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  Reply # 1570801 13-Jun-2016 06:37
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jonherries: The most compelling reason I have heard for agents not being particulary concerned about getting you the best price is shown in the maths below.

If you sell your house with an agent with a fee of 3.5% for $800k they make $28,000.

If the agent manages to get you an extra $50k (ie. House sells for $850k) the agent gets $29,750.

If we make the assumption that the extra money takes an extra six weeks of open homes and dealing with buyers, would it not be easier to concentrate on the next $800k sale than earning the extra $1750?

Of course even better is to lower the expectations of the seller so they think they were lucky to get $800k.

Jon


Also remember that nearly 50% of the commission goes to head office and the like so it's even less money for the salesman.

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  Reply # 1570802 13-Jun-2016 06:40
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JayADee:
Jaxson:

 

I think it pays to study this with a clear head.

 

 

 

 

 

 

 

On a standard house sale you're talking what 6%? of the sale price to the agent.  Depending on house values, that's in the range of $10,000 - $30,000 or so?

 

 

 

 

 

 

 

What is it that agents are bringing to you, what are you paying for?  Essentially its connecting you with the buyers through advertising/marketing, and with buyers who are not prepared to buy direct (and many are not, assuming some sort of guarantee from purchasing via an agent).

 

 

 

You are still paying for the legal fees regardless, they are simply connecting with the buyers and getting them to your property.

 

 

 

 

 

 

 

Basically, the question is, is that worth it for you?  In times where there is a lot of competition in the market, you'd probably do ok trying to sell yourself.  Ideally you want a multiple offer situation to drive buyers into a frenzy, and potentially agents can do that more if they have lots of buyers coming to them.  They'd obviously need to generate more than their sales commission for you to be better off than taking a lower offer yourself.  I think that's where the private sell can work well, if you're not greedy.  If you meet buyers half way into the agents commission, they pay less and you earn more, than if an agent was used. 

(As an aside... Watch out for ones who offer more than the valuation of your property, and who need finance to complete the deal, as the bank will only lend the lower of the offer and the valuation.

 

 

 

 

 

 

 

I'm amazed at the number of people who would freak out at the notion of spending $5,000 on advertising, yet are happy to pay $20,000 in commission to an agent?!

 



Which valuation do the banks look at, the GV or do they still require the buyer to get a new one?

 

When I was involved (a couple of years back) if you wanted to borrow not more than 80% of the GV, the bank would lend 80% of that value. They would only require a Registered Valuer's report if more than 80%, or if you wanted to borrow against more than a max property value ($2m at that time) or if the transaction was by 'Private Treaty' (ie if no third party like an agent involved).


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  Reply # 1570840 13-Jun-2016 09:22
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My friend is a real estate agent, bought a 150k boat last year, and a new range rover a couple of months ago. 

 

Doing OK. 


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  Reply # 1570853 13-Jun-2016 09:58
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eracode:

 

jonherries: The most compelling reason I have heard for agents not being particulary concerned about getting you the best price is shown in the maths below.

If you sell your house with an agent with a fee of 3.5% for $800k they make $28,000.

If the agent manages to get you an extra $50k (ie. House sells for $850k) the agent gets $29,750.

If we make the assumption that the extra money takes an extra six weeks of open homes and dealing with buyers, would it not be easier to concentrate on the next $800k sale than earning the extra $1750?

Of course even better is to lower the expectations of the seller so they think they were lucky to get $800k.

Jon

 

Same logic but looked at the other way round: Let's say the agent says they will get you $800k for your house. You think that's a pretty good price so you sign them up with commission at , say, 3%.

 

They then start to lower your expectations and after a couple of weeks they come to you with an offer of $780k saying "this is what the market thinks your house is worth" and they put pressure on you to accept the offer.

 

At this point their commission is going to notionally reduce by only $600 from $24,000 (on the 'promised' $800k) to $23,400. You're taking an after-commission hit of $19,400. Small drop for the agent, pain for the vendor.

 

And who knows what they say to the potential buyer: "These people are looking for $800k but will probably accept $780k if you offer it".?

 

So if the agent can get you to accept, it's no real skin off their nose and they go on quickly to the next one. Big incentive for them to get you to accept any old lower price.

