Image Is Everything

Business | February 20, 2009

I conducted an experiment in image over the long weekend, and the results were quite intriguing.

Perhaps we could all learn from my experience, or at least apply the outcome to society and draw some conclusions of our own.

Those who know me best would suggest that the following story is without a shred of exaggeration…

bmw325xi.jpg

I might be in the market for a new car in the next couple of weeks, and while I don’t consider myself a “car person,” I’ve certainly done my fair share of research to help my eventual decision.

People love to use the proverb of the “used car salesman” in many walks of life, and as such, I tried valiantly to avoid having to deal with the sales-speak, deceit, bartering, glad-handing, and all around frustration of dealing with car dealerships.

I negotiate for a living in my line of work; being a real estate agent, and it means that the last thing I want to do in my spare time is have to emulate my “on-field” persona.

But this past weekend, I put all that aside.

I got up on Saturday morning and put on my best suit and tie.  I rarely wear suits, but this day was to be “special.”

I went and got a Starbucks even though I despise those expensive latte-concoctions, and placed my Bluetooth on my ear.

I pulled up to BMW Toronto and entered through the front doors making as much noise as I could with my loudest “clip-clopping” dress shoes.  I pretended to be talking on my Bluetooth like one of those annoying, arrogant people we see more and more of every day.

I made sure to interrupt the head receptionist as I announced, “I’d like to speak with somebody in new car sales,” and then went back to my phony phone-call.

Within minutes, they had their best salesman come down to meet me.  I made him wait as I summed up my phony phone-call while giving him that, “Sorry, duty calls” look with my eyes, and then finally hung up and took off my Bluetooth.

Before he could say a word, I extended my hand and announced, “David Fleming, it’s a pleasure.”

He told me his name was Alberto, and before he could utter another word I said, “Alberto – do you have a card?”

“But of course, Mr. David,” he said, already sucking up to me.

He took a card out of his back pocket while I withdrew my leather business-card holder that I never use, but with the panache of Patrick Bateman in the movie American Psycho, I slowly handed him my business card and said, “My card.”

I put my arm on Alberto’s shoulder while taking a sip from my Starbucks coffee, and began my spiel.

“Alberto, here’s my situation, are you with me?”

“But of course,” he replied.

“I’m looking at a used 2006 BMW 325 XI from a friend-of-a-friend who owns a car lot in Mississauga.  They’ve offered this to me for $25,000 which is about $3,500 below the blue-book value, wouldn’t you agree?”

I went on with my rant while ensuring that Alberto couldn’t get a single word in, and basically told him that I was looking for an even better deal, and if he could provide me with one, I’d drive a car off their lot today.

I spent a half-hour with Alberto going over facts & figures, and he struggled to keep his composure after he asked about financing and I announced, “I’ll be paying cash.”

I was one step from putting my feet up on Alberto’s desk, as he punched away on the keys of his computer.

I left his office twice to make pretend phone calls, all the while keeping up the image of the successful, busy, laissez-faire young man, and finally Alberto told me he had something for me.

“I think you’ll like this,” he said as he prepared to print off a spec-sheet.

I had spent more than an hour with Alberto, acting the part of the “take no prisoners” business man who could simply not be beat in any negotiation, but I hit him with one final magnetic blow.

“Alberto,” I quietly asked, “Do you know what I’m going to do with that sheet when you print it off?  Why don’t I tell you…..I’m going to take that sheet to every other BMW dealership in the city and simply ask them ‘Can you beat this?’  Alberto, I don’t give a sh!t who gets this sale, or who gets the commission.  I’m after the best price, and I’ll stop at nothing to get it.  Do you follow me?”

Alberto submitted a sheepish smile and quickly pressed the “ESC” key on his computer.

He fuddled with the keys a bit more, then printed off a sheet and went upstairs to get a signature from the top dogs.

When all was said and done, he offered me a 2009 BMW 325 XI for $49,800.

