If you're a real estate agent, there's every chance your business changed a lot in 2020 in response to Covid-19 social restrictions.

Did you start conducting opens by live streaming?

Inspections via online meeting software?

Auctions online?

Or, did you simply stay the same, continuing to offer every listing you had -- and every new listing you were able to secure -- by private treaty?

The fact of the matter is, private treaty has served us well for a long time.

But so too did black and white TV, landlines, cassette tapes and traditional mail-order shopping... before they all became obsolete.

Covid-19 has pushed us to adapt rapidly, and to try new ways of doing things we may not have tried otherwise.

But when it comes to private treaty, the need for an 'upgrade' has actually been a long time coming.

And now, with online best offer, it's finally here.

What is best offer?

To keep it short and simple, best offer is a bit like private treaty or tender, on steroids.

Just like private treaty:

  • it allows buyers to submit offers in their own time, knowing any other buyer can also make an offer at any time.
  • it allows an offer to be accepted and the property sold at any time.
  • it enables you to negotiate with a buyer, and it gives your vendor control over their property's selling price point.

Unlike private treaty -- and this is important -- it doesn't allow for buyers to change their minds. Or sellers.

When an offer is accepted, just as it would be at a traditional auction, that offer is binding and there is no cooling off period. The buyer and the seller are legally-obligated to proceed with the sale.

Why best offer is better than private treaty for agents

As an agent, or even as a past buyer or seller, you know the greatest flaw of private treaty is there is no real commitment associated with any offer.

A buyer makes an offer one day, the seller accepts, the buyer finds a better place the next day and buys it, and they drop out of your sale. What are you going to do?

There's nothing you can do!

The property owner and agent have nothing to show for all the work that has been done to list the property, promote it extensively, open it and show it, nurture the buyer. In fact, all they can really do, is start again.

Online best offer is better than private treaty for agents for four key reasons:

1. It adds real commitment to every offer, and to every acceptance, so a sale is always a sale. Every offer and acceptance is made under legally-binding conditions with no cooling off period.

2. It can produce faster sales. It speeds up the sales process by introducing a strict timeframe of response on all offers.

3. It drives competition. Its automated updates drive buyer activity, ensuring every buyer immediately knows when another offer is made, is aware the offer can be accepted at any time in a binding manner, and knows they need to counter-offer quickly to stay in the game.

4. Best offer also helps cut down on tyre kickers. Because all offers must be made through the online system and all offers are binding, those people who aren't genuinely interested, are deterred -- in a friendly and process-driven way -- from taking up your valuable time.

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CASE STUDY: More commitment and less tyre kickers!

In 2019, a very frustrated agent approached Sale Ezy because he had a potential buyer who had inspected a specific property multiple times, conveyed offers by phone, and then withdrawn his commitment to the offer each and every time.

The agent had spent a lot of time on this buyer, as he had seemed genuinely interested, traveling a long distance to see the property. But would he really buy it?

The agent listed the property on best offer, and instructed the buyer to enter all offers through the system -- with the knowledge any offer he made is legally-binding and he must proceed if it is accepted.

At this point, another buyer entered the picture, and while buyer number one shied away completely, clearly not genuine, buyer two submitted their offer online, had it accepted and the contracts were exchanged that day.

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Why best offer is better than private treaty for property owners

When property owners look for an agent, they are hoping the agent can tick all the right boxes -- but one of the characteristics they prize most, is an agent who can close a sale -- and keep it closed.

With private treaty, property owners can suffer in two ways; first of all, they can accept an offer and have a buyer drop out last minute; secondly, they can feel powerless or out of the loop if communication isn't frequent enough for them.

When it comes to property owners, best offer is better than private treaty because:

1. They feel more empowered. They are consulted and really informed and educated upfront about property pricing and what to expect. This also improves their relationship with and trust of their agent.

2. They have the chance to be educated by market demand. If their expectations are perhaps too high, offers, all documented in a simple online system, provide evidence of where they should really place the value of their property.

