This costly mistake shows why estate agency experience matters - Alex Goldstein
The estate agency sector has long since struggled to recruit and then retain quality staff, after all it’s a tough job with some extreme situations and emotions.
Regrettably many newcomers to the industry have overly enthusiastic expectations, having been hoodwinked by the glamourised portrayals on social media and television.
At the end of the day, we are advising someone on usually their most important asset, which entails a significant amount of money and emotion. If you get it wrong, the fallout can be immense.
Recently I encountered one of the worst situations I have seen. A small property developer built the most extraordinary family home, with underground swimming pool, cinema, car stacker and all the bells you could think of.
What followed was a catalogue of errors, all because the first conversation they had with an estate agent sent them on the wrong path and a catalogue of fateful errors ensued.
The agent in question operated under a hybrid type model. Whilst the company they worked for had lengthy experience in the estate agency sector, regrettably they did not.
The agent advised the owner that the property would be worth double what it was actually worth once completed, all backed up by skewed figures and a glitzy presentation. The developer believing what they felt was professional advice backed up by years of experience, then went on to plough more money into the project.
The property then went onto the market at this hyperinflated figure. Sure enough it gained impressive commentary in the media. The developer then wished to maximise the marketing and put everyone involved on a multiple agency contract. In other words, the agent who finds the buyer, takes all the fee.
This move inadvertently opened the flood gates to every estate agent you could name, plus property brokers and runners. Sure enough within a matter of weeks, the property had been overexposed in the market and the whole sale had been diluted. The property was now being used as marketing cannon fodder to help each agent, rather than the developer themselves.
The owner also had no idea who was gaining access to the property, as the agents allowed social media influencers to go around the property creating several full video tours, which created a major security risk and put off potential buyers.
The property price was then halved back to where it should have originally been, however due to the over exposure and market going against them during this time, the price was then nearly halved again with the developer taking a significant financial loss.
All of the above problems started with just that one fateful conversation, with an inexperienced agent. The estate agent of course has long since been disinstructed, however they got the marketing collateral of dealing with a property of this magnitude. Conversely the developer is looking at financial ruin.
So next time you meet an estate agent, make sure you check for proof that they have worked at the property coalface or you too could go down the wrong path.