Philippe Heim*: Mr Ferfecki, how do I find the ideal estate agent to help me sell my property? The local market is utterly swarming with estate agents, and it can be difficult to get ones bearings.
Robert Ferfecki: Theres no such thing as “the best real estate agent; instead you should look for the one that best suits you as well as your property. The agent needs to be on the same “wavelength as you, and his/her know-how must be in line with the property that is for sale.
PH: In reality, I could probably sell my own property without enlisting the services of an estate agent.
RF: And you can basically do this, although it is only advisable when the buyer and the price are already set for some reason and when the utmost trust has been established within a family, for example. Or in the case of inheritances. Should you proceed in this manner, however, you are giving up the opportunity to know whether your price was right or which price the market would have yielded. You can only know this when you open yourself to the market! The market always has the last word, and the estate agent is, so to speak, the “whisperer, the lobbyist at your service. The NZZ recently published an article on this topic, according to which a good estate agent always works out to be free-of-charge for the clients, because the estate agent generates additional value that covers his/her fees. But there is an even better reason why you, as a private individual, would be better off not selling your own property: your own personal bias. You have lived in this property for a long time, and it was or still is your home. You have experienced countless wonderful moments there and thus have an emotional connection to the property. The market and those interested in buying your property have a much more sober view, and you could easily be offended or even have your feelings hurt by their counterarguments. And then you cannot continue to deal with the interested parties in a neutral and rational manner. Hiring an estate agent allows you to avoid this situation.
PH: Should I consult newspaper ads to narrow down the choices of potential estate agents?
RF: One could certainly get some initial ideas from the media, but beware: the majority of todays property market business lets say 95%, or perhaps even 99% takes place online. This means that the significance of newspapers and magazines has reduced dramatically. Thus, the “share of voice in the media is not a good indication of the quality of any given estate agent. Being able to masterfully use the tools of the Internet is a determining factor in sale success in todays property market. Of course you will come across adverts in the media that speak to you. But there are outstanding estate agents that you will not find there.
PH: Why has the Internet become so important for the property market?
RF: There are several reasons. Firstly, the Internet enables buyers to very efficiently search and screen properties, by using search subscriptions, filter criteria, etc. Secondly, the Internet is colourful and practically offers unlimited space, while a newspaper ad is always limited in its size, and full colour costs more. In a large ad, one could display perhaps 4 photos; on the Internet, there could be 40 or more. In addition, the Internet enables 3-D or 360-degree spherical images as well as videos in several different languages, as is becoming more standard. And the phenomenal success of social media in the Internet has contributed significantly to the complexity of this topic. With mobile devices such as smartphones and tablets, you always have access to the Internet i.e., to the search results for your properties and you dont have to wait until the next time you happen to have a newspaper in your hand.
PH: For the layperson, property selling on the Internet is synonymous with master platforms such as Homegate, Immoscout24, Immostreet, Comparis, etc. So, could anyone post an announcement?
RF: Yes and no: of course anybody could place an announcement on a master platform, just as anybody could run an ad in the media. But these platforms are just one of many cogs in the marketing machine, all of which must intertwine with one another, and turn, in order to create a certain impact. Today, the processes of marketing and selling properties are integrated and complex, with many factors that are dependent upon one another. - One could compare it with the healing process: when you are sick, you could diagnose yourself, purchase some medication at the pharmacy, and hope that you have done both tasks correctly for healing yourself is probably not one of your core competencies. Or you could go to a specialist in other words, a doctor who views your situation in an integrated manner and who perhaps prescribes you several remedies that, synergistically, work faster and more effectively.
Robert Ferfecki in conversation with Philippe Heim
PH: What should I pay attention to when it comes to selecting a estate agent?
RF: There is a whole range of factors you should take into account. Firstly: what kind of properties does the estate agent specialise in? There are vast differences between the sale of a new construction project built from plans and the sale of an existing structure. Whether you are marketing inexpensive or exclusive properties. Whether you are marketing multiple-family dwellings, single-family homes, or commercial properties... Secondly: what level of quality are you looking for? Even when it comes to estate agents, there are discounters, warehouses, boutiques, and custom tailors like there are GPs and medical specialists, to keep with the medical analogy. There are obvious differences between the level of education and competence of a GP and a heart surgeon, which are also reflected in their fee structures. But I consider the following competencies to be compulsory: expertise and marketing in all areas, i.e. classical marketing, digital marketing including social media, and architectural photography. Why architectural photography? The Internet is a picture medium, not a reading medium. A picture is famously worth more than a thousand words, so first-class images of a property are accordingly important. Low-resolution images, underexposed interior rooms, and slanted walls are absolute no-nos! - Depending on the property, the following competencies could also be important: experience in architecture and building (new construction, renovation, reconstruction); connections with relevant authorities and market partners; leadership experience and project management; community planning, including the associated legal questions (e.g. building law, property gains tax, Lex Koller, lump-sum taxation, etc.). So, unless you have a run-of-the-mill property, if you value first-class consultation and a certain degree of discretion, then you would benefit from choosing an upscale estate agent who will spend a lot of time with you to advise and guide you as an individual.
PH: Should the estate agent be part of a network?
