Selling a house to a friend

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clicknz

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#2427417 26-Feb-2020 12:34

Hi - as a photographer/videographer I've worked with a few different real estate agents and still find it hard to put a finger on whether they're working hard or not... I believe that the photos/videos do 90% of the work for them (well, I would wouldn't I....!!).

I've helped with about 5 house transactions in Wellington that have been private sale and all have been smooth with very quick sales. A good listing on TradeMe Property will have lots of eyes on it within hours and if you've sold a car in the past you should be fine with selling your house (I've done it myself a couple of times).

There are a few real estate videos on my website... it seems that a lot of people who are disheartened with overly Photoshopped still photos are a lot more trusting of videos now, and it means people see your house at it's best (saves faffing around with open homes - you show people around on your terms & times that suit).

I'm just about to start offering a photo/video service to Wellington region people who are keen to have a crack at selling their homes privately.

Cheers,
Mike

Photographer/Videographer clickmedia.nz

ShinyChrome

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#2427444 26-Feb-2020 13:10

I think the value of a real estate agents services also depend on the market to an extent.

In a depressed market, an agent will have to be working their ass off to make any sale. The good ones will survive and bad ones quickly disappear.

Because we are in a hot market where demand far exceeds supply, houses are effectively selling themselves; the only thing they are really doing is helping you manage the influx of viewings/offers you are most likely to get just by listing. So as @clicknz said, if you can be arsed doing it yourself... But most people don't have the time/patience to do it, and treat the 4% as the cost of doing business, which to be honest after growth is most likely still just small fraction of their capital gains.

SheriffNZ

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#2428147 27-Feb-2020 12:08

eracode:

@kingdragonfly Totally agree regarding RE agents. Their whole game is to build your expectations as a seller until they get you to sign - then to lower your expectations on price once you’ve signed so that they can collect their commission and move on to another sale.

The commission structure is all wrong too. If they can get you to accept say $30k lower for your house, it only costs them $1k less on their fat commission - but costs you $29k less in net sale proceeds.

I sell a few properties in my work regularly, through a number of different agents. We always renegotiate the commission structure to incentivise them to maximise the price. If they don't want to negotiate on their commission, go somewhere else as they can't be confident in their ability.

Delphinus

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#2428281 27-Feb-2020 14:22

SheriffNZ:

I sell a few properties in my work regularly, through a number of different agents. We always renegotiate the commission structure to incentivise them to maximise the price. If they don't want to negotiate on their commission, go somewhere else as they can't be confident in their ability.

Do you mind sharing what you negotiate? Eg how do you incentivise them to maximise the price?

SheriffNZ

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#2428320 27-Feb-2020 15:39

Delphinus:

SheriffNZ:

I sell a few properties in my work regularly, through a number of different agents. We always renegotiate the commission structure to incentivise them to maximise the price. If they don't want to negotiate on their commission, go somewhere else as they can't be confident in their ability.

Do you mind sharing what you negotiate? Eg how do you incentivise them to maximise the price?

Basically it's a lower % commission for the easy part and it ramps up after that. A good way to potentially go about it would be to have the commission payable under each scenario the same at a certain level (this gives them a base they can expect), but anything over that (and there could be steps in this too).

Eg- for the sale of a business we tried to get the agent to agree to the commission structure below. The numbers worked for us in the circumstances. They wouldn't be this high for selling a residential house.

Commission %

The first $xxx of any sales price

The next $xxx of any sales price

Anything greater than $xxxx

Ultimately they didn't agree to the above but you get the picture. You'd have to run the numbers at various scenarios to decide what you're comfortable with.

eracode

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#2428339 27-Feb-2020 17:26

@SheriffNZ

I don’t really follow what you’re saying here.

First: “I sell ... properties regularly... We always renegotiate the commission structure ... “

Then: “A good way to potentially go about it would be ...”.

So when selling properties you always negotiate the commission - but then you recommend a potentially good method. What structure do you actually always use when you successfully re-negotiate the commission to incentivise the agent?

Sometimes I just sit and think. Other times I just sit.

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Paul1977

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#2428609 28-Feb-2020 09:28

He's essentially just saying the opposite to what most agents offer, which is often a tiered % with the commission being lower at the higher end. E.g 4% up to $500,000, 2.5% for anything over $500,000.

@SheriffNZ is suggesting the opposite strategy, where the agents commission % gets higher for a higher price. E.g. lets say you were hoping to get $500,000 for your house - you could negiotiate 3% up to $500,000, 15% from $500,000-$510,000, 30% from $510,000-$520,000 etc. That would give a large incentive for the agent to get you more than the $500,000 you want.

I can see some merit in that sort of structure, but you'd have to be really sure on your numbers and be sure you aren't undervaluing your property.

SheriffNZ

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#2428611 28-Feb-2020 09:33

Paul1977:

He's essentially just saying the opposite to what most agents offer, which is often a tiered % with the commission being lower at the higher end. E.g 4% up to $500,000, 2.5% for anything over $500,000.

@SheriffNZ is suggesting the opposite strategy, where the agents commission % gets higher for a higher price. E.g. lets say you were hoping to get $500,000 for your house - you could negiotiate 3% up to $500,000, 15% from $500,000-$510,000, 30% from $510,000-$520,000 etc. That would give a large incentive for the agent to get you more than the $500,000 you want.

I can see some merit in that sort of structure, but you'd have to be really sure on your numbers and be sure you aren't undervaluing your property.

Yep, that's it exactly.

The example I provided was the one I could think of most recently. I really couldn't be bothered going through my files to find other examples. I was perhaps a little unclear in my original post though, we always "try" to renegotiate the commission structure. We aren't always successful (as in the example I gave) but it's worth a go.

There is no way to provide a guaranteed commission structure that an agent will accept. It depends on what you're selling, and the agent you're dealing with.

bmt

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#2429283 29-Feb-2020 14:28

Under a standard commission structure there isn't really that much incentive for an agent to try maximize the price - a quick sale with the least amount of effort is probably better. If you consider that they might have a base commission of $25k, remember that any further increase in sale price only gets them 2-4% of that increase. Another $10,000 gives the agent up to $400.. do they care about that considering they're already getting $25k?

I'm considering selling my apartment, and one particular agent has sold a couple dozen in my building. He has mentioned several times that all he does is a premium TradeMe listing and the place basically sells itself. He charges a 3% commission, so if all he's doing is creating a listing and hosting an open home for half an hour why give away tens of thousands for such little work.

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