Should you pay more for an estate agent who claims to have a database of ready buyers?

The sales pitch goes that these agents have a list of thousands of buyers who are just chomping at the bit to buy your home. In fact, many of them are so desperate to move they will often pay above the asking price to ensure a quick sale.

To benefit from this service, the agent usually wants you to commit to an exclusive agreement and pay the standard commission. But with buyers being able to search for homes online at the drop of a hat, is it worth signing up with an agent on the back of their exclusive database?

In years gone by (before the internet), estate agents would rely on building and maintaining a list of potential buyers to make a living. They would advertise open homes in the local press and collect the names and addresses of viewers to contact later.

The process was very effective, but the introduction of the internet and property portals such as realestate.com.au changed the landscape forever. Potential buyers no longer need to contact an estate agent to see what’s on the market. They can search online and see thousands of homes for sale at the click of a button.

With the estate agent no longer the first point of contact in the sales process, the list has lost its significance. Many agents still cling to the idea that the list is important, but the reality is the property buying landscape has shifted towards the buyer having more control.

To highlight how the list has lost its significance, let's look at what information a typical agents database contains and how that data is managed.

As I mentioned earlier, most agents build their database by collecting names and addresses from open home events. If they’re smart, they will also collect information such as available budget, desired features and moving time frame.

Most agents these days will advertise their open homes on the internet, this means there is no need for the buyer to contact the agent, for those agents that don’t advertise their open times, the buyer is required to contact the agent directly to request a time, this allows the agent to be able to qualify the buyer prior to going through, thus allowing them to be added to the agents database.

Because the inspection times are so readily available, the buyers' will typically arrange open home visits with several agents, so no agent can say they have an ‘exclusive list’ of buyers anymore.

The second problem with this method is that the list is often out of date. An agent may boast they have thousands of names on their list, the reality however, is that the names on these lists have been collected over many years and most of them will have already purchased a home from another agent, so most of the people on the list are no longer actively looking for a property.

The list is not completely dead. There is still the possibility that the agent is being truthful. They may have just listed or sold a property in your street or area and have a surplus of buyers who missed out and are looking for like homes.

If you are selling a specialist property like development sites, most agents will maintain a list of property developers who are actively seeking development projects. In this case, they will be able to present the property to their developers and potentially, the property could be sold privately without spending a small fortune on marketing.

Always be wary of agents boasting about the size of their database. Such lists are often out of date or contain information which isn’t relevant.

A well-managed database should contain a number of people actively searching for properties at any given time and should include information such as budget, desired locations, bedrooms and bathrooms etc.

So now you know the list isn’t what it used to be, how should you handle an agent who claims to have an ‘exclusive’ list of ready buyers? Well, you should start by treating such claims with a pinch of salt.

I have seen many homes listed for sale with agents promising a quick sale on the back of an extensive list of buyers, only for them to remain on the market for extended periods. Often, such sellers are stuck with paying high commissions and marketing costs because they were persuaded to sign exclusive listing agreements that locked them in for 60-90 days.

 

If an agent is insistent that they have buyers ready to buy your home now but will only access it if you sign an exclusive agreement, give them a chance to prove their claim by agreeing to a 14-day exclusive agreement.

This will give them time to introduce their buyers to the property without you committing to a long exclusive period where you’re stuck with an agent that has been dishonest with you from the start.

Another tip you can use is to ask the agent to waive their marketing fees. If an agent does have a list of ready buyers, you shouldn’t have to spend a small fortune to market your property. Ask them to waive their marketing fee, if they refuse, this is a warning sign that the list may not be all it's cracked up to be.

If you are looking to sell your home and are looking for a reliable, trustworthy estate agent to handle the sale for you, get in touch with me, Matthew Griffin on (07) 3054 7050 or send me an email. I have worked in the Brisbane real estate industry since 2012 and have built a reputation for being honest, transparent and trustworthy.