Real Estate agents, anyone done the math?

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David321

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#312546 26-Apr-2024 11:26

Hi all,

My wife and I are looking to put our house on the market soon and were wondering if anybody here has been through the process of comparing different real estate agent fees vs service and any other due diligence that should be done (if any) when selecting an agent?

I have heard from an agent who works for a company that charges are higher commission than a lot of other that those companies put more into selling your home and therefore get a better price for the seller, weather this is true or not is hard to work out.

Our house is in Hornby in Christchurch and I am assuming it is worth about $600k, putting it in the first home buyers price range I would assume, which I believe would negate the need for an expensive agent, my theory is first home buyers don't want to partake in auctions as due diligence is expensive and turns out to be lost money if they are outbid, so they typically do not even consider auction listings (although some do).

I believe the more expensive agents could be worth it for more expensive houses, securing their clients more (and higher) offers potentially?

Am I correct with this assumption? a cheap low commision agent is what we should get for our house considering its value? or is there something I am missing?

If cheap is the way to go, does anyone have any recommendations on agents or companies to use? likewise if the more expensive ones are in fact the way to go for us, any recommendations there also?

_David_

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#3223051 26-Apr-2024 11:50

I haven't run the numbers, but consider skipping the agent altogether. It's a big cost...

Have photos taken, put up your own trade me listing, arrange your own viewings, have your lawyer draw up the paperwork...

Yes, It's correct that a lot of buyers won't entertain auctions. As auctions are unconditional, buyers need to either pay for due diligence upfront (and risk that doing that several times, eroding their equity if they keep loosing auctions), where as with other sell types, buyers can put in a conditional offer, and agree a price before they pony up for due diligence.

Handsomedan

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#3223054 26-Apr-2024 12:00

It's been a long time since we last bought/sold a house, but my experience back then is very different to what i am told is the norm now.

It does appear that a lot less work is done by the agents than used to be the case - they tend not to take people around their listings, rather relying on shorter open homes and expensive marketing campaignes to sell the houses for them.
Feels like lost money a lot of the time.
I do know that a local agent in our area (Akl's North Shore) gets a lot of sales in the neighbourhood and surrounds (and at premium prices), but I assume he's also more expensive, so would have to do the math if we were to sell.

Good luck! It might be easier/cheaper to sell privately.

https://www.trademe.co.nz/c/property/article/selling-your-home-privately-the-need-to-knows

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#3223064 26-Apr-2024 12:28

Owing to their commissions and the way those work (e.g. larger commissions for more valuable sales, which is BS in my opinion) RE agents are anathema to me - but I've never had the guts to sell privately. To paraphrase Winston Churchill: "Never in the field of human endeavour has so much been paid to so many who do so little."

If you’re selling a house and wanting/expecting, say, $600,000, a buyer may offer you a cheeky $550,000. The agent may then urge you to accept it, saying: “That’s what the market is telling us [+ shrug]”. The reality is that they get a quick sale without any further work and can go on to their next one. You ‘forfeit’ $50k but their commission of, say, $24k is reduced by about only $2k. There is no real incentive for agents to maximise the amount a house is sold for.

If you have the luxury of time, it would be great to sell it privately and save a lot of money.

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MurrayM

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#3225432 2-May-2024 09:40

Back in 2007 my parents sold their house privately and it couldn't have been easier. They hired a professional photographer to take a bunch of photos (including those 360 degree ones) and got a few agents through to give them an estimate on what sort of price they could expect. I put together a simple website (I got the domain name buythishouse.co.nz) that included dozens of photos, Google Map, floor plan, measurements, info about all the fixtures and chattels, etc (quite a lot more info than you normally see in a house listing). A TradeMe listing was set up, but it only had the basic info and then said to visit the our website for more info. Everything went live on a Saturday morning and by mid-day the next day it was sold. Everyone that came for a viewing said they found my website very helpful.

As far as the legal side of things go, which I know a lot of people worry about, my father talked to a lawyer friend of his who gave him a standard house sale agreement contract.

trig42

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#3225437 2-May-2024 09:53

I think it depends on the market.

In a buoyant market, you'll get a lot of interest, and the choice of agent probably doesn't make too much difference.

In a tough market, you want an agent that will do the mahi. In tough markets, you see the number of agents drastically reduce as well (as those who jumped in and got the REA license when the going was goo have gone and found other income).

