1% commission real estate agents

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#1819310 11-Jul-2017 07:31

At the end of the day, you can't draw blood from a rock. If you have a 430 buyer you will get 430. If not, then no. But yes, perhaps one might find that buyer easier than the other.

tdgeek

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#1819311 11-Jul-2017 07:35

Batman: At the end of the day, you can't draw blood from a rock. If you have a 430 buyer you will get 430. If not, then no. But yes, perhaps one might find that buyer easier than the other.

In fact it was a 389 buyer. The agent got another 41 by negotiation. My point is that the bigger boys use more effort, as getting the best price is a feature and benefit of them, rather than just selling it.

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#1819312 11-Jul-2017 07:35

Even though the agent receives a smaller commission with TR*, I think the incentives are effectively the same under both models

The average income for RE isn't great e.g. interest.co.nz suggests an average income to the agent of $50,000. There are of course a small % of rock stars who will rake in the multiple $100,000's.

If we take the above example of a $500,000 house and ignore what proportion the agent actually gets to pocket*: Erking out an extra $20,000 for the vendor nets TR $200 on top of a $5000 commission, or nets a big-name $800 on top of $20,000. Yes the big-name agent gets more, but they face the same relativity of incentives as the TR agent. What would you rather put your effort into - an extra $800 or chasing the next $20,000?

If you worked for a big-name agency earning $50,000 per year, would you chase an extra $800 or the next $20,000?

If you worked for a big-name agency earning $300,000 per year, would you chase an extra $800 or the next $20,000? I think they would pick the next $20k in both cases.

* If you believe the TR story, their overheads are lower so a greater proportion of the $5000 goes to the agent. Intuitively, this has to hold true, otherwise agents would have to turn over four times as many properties with TR to net the same income as they would with a big-name agency - in which case who would work for TR?

tdgeek

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#1819313 11-Jul-2017 07:37

Batman: At the end of the day, you can't draw blood from a rock. If you have a 430 buyer you will get 430. If not, then no. But yes, perhaps one might find that buyer easier than the other.

You are in Dunners? It was -3.6 here in ChCh a half hour ago, but the MetService app tells me I'm offline, I guess its actually too busy. Must be chilly down your way

McNulty

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#1819314 11-Jul-2017 07:38

This is my thinking too. Since it is just a normal house in a normal neighbourhood in a flat market, the buyer is going to find me on trademe or realestate website. Ray White isn't going to turn a 400k buyer into a 420k buyer.

tdgeek

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#1819317 11-Jul-2017 07:42

nickb800:

Even though the agent receives a smaller commission with TR*, I think the incentives are effectively the same under both models

The average income for RE isn't great e.g. interest.co.nz suggests an average income to the agent of $50,000. There are of course a small % of rock stars who will rake in the multiple $100,000's.

If we take the above example of a $500,000 house and ignore what proportion the agent actually gets to pocket*: Erking out an extra $20,000 for the vendor nets TR $200 on top of a $5000 commission, or nets a big-name $800 on top of $20,000. Yes the big-name agent gets more, but they face the same relativity of incentives as the TR agent. What would you rather put your effort into - an extra $800 or chasing the next $20,000?

If you worked for a big-name agency earning $50,000 per year, would you chase an extra $800 or the next $20,000?

If you worked for a big-name agency earning $300,000 per year, would you chase an extra $800 or the next $20,000? I think they would pick the next $20k in both cases.

* If you believe the TR story, their overheads are lower so a greater proportion of the $5000 goes to the agent. Intuitively, this has to hold true, otherwise agents would have to turn over four times as many properties with TR to net the same income as they would with a big-name agency - in which case who would work for TR?

How I see it is that both will sell the home. The bigger ones work harder as that benefit is what lures sellers to use them. Most people can't value their home, even agents who look at a lot of data can't be sure, but big boys try harder as that's their MO. If I was selling, and I had ONE price that I will take I would use a 1% as I am not using them to find the best buyer, as I am non negotiable. OTOH will the big boys get me an extra 15k minimum to cover their extra fee? No one will ever know

McNulty

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#1819324 11-Jul-2017 07:52

"OTOH will the big boys get me an extra 15k minimum to cover their extra fee? No one will ever know"

The 15k which they might work harder for only gets the seller to break even point. Extra 5k on top of that for the seller please to make it worth the risk

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#1819345 11-Jul-2017 08:32

McNulty: This is my thinking too. Since it is just a normal house in a normal neighbourhood in a flat market, the buyer is going to find me on trademe or realestate website. Ray White isn't going to turn a 400k buyer into a 420k buyer.