 

Maybe cynical on my part but the incentive is there for them to act that way. I don't put any weight on the 'ethics' of the 'profession'. The Real Estate Agents Authority is there only to catch the obvious bad eggs, not to correct systemic weakness.

 

 

 

 

OR, when you consider houses sell on average for 20-30 hours of work by an estate agent, if you paid them $100/hr you should only pay $2000-$3000

 

The advertising should only be hundreds of dollars, just look at all the car retailer ads, there is no way they could make money if it was costing thousands !

 

Worse, the car retailers own the cars are are paying mortgage rates themselves, they have larger "yards" and more liability and risk.

 

 

 

Real estate agents need to be made employees rather than contractors, once they are on a wage, and charge by the hour, estate agent fees should plummet.

 

 

 

Ask yourself what you pay your plumber, electrician, car mechanic, they are all more qualified, have more risk, have to buy/carry stock etc .

 

 


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  Reply # 1570855 13-Jun-2016 10:00
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I would use an agent. I would also use a really good top agent. Get referrals.
Buy from bad agents, sell with good ones. Ones that put a lot of effort into getting to know the prospective buyers. 






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  Reply # 1570874 13-Jun-2016 10:39
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Or put a time factor in the mix.  Pay more for selling quickly, less for selling in 6 months time.

 

There are multiple ways this could be structured.

 

 

 

The funny thing is the price of the product, and how desirable it is are the main factors in terms of selling the product.  A top agent that sold a place in a week was very likely selling a desirable/presentable product at a price that was competitive in the market at that time. 


Each to their own, but if you're not pushed for time then I do wonder what you've got to lose by having a punt at selling yourself.  If you've got a product that's not priced particularly competitively and is not in a desirable area, then you might struggle to get potential buyers to your location, but if you've priced well, and are prepared to do a bit of the advertising yourself, then that's a lot of money you could keep yourself.


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  Reply # 1570887 13-Jun-2016 11:01
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Jaxson:

 

Or put a time factor in the mix.  Pay more for selling quickly, less for selling in 6 months time.

 

There are multiple ways this could be structured.

 

 

The agent who we used for the last house we sold had such a differential, but it was the other way around: she would charge a lower commission if she sold the house within x weeks of listing (which ours did, as the market at that time was crazy busy).

 

I've had no issue using agents for the three houses we've sold over the last 10 years. We've always been careful in who we picked as agents, and have not been disappointed by any of those we've used. That said, I agree the commission charged here in NZ is exorbitant, but we've always had some success in negotiating this. What I find so farcical about it, though, is how does this work given the significantly different costs of houses across the country? An agent charging 3% and working in Auckland is creaming it (given both sales prices and speed of sales) compared to the agent getting the same amount selling in Eketahuna (my go-to place for the back of beyond!).

 

I think the success (or otherwise) of selling your house yourself is dependent on so many factors, so it's not as simple as many portray it. In particular, I think it depends on the desirability of your property: in a fast-sales area like Akld it makes total sense; in a quiet market, it could be somewhat disheartening and slow as a key job of agents is getting people through the door (via hopefully better advertising, people on their books, other agents working for the firm etc). I've watched one particular house in my city (PN) - and this was a nice house at a fair price - go from a home sell method, to a cheap fixed-price agent to a "full-service" agent over a matter of half a year. I've also talked to people who have tried alternatives to the full-service agent, and been disappointed by the results.


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  Reply # 1570892 13-Jun-2016 11:13
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Personally I think using an agent comes down to how professionally you and your partner (if any) can handle the process.
For some people selling a house is a very emotional process and expectations can be unrealistic, or negotiations can become personal.
(eg have spent heritance money on the property that is just not going to result in an increased purchase price)

 

With the internet leveling the advertising playing field it is so much easier than 20 years ago to sell your own house.

 

So in my mind the main role of an agent is managing expectations of both the buyer and seller.
They are there to handle negotiations and provide market advice.
Any monkey can show somebody around an open home and place an advert on line/in the paper.

 

I feel most agents work 60% for the sellers, 10% for the buyer and 30% for themselves.


