Buying a house - Real estate agents

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Mad Scientist
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#1402790 8-Oct-2015 23:31

Thing though is, if properties in AKL are selling at 50-300% above CV, and you own one of those, you'd want to maximise your gains. Who wouldn't? And because of that it's simple. Send it to auction and see.

Agree, if you have a property in a high turnover area like Wellington, the property sells itself. Be it you or the agent.

mattwnz

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#1402797 9-Oct-2015 00:40

muppet: 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.

From my experience, the agent is working for

A) Themselves
B) Themselves
C) Themselves

Also as the agent is employed by the vendor, the agent is only required to be 'fair' to a potential buyer. But they must act in the best interests of the seller. This means that they will be on the sellers side, as they are acting for them. Not unless you employ a buyers agent, which are very rare in NZ. So the buyer is in a weaker position when it comes to whose side the agent is on, even though ultimately the buyer is indirectly paying for the agents services, via the deposit they pay on the house purchase. Unfortunately buyers of houses usually have to deal with an agent employed by the seller, so buyers should educate themselves on all the tricks agents can play. http://www.theguardian.com/money/2013/oct/06/tips-buyers-estate-agent-tricks

Also despite what some people may say, auctions will not always get the highest price for a house, as if there are multiple bidders, then the winning bid may not be the most that the winning bidder was prepared to pay for it. Tenders may yield a better price, because when people submit a tender, they are supposed to put in their absolute best offer if they really want it. In Wellington most houses are sold at tender, and we have very few auctions. Real estate agents love auctions, because they can't really lose on them. In high demand areas, it allows them to know when a house is likely to sell. Should a house not sell, they still get the auctioneers fees, and can then move to another sales method such as tender, and they can then put more pressure on the seller to accept a price.

lNomNoml

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#1402854 9-Oct-2015 08:42

Well my mom is a real estate agent and I know for a fact that she is always honest and always puts her clients first before making a quick buck.

Aredwood

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#1403294 9-Oct-2015 23:45

The big problem with auctions is that only those who can place unconditional offers can bid. When there are lots of buyers the seller won't notice that their potential market size has been reduced. With other sales methods people can place an offer subject to finance, lim report and builders report. Knowing that they only have to pay for those things if the offer is accepted. So they will be more likely to place an offer.

mattwnz

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#1403302 10-Oct-2015 00:43

Aredwood: The big problem with auctions is that only those who can place unconditional offers can bid. When there are lots of buyers the seller won't notice that their potential market size has been reduced. With other sales methods people can place an offer subject to finance, lim report and builders report. Knowing that they only have to pay for those things if the offer is accepted. So they will be more likely to place an offer.

That is a good point, and is why you have to do all your due diligence beforehand. In a hot property market though where auctions are the main mechanism for selling a house, any buyer who is serous has no choice but to look at houses being sold at auction, otherwise they are cutting out potential options. The problem is that due diligence costs a lot of money (property inspection, LIM etc), so you maybe out several thousands, and not even put in a bid. I have been to a couple of auctions in Wellington, and none even registered a bid, and I suspect the main reason is that people want to make any offer conditional on due diligence.

JWR

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#1403307 10-Oct-2015 03:04

joker97: Don't get me started on real estate agents.

I've learnt over time that whatever they say that is favourable to you (buyer) may not be true. No matter how trivial the matter they could be lying. If you treat everything they say as a lie you are getting savvy.

Liars

I'd add that if you are the seller, then don't assume that real estate agent advice is favorable to you either.

Assume they act in their own interests.

sir1963

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#1403342 10-Oct-2015 09:18

How about their "commission"

A house takes the same amount of work year over year (on average) to sell.

Just because a house goes up in price 10%, why should the commission ?

This is like your mechanic charging based on the value of your car.

Realestate agents need to be bought under control, they are adding a huge amount of cost for little return.

Realestate agents are the LEAST qualified of anyone involved in the sale (Building inspectors , lawyers, etc) and yet they
make the most money by far.

Sharesies

Trade NZ and US shares and funds with Sharesies (affiliate link).

Geektastic

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#1403443 10-Oct-2015 11:55

mattwnz:
Aredwood: The big problem with auctions is that only those who can place unconditional offers can bid. When there are lots of buyers the seller won't notice that their potential market size has been reduced. With other sales methods people can place an offer subject to finance, lim report and builders report. Knowing that they only have to pay for those things if the offer is accepted. So they will be more likely to place an offer.

That is a good point, and is why you have to do all your due diligence beforehand. In a hot property market though where auctions are the main mechanism for selling a house, any buyer who is serous has no choice but to look at houses being sold at auction, otherwise they are cutting out potential options. The problem is that due diligence costs a lot of money (property inspection, LIM etc), so you maybe out several thousands, and not even put in a bid. I have been to a couple of auctions in Wellington, and none even registered a bid, and I suspect the main reason is that people want to make any offer conditional on due diligence.

Just as a point of interest, in the UK banks will insist on a Chartered Surveyor (working for them) inspecting and valuing the house to satisfy themselves that what you are intending to have them lend against is adequate security. It is therefore technically impossible for anyone other than a cash buyer to place an unconditional offer, because if the bank's surveyor does not approve condition and value they won't lend.

I suspect that this is at least partially the reason why the law there says that the most you can lose if you don't complete the sale within 28 days is the 10% deposit. Of course, in many cases (e.g. London where the average price is NZ$1,200,000) 10% can be a pretty big sum.

We simply won't look at auction sales and a lot of other people we know are the same (none in Auckland mind) so yes, there is a definite buyer pool reduction by self-selection I would suggest.

networkn

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#1403445 10-Oct-2015 11:57

Geektastic: 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.

