1% commission real estate agents

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Horseychick

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#1819540 11-Jul-2017 12:54

So I'm curious whether the OP has made a decision?

Having dealt with a LOT of real estate agents in the last 4 years (took 18 months to buy new property, 6 months to sell original property x 2 agents, and sold a rental property myself on TM) I would go with the agent charging the lower %. The big guys claim they have more buyers, but I've never seen proof of that. They advertise an Open Home mainly to find people looking to buy then harass them afterwards trying to get them to view other properties. This may give them more buyers if they are holding more Open Homes, but the other agents who charge less will employ the same tactics. Bigger agencies will negotiate harder? How does that work? You think because they are potentially getting paid more they will keep going longer? It's not been my experience. Bigger agencies are very keen on auctions up in Auckland even when the auction market slowed considerably - why? Because they are pretty much guaranteed to get their commission. If they get the seller at an auction and the price isn't what they want then they will apply extreme pressure to say 'the market has spoken' regardless of whether they claimed the house was worth $25k more from their 'extensive data'!

Seen all these tactics in action and never seen any higher value from the big agencies who often have extreme pressure to simply make a sale and make their targets.

IMHO smaller agency will do as good and if you sign a short contract with them and are not happy then you can move onto the big guys and lose more money

McNulty

152 posts

Master Geek

#1819728 11-Jul-2017 17:45

OP here. I think I've made a decision (1%) but unfortunately my wife has independently made the opposite decision (4%}.

So now I have a whole other negotiation to work through!!!

mattwnz

20141 posts

Uber Geek

#1819790 11-Jul-2017 19:02

tdgeek:

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

Using trademe is really solely about getting the property to as many eyeballs as possible. It won't usually sell it, as very few people will buy a property without first actually visiting it. I have looked at viewer counts of properties being sold via Trademe, the real estate agents site, and the main property website, and by far the most traffic is off trademe. So that will likely have the best odds of connecting the buyer to the house, over any actual agent. It was like 10 to 1 of trademem over other sites. That however may have changed since I saw the stats a couple of years ago. I would still recommend people use an agent to do all the negotiation, but that doesn't mean you have to pay them a fixed percentage, rather than a fixed fee. homes.co.nz may give you a market price based on what others have sold for and the RV. Even get some agents in to do a free appraisal to get a market value, or pay a valuer. But some people just want someone to do everything for them, and don't mind paying to get an agent in, as it can be an easy option for many. A bit like using a tax refund website, vs just doing it yourself on the IRD site, as shown on fair go yesterday.

Horseychick

150 posts

Master Geek

#1820018 12-Jul-2017 07:53

McNulty: OP here. I think I've made a decision (1%) but unfortunately my wife has independently made the opposite decision (4%}.

So now I have a whole other negotiation to work through!!!

Haha maybe explain the difference in terms of how many shoes or handbags she can buy? Works for me!

Batman

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#1820046 12-Jul-2017 09:15

Rule no 1. Everything is negotiable. I would put it to the 4% saying I can get TR for 1%. Can you match? I would eventually accept 2%. THey will say they've never done this before, how special you are, ya di ya di ya. Do not accept anything other than 2%. (probably + GST so 2.15%)

Then the math says:

If you sell a house for 500k, you stand to dish out an extra 5k. In the grand scheme of things, it's not that much. Just make sure you get offer that is 10k above your expectation so everyone is happy.

Some agents who are extremely good at what they do will not negotiate. If they are hellbent on not negotiating, you probably have one of the top agents in town.

On the flip side, if they go down to 2%, they are desperate ... should you then have gone with them in the first place ... hmm ... I did that once. I would never use him again! (Yes Chch, he immediately offered to reduce to 2%)

Batman

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#1820047 12-Jul-2017 09:16

Sorry it's a bit complicated eh ... but yeah life's like that. Also if they agent does not suggest how you can improve your house to sell better don't use them.

McNulty

152 posts

Master Geek

#1927163 30-Dec-2017 21:52

6 months has passed so I've decided to give an update for anyone reading this thread in future.

Ultimately we decided to use the 1% agent (Total Realty) and we had a great result.

One thing I will note up front is that I credit the individual agent more than the agency. The same agency had some people working under their banner that I wouldn't let anywhere near my home, although I would say the same about any other agency - choose an agent, not an agency.

As mentioned, we met with a couple of different agencies (both specialists in my location). Of course the 4% agent promised better results, more potential buyers because of their large network, better marketing etc etc. The 1% agent argued that their prices are low because they don't need to support the exec salaries and overheads associated with a large national chain. At the end of the day, with the 2 sets of paperwork in front of me there was almost no difference in the 2 offerings (the 4% agent had a small amount of additional advertising avenues but both agents covered all the same "main" advertising i.e realestate, trademe, property press etc). The 1% agent also suggested that "the buyers will pay what they will and you can't fight the market forces with a bigger banner". Remember this statement because it will be relevant later.