Later that afternoon, I went to Parkview BMW.

Only this time, I wore jeans, a t-shirt, and my old McMaster University windbreaker.

I told the girl at the front that I’d like to speak with somebody about “cars,” and after ten minutes, a pudgy, 20-something young man with an awful goatee approached me.

His name was “Dwight.”

I acted somewhat coy, but still told Dwight that I’d like the best deal he could give me on a 2009 BMW 325 XI.

This time around, I let Dwight do all the talking, and when all was said and done, he offered me the car for $58,500, and said that was his “rock bottom” price.

The “rock-bottom” price was almost $9,000 higher than the quote I had received earlier that morning while acting like Ben Affleck in Boiler Room.

So what can we take away from this experiment, other than the unfortunate truths that we let image and prestige dictate how we view people in society?

Well, I think the results of this experiment could be applied to almost any industry or situation out there.

And as for the real estate industry?

When you hire a Realtor, you are benefiting from their experience, knowledge, and skill.

Would you call “negotiating” a skill?

Whether your Realtor is aggressive, tenacious, intelligent, charming; and whether their negotiating tactics are annoying, insensitive, brutish, or passive-aggressive and laid-back, what matters is results.

I have signed up three listings in the past month, and all three sellers asked me about a reduced commission.  Some mentioned it in passing, while some made serious noise about it.

I told all three of them the same thing: I am a full-service agent working at a full-service brokerage.  I am the best at what I do, and they simply shouldn’t settle for less.

Speaking with one seller about his $350,000 condo, he asked me why the exact same units had sold for $338,500 and $340,000 in the past month.  I told him it was 100% due to the agents listing the property.

If a Realtor from Brampton trying to work in downtown Toronto or a Realtor for a crummy brokerage such as (insert name here) is selling a condo, they don’t care about that final $10,000 for their sellers.  That $10,000 represents exactly $250 in additional commission for them, and they’ll never feel that lost $10,000. 

They simply won’t work for it; they just don’t care.

But some of us don’t see it like that.

As a seller, negotiating a 4% commission instead of the traditional 5% on the sale of your home might save you $2000 – $3000, but that Realtor who was so quick to accept a reduced commission isn’t going to go the extra mile, and it will cost you $10,000.

That Realtor is the jeans, t-shirt, and McMaster University windbreaker guy who receives the $58,500 quote on a BMW.

As a seller, you want somebody working for you who will do whatever it takes to get you every penny possible for your condo, even if it means dressing up like an ass with a cup of Starbucks and a Bluetooth to project an image and persona that will get that same BMW for $49,800.

They say that beauty is in the eye of the beholder, well so too is image…

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11 Comments

  1. fidel

    at 12:48 pm

    “When all was said and done, he offered me a 2009 BMW 325 XI for $49,800”

    Only BMW doesn’t have a 2009 325XI. I think you mean the 328XI, but it starts at $42,500 so I don’t know about these prices you’ve quoted. The margins

    I know people who use the same tactic with real estate agents, they call several up and take the guy who chops most off their commission.

    And David, I must disagree with you on this:
    “I told him it was 100% due to the agents listing the property.”

    At the end of the day, it’s the owner who sets the price and the owner who decides what price to accept. It has nothing to do with the agents listing the property. The listing agent simply inputs the details into mls and sits back while another agent shows & eventually makes the sale. If anything, the selling agent is 3/4 of the work for 1/2 of the pot.

  2. David Fleming

    at 12:59 pm

    Yeah sorry, it was the 2009 BMW 328 XI, AWD, fully loaded…I’m not really a “car guy.”

    I’ll go ahead and disagree with you, Fidel.

    A listing agent who “sits back and waits for somebody else to make the sale” isn’t doing his job. Whatever happened to MARKETING a property?

    At the end of the day, I’ve out-negotiated agents, and in my early years I had been severely out-negotiated by top agents. If you think that all agents are created equal when it comes to the bargaining table, then you are sadly mistaken.