RF: Not necessarily. All good estate agents network within their own context, for doing so is an important part of their job. When it comes to national networks, I consider these to be secondary in Switzerland, as we have considerable market transparency because of the various master platforms. When it comes to international networks, these are barely worth a mention in Switzerland, because the purchasing of homes by foreigners is regulated in Switzerland by the Lex Koller act. Essentially, foreigners permanent address and main place of residence must be in Switzerland in order to legally purchase residential property. Thus, it is quite unlikely that a foreign contact could arise by chance or be introduced, who would already fit these criteria and therefore be a possible buyer. So it is preferable to choose a strong individual estate agent over a network-bound franchise estate agent, whose main concerns are the high location-related costs and the franchise fees he/she must pay. In short: the estate agent should be very well-connected. But not primarily with colleagues and competitors, but rather with his/her core target group!
PH: Ideally, how large should the agency be?
RF: The larger the structure within which the estate agent is incorporated, the more standardised and typical is his/her approach. Or the other way around: the smaller the agency, the more likely the chance that you will receive a high degree of individual service. Lets take, for example, an estate agent who is integrated into a large, international system: all tools and processes are prescribed for him/her. And all tools are designed in such a way that they can be used by all employees. So, it is obvious that such networks cannot implement tools that require high qualifications.
PH: What else should one pay attention to?
RF: Now we come to what is perhaps the most important question: who will drive your dossier or sell your property? Is it just anybody from a team, or is it always the same, experienced person with appropriate seniority?
The marketing has generated contact with interested parties in advance and has established curiosity and expectations. And then comes the most complex part of the process: the property viewings and the sale. The viewings are by far the most important and most complex part of the marketing. They take lots of time and require the estate agent to become individually invested with each interested party. Of course, one must do ones research and be prepared: Who are the people? Why are they interested in this property? What are their motivations? What is important to them? Where are they in their life cycle and what does their future look like, particularly as this concerns the property? This requires fastidious profiling.
PH: Can you give us an example?
RF: Lets take as an example a 50-year-old, well-preserved villa in a lavish, very nicely located parcel of land on the edge of a large Swiss city. For a property such as this, one could reasonably expect the following interested parties:
These are four completely different candidates with utterly different needs and perspectives. For the estate agent, the challenge entails having to put oneself in the shoes of each candidate in order to be able to bring up selling points in conversation that will be relevant for that candidate. In the truest sense of the word, in terms of the languages spoken by the interested parties: the family speaks differently to the architect, and the foreigners speak an additional two different languages. The estate agent must be able to speak to all interested parties on an equal footing. Doing so requires not only a high degree of know-how but also a large level of life experience, which a new estate agent could hardly be expected to have. Yet it is often the case that the larger estate agents in particular prefer to send junior employees or assistants to property viewings because this is more convenient or because it is cheaper. But: this perceived shortcut does not lead to the best outcome. There is no shortcut: you have to go the extra mile!
PH: But perhaps not every property needs a highly educated senior estate agent...
RF: That depends on your aspirations, and it definitely also depends on the propertys price range. But you have to understand: each property has an origin and a future. The origin is the architecture, style, materialisation, domestic engineering everything that is associated with its present condition. But much more important is its future its potential: how will it age? Which renovation projects will soon be due? How could it be changed, expanded, extended, or renovated? What are the current regulations and laws related to such changes? Or when would be the ideal moment for a new construction? These are questions to which only a proven expert with ample professional experience can provide you substantive answers.
PH: What should one pay attention to when it comes to the estate agent contract?
RF: In Switzerland, an estate agent contract should be formulated in accordance with the guidelines of the industry association. Beyond that, there are very compact, short contracts and there are long, detailed ones. The short contracts may well be more reader-friendly, but they leave quite a number of things unregulated, which could lead to unfavourable situations and conflict. Long contracts may well appear daunting and tedious but they regulate everything in detail, thus avoiding most potential conflicts. When in doubt, I would recommend a long contract to a client.
PH: What is the advantage of an exclusive contract?
RF: An exclusive contract mandates that a single estate agent markets the property. This has the significant advantage that you as the client/seller will have one single contact person who will intertwine all the threads. For this reason, you should be even more precise in your choice of this contact person. In most cases an exclusive contract is the best solution, for then all documents/information come from one person and one source, and one can always maintain an overview. In a non-exclusive contract, as soon as several estate agents are competing for the same property, differing information and documents begin to circulate and the estate agents will, where possible, begin to make “unauthorised offers to lower the price in order to attract interested parties. Either way, such situations are damaging to the perception and reputation of the property. - Appointing several estate agents to the same property is really only beneficial in the case of very specific properties and when the estate agents operate in different markets or segments, meaning they would not cross paths with one another.
PH: What is the biggest pitfall when it comes to assigning a mandate?
RF: Most definitely the promise of a high selling price, often paired with a relatively low estate agents commission. Countless estate agents market the promise to sell your property “at the best market price. This is an empty promise a claim that could only be proven if the same property were to be sold by several estate agents, which is of course not possible. So if an estate agent promises you heaven and earth (meaning very high sales revenue) with a strikingly low commission, then you can be sure that this calculation will not be realised. For “superior quality + cheap price = alchemy is simply not possible in any industry. Either the estate agent is working at low cost and saving on certain expenditures such as education or acquiring the best tools for his/her work or certain marketing measures. But it should be understood that an estate agent operating with these savings cannot provide the best possible service. Or an estate agent does elaborate work, leaves no stone unturned, utilises the entire range of marketing tools and then that has its price.
For most people, their property is the most valuable item they own, and when they sell it, it should be for the highest possible price. This has to be successful on the first attempt, for they can only sell the property once. There is no second chance. For this reason, it is even more important to carefully select the estate agent of ones choice.
* Philippe Heim is a student at the University of St. Gallen (HSG) and conducted this interview in the context of his seminar paper on the topic of “Marketing within the Property Industry in April, 2014.