Buying a house - Real estate agents

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#1402469 8-Oct-2015 15:11

joker97:

No the best agents get 50-50, rarely, 60-40. Usually 40-60. Of the coMmission. The real estate company gets the other cut. Of the portion the agent gets, depends. Could be shared by partner, or if you buy thru another agent, the cuts are further divided.

Those numbers are indicative to illustrate that a large difference in money to you, equates to very little for them, whichever way it's split.
Therefore the focus for the agent is more likely to be on moving the property for whatever price, rather than hang out in the hope for a bigger offer, that makes little difference to their eventual cut.

mattwnz

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#1402470 8-Oct-2015 15:15

Also always pays to record all conversations with an agent. Also email if you can any questions. Agents will likely try to phone you to answer questions, so they don't have to put answers in writing. My past experience with dealing with agents hasn't been good.

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#1402471 8-Oct-2015 15:15

Re Jaxson

Trouble with being a buyer in Auckland, the properties move themselves. So agent has no need to treat you nice. So they probably treat you like garbage, but usually to push the price even higher

In a buyer's market, everything you say apply completely. No sale = zero commission, threat of losing listing to another agent, ranking goes down. Sale = success.

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#1402505 8-Oct-2015 15:44

joker97: Re Jaxson

Trouble with being a buyer in Auckland, the properties move themselves. So agent has no need to treat you nice. So they probably treat you like garbage, but usually to push the price even higher

In a buyer's market, everything you say apply completely. No sale = zero commission, threat of losing listing to another agent, ranking goes down. Sale = success.

Agreed - it is the agents that are pushing up the prices here in Auckland. I have been seeing quite a few auctions where the property is not selling. The agents come in promising the sellers that we can get you $x dollars so that is what the sellers want. but at auctions, these prices are not being hit. I have seen quite a few properties that have not sold at auction, and then they have also dropped in prices after they go to negotiation as well.

Ahh - house hunting in auckland is a pain! i would gladly move to another city, but family is in auckland so it gets difficult.

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#1402509 8-Oct-2015 15:51

It's not the agents' fault, the houses literally sell themselves to ... nobody knows. No data.

MileHighKiwi

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#1402555 8-Oct-2015 16:50

Jaxson:
The bit about the agent working for themselves, is based on their commission:
4% of $500,000 is $20,000 to the agent.
4% of $550,000 is $22,000.

That extra $50,000 for you is only worth $2,000 for them, so they'd far rather make the sale and pocket the $20,000 than jepordise a quick one for your higher price.
They won't admit to that of course, but that's the reality of the game.

This was covered in the excellent 'Freakonomics' book. They compared the statistics of agent sales of vendors properties against agents own properties and they always sold their own houses for far more than their vendors. They are motivated to get their commission as fast as possible, not necessarily what's best for you.

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#1402564 8-Oct-2015 17:09

Have experienced purchasing houses with & without an agent. Not a huge difference in my opinion for my role (purchaser). Seems like they charge a whole lot for doing very little.

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#1402573 8-Oct-2015 17:22

It is easier to buy through an agent (slow market). They can really convince the vendor to reduce the price. Every time I try with the vendor on private sale they won't reduce by a single dollar. So you just wait a few months, when it goes to the agent - bang go in for the kill. Same offer, but they lose out because of the commission + marketing + tidy ups + etc etc. Truth is, the house is worth what the highest bidder will pay. Nothing else.

jmh

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#1402577 8-Oct-2015 17:56

There's another reason why they recommend setting the price lower. They are starting the process of 'managing the seller down'. What happens is they over value the property to get the listing. Once they have you on board the process of managing down starts. This prepares you for accepting a lower offer than you would have done. If you get quick sale you won't notice this, but if the property stays on the market for longer then the managing down process begins. I've even had personal experience where I turned down an extremely low offer and then got no more viewings (he basically took it off the market without me realising). When I took it to another agent he sold it at my asking price in a week. It's hard to overestimate how pathetic some of these guys are.

You may think that the agent would want as high a price as possible but in most cases this is incorrect. They want a quick sale so that they can move on to the next property. They would rather drop a few hundred on the commission, close the sale and move on to the next one than fuss around with multiple offers and negotiating.

andrew027: I've recently sold a house in the greater Wellington region, and bought another one after looking at two others (including doing due diligence). We found that by phoning and talking to people in the Hutt City Council, they gave us so much information about consents that had been granted, easements, etc. that we ended up not getting a LIM.