We sold our house mid last year with Bayleys. They are not the cheapest commission-wise, but the agents did a great job. The marketing (which we also had to pay for) was great and the house sold in our expected/hoped price band in about 4 weeks (it was a Tender). Always afterwards you ask yourself if you'd gone with another agency (cheaper) would we have got the same result? I don't think we would have in the market we sold in. A year earlier we probably could have put a handpainted sign out the front and got more, but that was then.

In short, a good agent is worth it. A lazy one (who is just there to shift boxes really) isn't. Take a look at the listings in your area, even check out homes.co.nz to see what has sold and who sold them (you can google the address and generally you'll find the agency/agent who listed them) - if one agent sticks out, go talk to them. Good chance they specialise in your area and price range and may have buyers waiting.

BlargHonk

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#3225439 2-May-2024 10:18

One tip is to go around other open homes for similar properties in the area and talk to the agents. You will soon get an idea of which ones are organised, helpful, etc.

Then make sure you get current market appraisals and indications of commissions from multiple agents. Note that they will all expect you to negotiate the commission so don't go on the first number they present.

nova

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#3225446 2-May-2024 11:05

A good agent is worth it if you are selling to first home buyers. Banks prefer houses that are sold through an agent, a buyer will probably have to go through more hoops for a private sale in terms of getting independent valuations etc.

We sold a house in Christchurch quite a while back through Total Realty, we used Di Clement and she was quite good. It is worth exploring one of the cheaper agents if you don't want to go to auction, you can sacrifice a few thousand on the sale price and still be ahead with the reduced commission. But at the end of the day the agent themselves makes the biggest difference, so go to the open homes as a buyer and see how proactive the agent is and how well they represent the home. We also more recently sold a house at auction through Harcourts, which worked out at about 3% commission. That also went quite well and if going to auction I think it is worth going with one of the bigger firms.

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Wheelbarrow01

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#3225725 3-May-2024 00:18

nova:

A good agent is worth it if you are selling to first home buyers. Banks prefer houses that are sold through an agent, a buyer will probably have to go through more hoops for a private sale in terms of getting independent valuations etc.

We sold a house in Christchurch quite a while back through Total Realty, we used Di Clement and she was quite good. It is worth exploring one of the cheaper agents if you don't want to go to auction, you can sacrifice a few thousand on the sale price and still be ahead with the reduced commission. But at the end of the day the agent themselves makes the biggest difference, so go to the open homes as a buyer and see how proactive the agent is and how well they represent the home. We also more recently sold a house at auction through Harcourts, which worked out at about 3% commission. That also went quite well and if going to auction I think it is worth going with one of the bigger firms.

Not pertaining to Di Clement specifically (I am sure she's lovely!), but here is my 2017 opinion of Total Realty for what it's worth.... I'm unsure if it's still their primary sales tactic to market properties with "buyer enquiry from" at a figure that's up to $80k below what the vendors are willing to accept, but I caught them doing it more than once back in 2015/2016...

Probably worth clarifying that an $80k difference at today's prices seems like nothing to moan about, but back in 2015 Christchurch when it was buyer enquiry from $429k, you offer $469k, then they tell you the vendor wants at least $510k, that's an extra 18% on top of the guide price (and a full 25% over RV at the time), then it's all just a waste of everyone's time. For the record, QV sales data shows that they eventually sold that house for $449k - a full $20k less than I offered...

I've had reason to sell a number of properties in Christchurch over the past few years (mostly due to executing my parents' estate). Here are my picks:

Malcolm Cameron, Harcourts Bishopdale - a solid & honest performer who doesn't blow smoke up your butt. If anything, he slightly underestimated how much he'd get for us - even he was a little surprised when we sat down to open the deadline sale offers. But I'd rather that any day that someone who over-promises to get the listing, and then wears you down on price just to get a quick sale and collect their commission. He's also happy to do appraisals with no pressure to sign on the dotted line (I've asked him to do a couple on my own house since).

Judy Hallinan, Ray White Marshlands - Any agent prepared to get on her own hands and knees to give the garden a quick weeding prior to an open home is a keeper in my book - to this day I still don't quite believe it even though I pulled up and saw it with my own eyes. Not to be discouraged after an unsuccessful auction attempt in a softening market, Judy worked tirelessly to get a mildly interested party over the line with a great offer.

