feeling bitter in hindsight that they accepted a price under market value.

Property transactions can occur in all kinds of formats and methods, but there is no doubt, this one is often tough for all parties.