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  Reply # 1570919 13-Jun-2016 11:34
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KrazyKid:

 

Personally I think using an agent comes down to how professionally you and your partner (if any) can handle the process.
For some people selling a house is a very emotional process and expectations can be unrealistic, or negotiations can become personal.
(eg have spent heritance money on the property that is just not going to result in an increased purchase price)

 

With the internet leveling the advertising playing field it is so much easier than 20 years ago to sell your own house.

 

So in my mind the main role of an agent is managing expectations of both the buyer and seller.
They are there to handle negotiations and provide market advice.
Any monkey can show somebody around an open home and place an advert on line/in the paper.

 

I feel most agents work 60% for the sellers, 10% for the buyer and 30% for themselves.

 

 

 

 

60% for themselves, 20% for the sellers, 20% for the buyers.

 

 

 

One thing that would help would be making illegal the "exclusive listing" arrangement. This is simply anti-competitive.

 

Once you have signed a listing agreement, you are a captive market, its getting that listing thats important. This is why so may listing are "bought" through the agent giving unrealistic expectations to the seller and then closer to when the exclusive period is about to come up they push how the market demands a lower price. Also because they bill advertising as an additional fee that must be paid up front, it creates a barrier to listing with multiple agencies.

 

If you dont have and exclusive, the agents will also do very little to sell your house.

 

If the buyers had to pay 1/2 the agents fees a LOT more people would consider private sales, helping force down the exorbitant fees.

 

In the UK, the fees are less than 1/2 that of NZ and it includes advertising and expenses.

 

 

 

NZ is being ripped off.


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Spark NZ

  Reply # 1570937 13-Jun-2016 12:02
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dafman:

 

Some questions:

 

Will you be able to reach as many potential buyers as a real estate agent working for a well-known company? More buyers = more upside on potential price offers.

 

A good real estate agent will promote price competition between potential buyers - its their job to do so. Will you be able to do the same?

 

Do you want to run open homes yourself?

 

A good real estate agent will be able to provide better information on competing properties, or recent sales, to assist getting you a better price. Will you be able to do the same?

 

If you have a disgruntled buyer, real estate agents are the buffer between you and the buyer. Do you want to run the risk of any direct hassle?

 

 

I recently (a week ago) sold a house for which I was the estate executor. I only had a vague idea of what it would be worth because the property had only very recently been subdivided as part of the estate administration. With no GV generated by the council at that point, setting a realistic asking price was pretty difficult.

 

Initially I was not keen to go through an agent but eventually my sensible side prevailed, and I listed it with a large national chain.

 

I have to say that I am glad I did - we chose no price marketing with a deadline sale. The agent went above and beyond by doing a 1 hour open home on both Saturday AND Sunday for all four weeks of the marketing campaign. With a lot of companies you'll only get 30-45 minutes once a week.

 

The agent managed to get us into a multi offer situation, which ensured that each buyer really did make their absolute best offer. In the end, we accepted an offer which was tens of thousands more than I ever thought we'd get. The extra money we got more than covered the agent's commission but not only that, I didn't have to waste my weekends being at the property showing people around, or any of the other stuff you don't think about before deciding to be your own agent.

 

Of course, each situation is different, and in some cases there is no reason why you can't have a go yourself. But I do believe that in my particular case, the agent and his high profile agency were able to get my house in front of many more potential buyers than I would ever have been able to do on my own. And his slick negotiation skills ensured that we were able to get multiple (and competitive) offers on the table.





The views expressed by me are not necessarily those of my employer Spark NZ Ltd

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  Reply # 1570959 13-Jun-2016 12:36
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Hi - not sure if OP has sold their place yet, but I would suggest trying to sell via TradeMe Property and/or local advertising by yourself first. TradeMe has huge reach, but I'd suggest doing your homework on marketing and get some good photos. As a long-time professional photographer and videographer I would of course suggest hiring someone who knows what they're doing. Over the years I've helped numerous people sell their houses with great images (that's what draws interest - same as all online selling), plus with TradeMe accepting video media now, it's proving a huge benefit to have a slick, well-put together video walk-thru'. 

 

Good images and a well-written pitch talking about local points of interest, etc should get interest from not only local and national buyers, but with some social media savvy you'll be able to get good international exposure. There are some commercial plus residential property samples at my website.

 

Good luck.

 

Cheers,

 

Mike Clare

 

http://www.clickmedia.nz


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