    If you’re a listing agent, and a cooperating agent brings you an offer for $425,000, how do you get them to come up to $475,000?

    It all has to do with your negotiating skills, persona, and experience. And as my post was intended to show, these are quite often a function of image…

  3. McBloggert

    at 2:57 pm

    I take issue with Fidel’s post above, and let me also qualify that I am in now way affiliated with the real estate industry. The idea the owner sets the price of the property and ultimately determines what the “sale” price is because they have the free will to accept, or decline an offer is pretty micky mouse logic and really does a disservice to the listing agent.

    For the most part I would assume sellers don’t know the real value of their home – they may know the ballpark or what their neighbour’s sold for, but they hire a professional to determine what the market will yield for their asset. This would play heavily into the marketing of the property. If a seller pressures their agent into listing too high, the exposure for their property is going to be diminished because people will be less likely to see it. Without a solid offering price and listing strategy the owner could be costing themselves untold amounts.

    Further, a listing agent could offer a lot of value in this market by offering (if they are honest and looking out for their clients best interest) a dispassionate perspective when the offers come in. Perhaps the offers are less then they hoped for and they may be tempted to hold out for their asking price, but as I have seen from personal experience, taking a guaranteed lower offer can often be much more lucrative then holding out and eventually getting much much lower as the market deteriorates or the listing becomes stale.

    I know its going to be difficult to swallow when I am on the selling side and have to pay the commission, but I know that hiring a professional to negotiate, market and shepherd me through the largest financial transaction I will make, is a sound investment.

  4. David Fleming

    at 3:31 pm

    Actually, I ended up buying 1989 Le Baron convertible.

    The previous owner was apparently “Jon Voight,” although that Jon spelled his name “J-O-H-N.”

  5. fidel

    at 11:37 am

    McBloggert, you use the term professional far too loosely. If I wanted to assess the value of my home, a R/E agent would be the last person I would go to for an unbiased opinion. Aside from looking at recent sales data (which I can do myself), what other insight could they possible provide? Anyone can get a real estate license.

    And how much do agents really market their properties? Aside from listing on mls and maybe the agent’s personal web site, how much exposure is the average property going to see? If I’m a listing agent, I can simply post it on mls and let someone else do the leg work selling the place. Sure, I can put ads in the paper or online, do flyers or direct mail, but it’s not expected. Top agents do this stuff, but most run of the mill agents do the bare minimum, and why not, it’s easy money.

    I’m not denying there’s value in using a RE agent, but lets not overstate the importance of listing a property on mls. If I were a selling agent who spent countless hours & gas money ferrying clients to different viewings only to have to split HALF the commission with a dude who merely posted the listing & relayed the offer. I don’t know what the right answer is to compensation, but the current system seems unfair to the selling agents.

    Not to say all agents are cowboys, but I’ve dealt with many who had a shameful lack of basic real estate knowledge and to think some people rely on these people for advice is frightening.

    And David, I’m not beating up on you, obviously you are passionate and professional about your work but unfortunately not representative of your field. Your blog is awesome and I enjoy your perspective even if I disagree.

  6. David Fleming

    at 1:05 pm

    Fidel, I agree with some of your observations about “run of the mill agents.” You and I have never met, but I hope you DO see the passion I put into my work…

    You are also passionate about posting comments on my blog, which is why I will moderate any post you make, regardless of its content.

    That’s what blogs are for, right?

  7. McBloggert

    at 2:02 pm

    I don’t believe I use the term professional loosely because when I hire a real estate professional, I do my research and hire exactly that, a professional.

    I don’t doubt that amongst the thousands of real-estate professionals in the GTA, who are accredited and tested, there are many unscrupulous, lazy and un-motivated agents. In the same turn, there are many lawyers, accountants and financial sector “professionals” who could also be painted with such distinction. Professional is a term used to designate a persons profession, not their efficiency or your characterization of their field.