Regarding the "offers above" business, our agent recommended we set it lower than we were really prepared to accept as it would bring in more interested parties, and the more interested parties we had the better price we were likely to end up with. You expect to go back with a counter offer with a higher price anyway. I understand your point thoug - if the property is advertised as "buyer enquiry over $699,000 it feels odd to reject an offer of $705,000 because the agent said you should be able to get $715,000.

At the end of the day, if you're buying, just remember that selling agent isn't on your side and will do just about anything legal (and sometimes possibly not legal) to make a sale.

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#1402631 8-Oct-2015 19:17

We've had our house on the market for a year and the agents have demonstrated a level of incompetence and laziness that is entirely out of proportion with the $40,000 or so they think they are worth for doing the job.

Attention to detail is pathetic - we just yesterday had an advert proof with an incorrect RV on it, despite the fact that neither the agent nor the RV have changed throughout - she also got the floor area wrong.

There is no level of professionalism: most of them are shiny-suited cowboys in banana shoes, just dodgy used car salesmen masquerading as members of an allegedly professional body.

Given the level of charges (for example in the UK you may pay 2% and the agent pays all the advertising costs) the level of service most deliver is nothing short of disgraceful. I could employ a QC for 80 hours of legal work for the cost of an agent selling our house, to put it into perspective.

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#1402636 8-Oct-2015 19:23

Geektastic with your sort of property i would list with as many agents as possible and not use a sole agent, to maximise exposure. Then just have to wait for a buyer. After three weeks of marketing one would have reached every buyer in the market for a certain property type. Listing another 3 years makes no difference until it is exposed to a new buyer. (Either they come into the market to look, or you need to look for new buyer)

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Geektastic

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#1402642 8-Oct-2015 19:30

joker97: Geektastic with your sort of property i would list with as many agents as possible and not use a sole agent, to maximise exposure. Then just have to wait for a buyer. After three weeks of marketing one would have reached every buyer in the market for a certain property type. Listing another 3 years makes no difference until it is exposed to a new buyer. (Either they come into the market to look, or you need to look for new buyer)

We are confident the most likely buyers are from overseas - either incoming migrants for whom the price is comparatively cheap or returning NZ ex pats selling up in say London or LA.

Thus we want agents with good overseas connections and experience at leveraging them rather than those focused more on the domestic market.

muppet

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#1402650 8-Oct-2015 19:46

The agent works for:

A) The Seller
B) Themselves
C) Not you

They want as many people at the Auction as possible because of B. It looks good, regardless of how many people bid. They also know if they get you there and you DO happen to love it, you might throw caution to the wind and bid a bit higher than you "maximum budget".
They also want the maximum sale price, because of A and B.

They'll always do a great job of making you feel they're on your side too, but they're really not. This is because of A, B and C.

The only way you can mitigate this is by asking them for a list of recent houses in the area of similar spec and checking this yourself. Also compare the sale prices to their CVs and see approx what the % increase is and apply it to the house you're interested in.
Also if possible, talk to other agents (from different companies) and see what they think it might sell for, they'll usually give you an honest answer because there's nothing in it for them.

Also, as mentioned, reserves can be set low or high! When we sold our house in Auckland we set the reserve a bit higher than we probably should have, and we ended up taking a lower bid on the night. We were still happy and the buyer was happy.

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#1402651 8-Oct-2015 19:47

That was what I meant, Russian billionaires looking for cheap million dollar holiday homes. Good luck!

jonherries

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#1402787 8-Oct-2015 23:24

We sold our own home, used a closed tender, made it clear to everyone we would take the highest bid (and reserved the right to take none) and paid for a building report and LIM up front to give them some confidence. We also shared the building report we got when we moved in so they could see where it had come from. We made a good faith declaration about any potential issues as well to try and give people some more confidence.

We ended up having 6 bids after 6 weeks on the market and the house sold for the price we hoped for (higher than the price we would have accepted).

Hard bits were, tidying the house, taking the photos, running the open home and writing the adverising blurb on Trademe (only place we advertised), explaining to people the process and understanding what a realistic offer would be.

Our lawyer was really good (Wellington - Letizia Ord)

Jon

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