3. They are always in the loop. Automated communication ensures they see every offer immediately and their agent is prompted to discuss it with them rapidly.

4. They can support a fast sale. Momentum drives them to make important decisions with less hesitation.

5. They can achieve a competitive price. The system updates and prompted-agent-communication to buyers ensures all interested parties are motivated to participate quickly and competitively.

6. They get real commitment. When they accept an offer, they can start celebrating, because the buyer can't simply change their mind and drop out!

Why best offer is better than private treaty for buyers

During a property sale, the agent is working for their client, meaning the seller is their number one priority, and the buyer is not.

In real estate, up to 40% of enquiries go unanswered, leaving a lot of buyers disillusioned and frustrated. Further, sales methods are often designed with the seller's experience and best interest in mind, as opposed to the buyer's experience.

But a buyer's experience is a very important part of a successful sales process.

In fact, we know of buyers who have walked away from purchases they desperately wanted because they weren't communicated with quickly enough or because they felt they were being messed around.

Best offer is better than public treaty for buyers because:

1. They want commitment too! Buying a property is emotional, you invest a lot of yourself in it, and if it is to be your own home, you often let yourself fall in love with it before the paperwork is signed.

If you make an offer, and it is accepted and you think you are the successful purchaser, only to be gazumped last minute, you can be left heartbroken.

With best offer, if you make an offer and that offer is accepted, that acceptance is also binding. The seller, just like you, is now legally obligated to proceed with the sale... so pop that champagne!

2. They need to feel in the loop! Being communicated with frequently as a buyer -- especially about a property you desperately want to buy -- is as important as a property owner being communicated with frequently. You just want to feel like you know what is going on.

Best offer's automated updates ensure a buyer is alerted when there is activity on the property, and an agent is prompted to get in touch with all buyers.

3. They want a quick answer! Working up the courage to put in an offer is exciting... no scary... no exciting! Anyway, it's a lot! So the last thing you want, is to put in an offer, then not hear back for several days, or in cases we've heard of, even up to a week!

It's not only a long time to be waiting, it's also a time period that really forces you to go out and look at other properties.

Best offer requires agents to respond to any buyer offer, on behalf of the vendor, within 24 hours. If they don't, the buyer withdraws the offer. This ensures no one is ever left waiting and worrying!

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CASE STUDY: The forgotten buyer

Last year, my partner and I travelled four hours (several times) to view houses in regional NSW as we wanted to get into the market, but we couldn't afford to purchase in Sydney.

On our second visit, with only a few weeks left of our financial pre-approval, we found a house we absolutely loved.

That afternoon, as we were driving home, we called and made an offer -- we couldn't put it in writing while in the car, which was something that made us feel quite nervous and uncomfortable.

The agent responded the next day to let us know our offer had been accepted.

And then...

We never heard from her again!

We later found out another buyer had made a higher offer and the property owner had accepted and sold. Unfortunately, the agent never contacted us, because we were all set to counter-offer to buy the house we wanted! In this case, agent, vendor and potential buyer (us) all missed out.

If this sale had been facilitated by online best offer, we could have made our offer, in writing, with the click of the button in the app, while in the car. The agent would have had 24 hours to respond to us, and when the second buyer made their offer, we would have been alerted immediately, so we could offer again.

And when an offer was finally accepted, it would have been binding -- no frustration, no let downs!

They're could have been a bidding war, there could have been a higher price... but a communication and process break down led to a lot of frustration and, for anyone who wasn't in the industry, like us, potentially a negative reflection on estate agents in general!

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If Covid-19 has taught us nothing else in real estate, it's that we don't want to have to make rushed decisions and adapt and evolve overnight, faster than we anticipated, ever again.

To ensure that doesn't happen, we need to be exploring new opportunities and updating all the time!

Just remember, when social restrictions are lifted, and life goes back to some sort of normal, consumer needs and demands will continue to keep changing, as will technology, and if you don't change with it, you risk being left behind!