    As to a listing agents value, I believe and again I can draw on personal experience, is highly valuable and one needs to consider their role in the sale a bit more closely then just plopping it on MLS – a rather crude, one dimensional analysis. I will give you two examples of how my family has both benefited from an excellent listing agent and how we lost a lot of money from a “mediocre” one. I believe that this will help illustrate the dollars and cents, to a difference of opinion on a listing agents “worth”.

    In situation A) we have a listing agent who had my grandparent’s home in Lawrence Park. The time had come for them to sell their big old home and downsize into something that met their needs at the time. They had the unfortunate timing of listing their house in the mid 1990s after the bubble broke, but not entirely before the market had recovered. So, their agent listed the house in the seven figures and it sat on the market where it received good interest and they solicited a number of offers, none were close to their asking price, with a discrepancy in the hundreds of thousands of dollars. My grandparents, armed with their pride and “knowledge” of the market and what the neighbours got for their house a couple years back decided, “no” we’ll hold out for “our price”. Well the house sat, got re-listed and eventually sold six months later when they had enough and were just looking to move on. The offers they got when it initially listed were about 25% higher then what they eventually sold for…25%!!

    Had their agent been able to reason, present the facts and work with their client to see that it was in their best interest to take the lower offer, given the market, my grandparents would have had hundreds of thousands more to show for the sale of their house. Was it the listing agents fault? Not necessarily. My grandparents fault? Partially, but I believe a better agent could have handled the situation differently.

    In situation B) we have a similar story, with a much different outcome. My parents are now ready to sell and move to the country, away form the hustle and bustle of the city. One additional bonus is that they get to sell their house in Leaside for hefty profit, in a hot market and move to a low cost jurisdiction – score! So, they interviewed a bunch of agents, got references and settled on someone from Bosley, not David, but another very good agent.

    Now here is a case that should support your assertion, that all you have to do is list the property on MLS, put your feet up and accept offers. At this time, houses in Leaside were selling way above ask and money was tossed around like nothing – if you had a 10ft square boulevard, you were going to get multiple offers and someone was going to build on it. Well that’s what our agent did, put it on MLS…on and of course circulated the property to his and his brokerages clients, many of whom were developers or affluent professionals looking for just such a property. His initial value was attracting the right people to see the house, not just Bob and Jane who search MLS from their cubicle and turn Toronto into a veritable “open house Sunday” scavenger hunt.

    So 7 days are up and my parents, who “attractively” listed the property, with the advice of their agent, are ready to accept offers. And here is where our “listing” agent helped extract $200K above a listing price my parents were happy to get. I am sure David can be much more articulate about the art of negotiation, multiple offers, sign backs and what not, but it essentially comes down to pairing a couple buyers off and getting them to blindly bid up their offer until there is no more to be had. There is risk involved for both parties and having the very best agent working for you, with years of experience and acumen pays dividend that you can very much qualify. Our agent worked the offers back and forth and got a tremendous return for my parents, he got every dollar that was there to be had and perhaps more.

    One further point on this, the eventual buyer’s first point of contact with our home wasn’t MLS, but through the professional network-grapevine of agents who have clients with specific demands and deep pockets.

    Just as a seller’s agent is more then a chauffer the listing agent is more then a monkey posting on MLS.

  8. fidel

    at 10:30 am

    Mcbloggert, thanks for sharing your experience.

    The difference between RE agents and other professionals like lawyers/accountants is the latter must be a top student and spend many years in school and write difficult several exams and prove knowledge of their study area, whereas anyone from any background can do a correspendance course in real estate and get a license in the mail. Assessing property value is a bit of an art and simply having a RE license doesn’t make you a master of that art.

    Personally, I would rather split the commission with a run of the mill agent to list on the mls than pay 5% for an all star, extra money in my pocket is more valuable than great service IMO. Then again, you do get what you pay for so it’s all about your priorities.

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