Apartment Specialists Podcast No: 6
Today, we’ll talk about “Exclusivity Agreement” and why you should NOT sign this type of contract. Learn more about it from this podcast.
Andrew Murray, Apartment Specialists. Today we’re talking about number three which is exclusivity periods, i.e. you, being an apartment owner, signing a contract with a real estate agent to sell your apartment. Basically, every single apartment agent and agency puts you into a contract but locks you in for the industry standard 90 days. Why? Ask yourself if it was any other service or industry – because that’s what a real estate agent is – we’re providing a service, we’re matching a buyer with you being the seller.
Now ask yourself, Why should you be locked into a contract? In any other industry, if you went and got a cleaner, for example, to come and clean your house and they come in and go, Okay, well, I’m going to be the best cleaner ever, I’m going to clean it so spotless you’re going to be able to look in the mirror and you’ll see no specks, you look out the window and it will be like the window won’t be there. And you’re like, yeah, yeah, whatever. So just before I clean your house, can you please sign this contract. For the next three months you can only get your house cleaned by me? No, you wouldn’t do that, would you?
Would you go to the bank and sign up with a new bank, and they go, Okay, we’re going to do this and provide this and we’re going to improve your service and all this kind of thing. And then sign a contract saying you can only be with them. Doesn’t that give, for example, the cleaner the right to go, Well, I can slacken off, they can only clean the house through me and they have to get it cleaned? So why should it be happening in the real estate industry? I don’t know who made it up, it’s ridiculous. I’ve just come back from the States. I went there and saw some of the top agents in the world.
I mean, they’ve got 450,000 agents over there, and what were they doing? No contracts. You can get them out at any time. So what am I doing? Obviously the same, because at the end of the day, if you’re doing a good job, you think about it, if you employ, for example, me as an agent, and I’m doing a good job and I’m working my * off, right? I’m bringing you offers, I’ve been calling you, I’m getting into communication, I am trying my absolute best to get you the very best value, are you going to fire me? No. Am I worried that you’re going to fire me? No, because I’m working hard for you. So why should you be locked in? I honestly just don’t get it.
Anyway, so this is why I’m talking about it. You can actually talk with your real estate agent, right? Under the act, you do have to have an agreement with your real estate agent. You have to declare it, you’ve got to go through all those points and have a contract and go through all of that fine print. You’ve got to get your lawyer’s advice. You’ve got to know what you’re involved in, all that kind of thing. Yes, there has to be an agreement in place but should you be locked in? What I’m saying is, you should be able to write a clause in that agreement and say: if I feel you’re not performing well, I don’t want to be with you anymore or you’re not basically living up to your promises, or basically you’re just not working for me, I should be able to get out of this agreement at any time. It sounds pretty simple and it sounds obvious and it should be happening but that’s not the case. Where’s the incentive?
For example, if I know you’ve got an aim to sell your apartment within two months, or it there’s a situation, or you’re behind in your body corporate fees, or you need the money for X ,Y or Z, because generally selling a property, there is a reason for it. And if the agent knows that you’ve got to sell your property and they’ve locked you in, is that incentivising them to really go and get the best offer for you? They’re thinking, Yes, I’ve listed them, now I’ve got to sell it. That’s money in the bank. And I’ll tell you what – that’s the same in the industry. What’s getting the listings? Money in the bank. Why? Because they know they have to sell it for you.
So what I’m saying is, and this is one of the reasons which costs owners thousands of dollars when selling their apartment is purely that fact. Go with it, talk to your agent. What are we going to go with? For example, we don’t lock you in at all because there is no point. I don’t want to have a person badmouth me, I don’t want to have a client who’s not happy. And you don’t want to deal with somebody who you’re not happy with. So the business is then for us to lose.
For example, so if I go into an agreement with you, and you don’t give me time, I can lose that. I can lose your business by not delivering. So this is what is incentivising me to deliver. Pretty simple. So that’s how the market should be, and you being the owner, you can actually dictate the terms. What I am saying is I’m educating you on that fact that you should be. So I hope you’ve enjoyed listening to this different perspective on how an agency agreement or that visibility should be done.
I’m going to talk a bit more on this topic because it’s quite a big one. I’m now going to talk about how an owner does conjunctional sales, i.e., how does he let the other agents sell your property, and I’ll talk about that with you in a couple of days. And basically this was from number 3 in the report. You can email me and get it at email@example.com, or you can go to the website, download the report, probably the easiest, at www.apartmentspecialists.co.nz, and just download it there. Cool. Thanks, guys. Cheers!