Change agents. We have used the same agent for the last 2 properties we have purchased. I have found them professional, honest (nearly) and pretty hard working. We did make their first sale easy by buying cash unconditional, but they did a good job selling our house.

Geektastic

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#1403446 10-Oct-2015 11:59

sir1963: How about their "commission"

A house takes the same amount of work year over year (on average) to sell.

Just because a house goes up in price 10%, why should the commission ?

This is like your mechanic charging based on the value of your car.

Realestate agents need to be bought under control, they are adding a huge amount of cost for little return.

Realestate agents are the LEAST qualified of anyone involved in the sale (Building inspectors , lawyers, etc) and yet they
make the most money by far.

Based on skill set and qualifications of all the agents I have encountered, I would pay them no more than $30/hour.

If you said that they did an hour a week of genuine, only on your house work for say 6 months, the fee should not exceed $1000 plus expenses to sell a house in 6 months.

networkn

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#1403464 10-Oct-2015 12:52

Geektastic:
sir1963: How about their "commission"

A house takes the same amount of work year over year (on average) to sell.

Just because a house goes up in price 10%, why should the commission ?

This is like your mechanic charging based on the value of your car.

Realestate agents need to be bought under control, they are adding a huge amount of cost for little return.

Realestate agents are the LEAST qualified of anyone involved in the sale (Building inspectors , lawyers, etc) and yet they
make the most money by far.

Based on skill set and qualifications of all the agents I have encountered, I would pay them no more than $30/hour.

If you said that they did an hour a week of genuine, only on your house work for say 6 months, the fee should not exceed $1000 plus expenses to sell a house in 6 months.

How would they reasonably make a living on that ?

jmh

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#1403485 10-Oct-2015 14:14

In the UK deposits are not paid until contracts are exchanged which can be several months after the initial offer is made. You can make an offer on a property and pull out at any time and for any reason before exchange of contracts (both parties can pull out - the seller might get a better offer and decide to take it). All surveys and due diligence are done before any binding contract. I sold a house in London last year, and bought here, and I have to say the NZ system was quicker and easier, although I avoided auctions. I was a cash buyer but was unable to pay a deposit up front because my money was in the UK. The house I bought went to auction and didn't sell so I was able to negotiate a good price.

Geektastic:
mattwnz:
Aredwood: The big problem with auctions is that only those who can place unconditional offers can bid. When there are lots of buyers the seller won't notice that their potential market size has been reduced. With other sales methods people can place an offer subject to finance, lim report and builders report. Knowing that they only have to pay for those things if the offer is accepted. So they will be more likely to place an offer.

That is a good point, and is why you have to do all your due diligence beforehand. In a hot property market though where auctions are the main mechanism for selling a house, any buyer who is serous has no choice but to look at houses being sold at auction, otherwise they are cutting out potential options. The problem is that due diligence costs a lot of money (property inspection, LIM etc), so you maybe out several thousands, and not even put in a bid. I have been to a couple of auctions in Wellington, and none even registered a bid, and I suspect the main reason is that people want to make any offer conditional on due diligence.

Just as a point of interest, in the UK banks will insist on a Chartered Surveyor (working for them) inspecting and valuing the house to satisfy themselves that what you are intending to have them lend against is adequate security. It is therefore technically impossible for anyone other than a cash buyer to place an unconditional offer, because if the bank's surveyor does not approve condition and value they won't lend.

I suspect that this is at least partially the reason why the law there says that the most you can lose if you don't complete the sale within 28 days is the 10% deposit. Of course, in many cases (e.g. London where the average price is NZ$1,200,000) 10% can be a pretty big sum.

We simply won't look at auction sales and a lot of other people we know are the same (none in Auckland mind) so yes, there is a definite buyer pool reduction by self-selection I would suggest.

sir1963

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#1403514 10-Oct-2015 14:49

Geektastic:
sir1963: How about their "commission"

A house takes the same amount of work year over year (on average) to sell.

Just because a house goes up in price 10%, why should the commission ?

This is like your mechanic charging based on the value of your car.

Realestate agents need to be bought under control, they are adding a huge amount of cost for little return.

Realestate agents are the LEAST qualified of anyone involved in the sale (Building inspectors , lawyers, etc) and yet they
make the most money by far.

Based on skill set and qualifications of all the agents I have encountered, I would pay them no more than $30/hour.

If you said that they did an hour a week of genuine, only on your house work for say 6 months, the fee should not exceed $1000 plus expenses to sell a house in 6 months.

A TV program about them said there was typically 20-30 hours to sell a house in NZ.
So even at $60/hr + expenses you would be looking at less than $2000.

sir1963

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#1403516 10-Oct-2015 14:51

networkn:
Geektastic:
sir1963: How about their "commission"

A house takes the same amount of work year over year (on average) to sell.

Just because a house goes up in price 10%, why should the commission ?

This is like your mechanic charging based on the value of your car.

Realestate agents need to be bought under control, they are adding a huge amount of cost for little return.

Realestate agents are the LEAST qualified of anyone involved in the sale (Building inspectors , lawyers, etc) and yet they
make the most money by far.

Based on skill set and qualifications of all the agents I have encountered, I would pay them no more than $30/hour.

If you said that they did an hour a week of genuine, only on your house work for say 6 months, the fee should not exceed $1000 plus expenses to sell a house in 6 months.

How would they reasonably make a living on that ?

Oh I guess the same way shop workers and a whole bunch of people have to reasonably make a living on $15/hr.

They are sales droids, nothing more.

Aredwood

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#1403799 11-Oct-2015 11:50

The other problem is that there are too many real estate agents in relation to the number of sales. This means that each agent has to put alot of effort into getting new listings. When they could otherwise be working on selling instead. Had an agent tell me that if I refer someone to them and they then list their house with them. They will pay me $500 just for the referral. It also means that an agent will have a really variable income.

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