In a sellers' market, you can easily turn any 400 buyer into a 420.

In a buyers' market, you need an agent who will convince a 400 buyer to pay 400 as opposed to 380 on the property next door. That's called marketing and a touch of persuasiveness.

What's the market in Chch like?

My point is, it's the agent having the buyers, the agent marketing the property. The agents that market well tend to have more buyers. But at the end of the day, it all comes down to marketing to find the highest paying buyer at that point in time.

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#1819346 11-Jul-2017 08:34

tdgeek:
Batman: At the end of the day, you can't draw blood from a rock. If you have a 430 buyer you will get 430. If not, then no. But yes, perhaps one might find that buyer easier than the other.

You are in Dunners? It was -3.6 here in ChCh a half hour ago, but the MetService app tells me I'm offline, I guess its actually too busy. Must be chilly down your way

Sometimes Chch is colder. My app predicted 3 degrees last night. Not a hint of frost so it must have been 3 or even higher!

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#1819357 11-Jul-2017 08:43

Batman:
tdgeek:

Batman: At the end of the day, you can't draw blood from a rock. If you have a 430 buyer you will get 430. If not, then no. But yes, perhaps one might find that buyer easier than the other.

You are in Dunners? It was -3.6 here in ChCh a half hour ago, but the MetService app tells me I'm offline, I guess its actually too busy. Must be chilly down your way

Sometimes Chch is colder. My app predicted 3 degrees last night. Not a hint of frost so it must have been 3 or even higher!

Its still -1.6 here, and a colleague is in Invers , its 7 there! I thought the cold blast was happening down your way early this morning

tdgeek

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#1819358 11-Jul-2017 08:46

Batman:
McNulty: This is my thinking too. Since it is just a normal house in a normal neighbourhood in a flat market, the buyer is going to find me on trademe or realestate website. Ray White isn't going to turn a 400k buyer into a 420k buyer.

In a sellers' market, you can easily turn any 400 buyer into a 420.

In a buyers' market, you need an agent who will convince a 400 buyer to pay 400 as opposed to 380 on the property next door. That's called marketing and a touch of persuasiveness.

What's the market in Chch like?

My point is, it's the agent having the buyers, the agent marketing the property. The agents that market well tend to have more buyers. But at the end of the day, it all comes down to marketing to find the highest paying buyer at that point in time.

A friend is an agent for a big boy agency. Their network is very large, so she tells me they have more access to buyers. More buyers the better, more pushy agents the better

ChCh is flat now, one of the lower increases last quarter, but prices aren't coming down. If you had a house is the more affordable range, say 500, Id say the market is ok as that's the first home struggling buyers range probably

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#1819371 11-Jul-2017 09:14

tdgeek:

Batman:
tdgeek:

Batman: At the end of the day, you can't draw blood from a rock. If you have a 430 buyer you will get 430. If not, then no. But yes, perhaps one might find that buyer easier than the other.

You are in Dunners? It was -3.6 here in ChCh a half hour ago, but the MetService app tells me I'm offline, I guess its actually too busy. Must be chilly down your way

Sometimes Chch is colder. My app predicted 3 degrees last night. Not a hint of frost so it must have been 3 or even higher!

Its still -1.6 here, and a colleague is in Invers , its 7 there! I thought the cold blast was happening down your way early this morning

Maybe it's going from north to south. Not sure how but that sounds like what's happening!

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#1819378 11-Jul-2017 09:36

tdgeek:

So your saying that they all just turn them over?

House sells for $500,000 one gets $20,000 the other gets $5000 thats more my point. Why would anyone use 4%ers? The perception is they will do more and get more. Far higher access to buyers, etc. We sold a flat, at auction, by one of the big names. Reached 389. Auction stops, so they talk to the bidder. 405. No, so they talk again, I wont get much more, hopefully 410. Got 430. The 1%ers wont negotiate like that as they are only getting a quarter of the whole deal, they want to flick it and move to the next one. They also wont have access to the numbers that Harcourts and Ray White will. And going by the extensive data we got on sales in our area, which wasn't just a list on A5 paper, they wont go to that detail either. All IMHO, and from my limited first hand experience.