I then asked both agents for their recent sales figures (advertised price vs actual result). Surprisingly, they both were happy to provide this info without hesitation. A quick spreadsheet revealed that the 1% agent was having slightly better results. (As an aside: After a bit of extrapolation from me, I was also able to estimate that both agents bring in roughly the same personal income each year, and their income is more average than some people might think). I also used the spreadsheet to confirm what I already knew: if the 4% agent got me a fantastic price and the 1% agent did an average job then they'd be about equal. I the 1% agent did anything better than an average job then I'd be ahead.

As mentioned in the original thread, I wanted to go with the 1% but my wife wanted to go with the 4% agent as she had a better sales-y personality which I'll admit is important in selling, so I tried my best to work with them. I decided to see if the 4% agent would come down re their commission. I tried a couple of different tactics mentioned by others in this thread: asking for lower commission from the 4% agent which they flatly refused, citing the much better job they'd do for us and suggesting that it was insulting of me to ask.

I then tried suggesting to the 4% agency a low/high commission structure which would net them an extremely high commission if, and only if, they delivered on their promises (2% commission up to sales price X, 8% commission on anything above X. Where X was nothing unfair and totally in line with their valuation range and 'promises'.) What happened next was a turning point: The 4% agent replied by saying that they couldn't do such a low/high deal because "the buyers will pay what they will and you can't fight the market forces" (not a direct quote but near enough). Thanks, so you admit to charging an extra 3% for no benefit!

At that point we signed with TR and coincidentally our direct neighbors listed with the very same 4% agent the same week. We sold after around 6 or 7 weeks for a good price (not amazing but well towards the higher end of valuation, and well over RV) and the neighbors' house is still for sale several months later, now currently listed with a second 4% agency. There are several differences between the neighboring houses for sure but the ultimate point of the story is that the 1% agent got us a great result, got the job done, and offered a service which was no worse than (and probably better than) the 4% agent. And I saved several thousand dollars in commission.

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elpenguino

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#1927224 31-Dec-2017 01:06

Awesome . Thanks for sharing your story.

Most of the posters in this thread are just like chimpanzees on MDMA, full of feelings of bonhomie, joy, and optimism. Fred99 8/4/21

Batman

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#1927228 31-Dec-2017 07:14

It really depends. A house that appeal to many people (usually low to mid end pricing), if advertised widely, there will be buyers.

And the price? Well, depends on how much the buyers can/want afford! Max price? Depends if you can get 2 buyers to go hammer and nail at each other.

A house that appeal to a rare / special person (usually very expensive, in the middle of nowhere, down a ditch, half built??, leasehold, etc), well you got to find that special person to buy it.

And the price? Well don't even talk about the price first - you got to find the special person. It's right place right time. If they exist and you find it, then you talk about the price - that's where specialist marketing comes in. But you can find that buyer but can't agree on price, and you can drop the price to $1 and the buyer is not around at that point in time.

tdgeek

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#1927236 31-Dec-2017 08:09

We went with the 3.5% one recently. Were going to do it ourselves, glad we didnt. I sold my late Aunties house via TR, it was quick, price not great. There is no incentive to try to get the best price. Incentive is turnover.

My basis for our recent sale (which was auction) with the higher agency, is while I can hold out, they will bleed the last cent from the buyer. I saw it in an auction we had a couple of years ago. So my basis was, if they can get 20k more than me, it makes no difference. Our agent did open days, other agents from her agency (Harcourts) were also involved, and as it happened, the interested parties were from her other agents. Bidding stopped at 406, got 450. I cant say what I would have got, or what could have happened with a lower resource 1%, but Id rank a good sales person (in this case its the auctioneer in the go to a room lets talk) higher than car sales people in getting a sale.

Either way you never really know

McNulty

152 posts

Master Geek

#1927405 31-Dec-2017 17:56

tdgeek:

There is no incentive to try to get the best price. Incentive is turnover.

What I've learned is that the incentive is turnover for every agency

tdgeek

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#1927432 31-Dec-2017 20:04

McNulty:

tdgeek:

There is no incentive to try to get the best price. Incentive is turnover.

What I've learned is that the incentive is turnover for every agency

Off course it is. But the 1%'ers MUST get turnover. Best way to get quick turnover is a quick sale. best way to get a quick sale is a low price. "This is the market" , and so on

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