4 reasons you need to get quotes when buying services

We're nearly at the end of quarter one of the calendar year and the real estate markets in a lot of jurisdictions have started to turn down or have been turning down since before Christmas.

With three months of sales and leasing results out in the market for property owners to examine, now is the time of year that people start thinking about their own assets. They'll be engaging in the decision whether or not they should sell or lease their property or properties in 2019.

The temptation is always to 'go with what you know' or 'go with who you trust'. This often equates to utilising a friend, the person who sold you the asset or just a word-of-mouth referrals.

I'm sure this sounds familiar right? It's what most people say and do. It's natural human behaviour.

Unfortunately, it's not the best advice.

What you know and who you know often come with the following three problems:

• Recency bias. Even if someone got you a 'good result last time' (and that time may in fact be months or years ago), does not mean that they will either a) repeat the result this time or b) that they are the best choice this time around.
• Confidence bias. Because you've always had a 'good result last time' you're confident in your own personal ability to determine who you should use, regardless of a lack of information sought and research conducted; and
• Anchoring bias. It's common for you to rely on the first piece of information you get. This means invariably that you'll go with whomever you speak to first, or whomever sends you the first quote/proposal. This is aligned heavily with recency bias, because the first person to send you a quote/proposal will often be the individual/company you've used previously/recently.

The only way to combat the above bias is to get quotes.

It is easy to point to the above biases and suggest that these are reasons enough to get more than one quote.

However, rather than just point to the negative I thought it might instead be useful to point to four major positive reasons to always obtain quotes.

Because I and my team are in the business of real estate, I'm going to use obtaining real estate agent / broker quotes as the examples provided.

Reason 1 - Service providers change over time

Service providers change both in quality and location over time. In the real estate industry, agents and brokers move locations over time. This is for two reasons.

Firstly, they are people, and people move homes and suburbs. Real estate agents and brokers typically like to operate in the areas they live (or at least reasonably nearby) as they are by nature and training immersive in the local community.

Secondly, much like sports stars, real estate agents are typically high octane performers who go through streaks and slumps. You won't know who's winning in your area unless you request quotes from enough providers, and get them to submit their recent comparable sales to you to see who's winning at the time you wish to purchase their services.

Reason 2 - Service providers costs change over time

The market sets the price for goods and services in most economies. When economies are growing costs rise, including costs for services. During a rising property market, there are competing tensions between the fact that days on market are much lower and that the services of real estate agents and brokers are in demand. The inverse is the case when the market is turning down.

It's essential that you always test the market at the time that you need the services to get the current price - both for the property asset and for the brokerage services the real estate agent will provide.

Reason 3 - Competition generates better cost outcomes

Have you ever bought a car? Did you run between dealerships of the same brand of car, or between dealerships comparing a similar class of car? The reason you've done it is simple - to get a better deal. Is it annoying and time consuming? Yes, definitely. Is the payoff worth it? Well it depends on the value of the purchase and consequently the value of the services.

In the real estate agent and broker world, a few basis points on such a valuable asset can be worth $1,000's, so yes, it's definitely worth your time. Vendorable makes it easy to query the market in this one-to-many fashion with the click of a few buttons. We worked hard on this because if you had to do this all yourself on the phone and via email, the time spent would potentially negate any savings.

A word of caution here: cost is not everything. Just choosing the cheapest isn't necessarily the best. What you want is the service provider who meets all the non-monetary criteria you value, at the best possible value/price point.

Reason 4 - More quotes provide a better view on value

The more quotes you have in your hand the better your view on the value of an asset will be. In data analysis, collecting and then using just one data point is dangerous. It certainly doesn't provide sufficient information to make any decision. The more data you collect the better information you will have to make a decision.

Quotes are no different, the more quotes you have the better understanding you will have of the costs you're going to incur and the value you're going to receive.

Real estate agents and brokers will all have different views as to the value of a real estate asset. So, the more opinions you collect the better position you'll be in to make up your own mind as to the value of an asset.

Similarly, different real estate service providers have different ways and methods that they like to charge and structure their fees. Again, collecting as many different cost structures as possible will give you great clarity as to how and how much you'd be willing to pay.

What's the right number of quotes?

More isn't more, information overload is real.

If you obtain too many quotes you can end up in information overload and as a result incur its byproduct, analysis paralysis. This is especially the case if you're collecting information manually via pen & paper, or email and telephone. This is one of the reasons why we developed Vendorable. It makes comparing apples with apples across multiple quotes much easier than if you tried to do it manually/in-person.

In our experience, somewhere between 5-10 quotes in the real estate space will provide sufficient information to make a good decision about costs and asset value. That number is not foolproof and certainly for unique assets you would want more, or in there may not be that many agents around to provide quotes.

Best of luck should you decide to sell or lease your property in 2019 we'd love to help, at least check out Vendorable.com, we'd love to hear from you.

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#Property #RealEstate #AusProperty #UKProperty #NZProperty #USProperty #CADProperty

Jason Weeks is the CEO at and a founder of Vendorable.com a platform for real estate services. Since 2014, more than A$2bn of real estate has passed through the platform assisting thousands of property owners and vendors to sell and lease property, and provided opportunities to thousands of agents globally.