Yep. Perception is often not reality. I mean why would you use an agent at all over doing it yourself on TradeMe? Pretty much the same buyers. At the end of the day you're either happy with an offer or you're not. An agent's involvement may or may not get you an offer you're happy with. I simply don't see them adding value to the transaction these days. Pre-internet - certainly.

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#1819386 11-Jul-2017 09:45

cadman:

tdgeek:

So your saying that they all just turn them over?

House sells for $500,000 one gets $20,000 the other gets $5000 thats more my point. Why would anyone use 4%ers? The perception is they will do more and get more. Far higher access to buyers, etc. We sold a flat, at auction, by one of the big names. Reached 389. Auction stops, so they talk to the bidder. 405. No, so they talk again, I wont get much more, hopefully 410. Got 430. The 1%ers wont negotiate like that as they are only getting a quarter of the whole deal, they want to flick it and move to the next one. They also wont have access to the numbers that Harcourts and Ray White will. And going by the extensive data we got on sales in our area, which wasn't just a list on A5 paper, they wont go to that detail either. All IMHO, and from my limited first hand experience.

Yep. Perception is often not reality. I mean why would you use an agent at all over doing it yourself on TradeMe? Pretty much the same buyers. At the end of the day you're either happy with an offer or you're not. An agent's involvement may or may not get you an offer you're happy with. I simply don't see them adding value to the transaction these days. Pre-internet - certainly.

Depends on the property. May not be "pretty much the same buyers". Some loaded buyers don't look on the internet. Some anxious buyers don't look on the internet. Some people are too busy to look on the internet themselves. Cheapskates like me look on the internet. Hence depends on your property. Low end - internet. Mid end - maybe internet if you don't expect top dollar. Want top dollar - use an agent.

True story: my cleaner bought a house like this: She goes to the bank. The banker hooks her up with an agent and comes back with 4 options in her price range. She picks one she likes. She sees the agent, and offers more money than the last accepted offer which did not get completed. Bought a house. Everybody happy. I was like - WTF!!

tdgeek

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#1819407 11-Jul-2017 10:08

Batman:

cadman:

tdgeek:

So your saying that they all just turn them over?

House sells for $500,000 one gets $20,000 the other gets $5000 thats more my point. Why would anyone use 4%ers? The perception is they will do more and get more. Far higher access to buyers, etc. We sold a flat, at auction, by one of the big names. Reached 389. Auction stops, so they talk to the bidder. 405. No, so they talk again, I wont get much more, hopefully 410. Got 430. The 1%ers wont negotiate like that as they are only getting a quarter of the whole deal, they want to flick it and move to the next one. They also wont have access to the numbers that Harcourts and Ray White will. And going by the extensive data we got on sales in our area, which wasn't just a list on A5 paper, they wont go to that detail either. All IMHO, and from my limited first hand experience.

Yep. Perception is often not reality. I mean why would you use an agent at all over doing it yourself on TradeMe? Pretty much the same buyers. At the end of the day you're either happy with an offer or you're not. An agent's involvement may or may not get you an offer you're happy with. I simply don't see them adding value to the transaction these days. Pre-internet - certainly.

Depends on the property. May not be "pretty much the same buyers". Some loaded buyers don't look on the internet. Some anxious buyers don't look on the internet. Some people are too busy to look on the internet themselves. Cheapskates like me look on the internet. Hence depends on your property. Low end - internet. Mid end - maybe internet if you don't expect top dollar. Want top dollar - use an agent.

True story: my cleaner bought a house like this: She goes to the bank. The banker hooks her up with an agent and comes back with 4 options in her price range. She picks one she likes. She sees the agent, and offers more money than the last accepted offer which did not get completed. Bought a house. Everybody happy. I was like - WTF!!

Agree fully

A house is a big deal. Many are quite happy buying or selling a box of 10 widgets on TradeMe, but a house, not so many. Its too big and too much risk, and I dont know anything about buying or selling a house, I dont want to sell it too cheap and I dont want to overpay, so the best option for many is to go somewhere where there are experts in the field, who deal with house sales and purchases ona daily basis, who know the market in your town. Its so easy to go the wrong way for tens of thousands

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