I have also sold a house through Mike Pero (the agent has since gone overseas so no point mentioning his name) and I found them very good as well. One of the Mike Pero benefits is that they do charge a bit less that the main players (around $6k cheaper than the main players on a $500k sale) but are still a full service agency.

The main problem is you don't get a do-over when selling your house - so you'll never know whether a different agent could have got you more. All you can do is pick the one you have some chemistry with, who comes with good references and a strong record of results.

cddt

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#3225743 3-May-2024 08:20

We went through selling our house (in Auckland) in 2022, and then buying another one. We encountered a few good agents, and many more bad ones.

When looking for a selling agent, remember that a few agents make the majority of the sales (and hence the income). The majority of agents make very few sales, and are desperate to a) get a listing and then b) make a sale at any price. Therefore, you want an agent who is successful, because they are less likely to pressure you to accept a lower price, because the sales of your house isn't as critical to their success.

Oh and the commission percentage? It's always negotiable. Do not consider paying more than 2%.

If anyone is in Auckland I can recommend Aman Gulia from Harcourts - I would list with him in a heartbeat if I was selling again.

My referral links: BigPipe | Mercury

BlargHonk

147 posts

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#3225807 3-May-2024 10:03

cddt:

We went through selling our house (in Auckland) in 2022, and then buying another one. We encountered a few good agents, and many more bad ones.

When looking for a selling agent, remember that a few agents make the majority of the sales (and hence the income). The majority of agents make very few sales, and are desperate to a) get a listing and then b) make a sale at any price. Therefore, you want an agent who is successful, because they are less likely to pressure you to accept a lower price, because the sales of your house isn't as critical to their success.

Oh and the commission percentage? It's always negotiable. Do not consider paying more than 2%.

If anyone is in Auckland I can recommend Aman Gulia from Harcourts - I would list with him in a heartbeat if I was selling again.

I am not sure you would get a top agent for less than 2% commission? All the ones we spoke to were around 3% after negotiation.

Rushmere

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#3225816 3-May-2024 10:32

I hate selling houses. There are some really great agents out there, and some really bad ones. It can be tricky telling the difference until after you've signed up.

I went with an independent agent (i.e. someone who ran her own small agency) when last selling in Auckland a couple of years ago and ended up paying about 1.9% (including all marketing costs). I may have just got lucky, but the agent was excellent, and she worked hard for her commission. The fee was capped, but despite that, she talked me into holding out for a higher offer even though there was nothing extra in it for her. I achieved a significantly higher selling price than I expected, and also much higher than every other agent had estimated, so it certainly is possible to get good service for less than 2%.

I think you need to take some time to choose an agent. Spend time talking to them and asking them lots of questions about how they operate and how they will market your property. Good agents will be happy to spend the time explaining everything in detail. Also, definitely make sure they don't lock you into a long contract (a good agent won't need to lock you in, and you need the ability to move on fairly quickly if they don't deliver), and never let them talk you into an auction, that's a terrible way to sell any "normal" domestic property.

Good luck!

Lolmil116

20 posts

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#3225926 3-May-2024 11:19

I am an agent and I'd be happy to have a chat with you if you like? I have worked for both low fee agencies as well as 'traditional' companies (I am now happily with Raine & Horne). I am based in Papamoa/Tauranga so it will be independent 'advice' as I wont be making the commute regardless of the commission fee! Feel free to PM me.

cddt

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#3225947 3-May-2024 11:43

BlargHonk:

I am not sure you would get a top agent for less than 2% commission? All the ones we spoke to were around 3% after negotiation.

It may be different outside Auckland. We had multiple agents (from different agencies) offer 2% or under unprompted back in mid-2022.

My referral links: BigPipe | Mercury

alisam

829 posts

Ultimate Geek

#3235197 27-May-2024 12:11

The web site Calculate.co.nz – Real Estate Commission Calculator gives examples of expected commission to pay based upon the sale price.

I rang our local Harcourts Cooper office and the local Barfoot and Thompson office (both West Auckland).

The Calculator for Barfoot and Thompson was spot on, but Harcourts came up with a lower figure than Harcourts Cooper.

Harcourts Cooper: <= 300,000 = 4%, >300,000 = 2.50%. Plus an Admin Fee of $750. GST is applied to all values. So a $1,650,000 house would be $53,475 (including GST).

Barfoot and Thompson: <=300,000 = 3.95%, >300,000 = 2.00%. Zero Admin Fee. GST is applied to all values. So a $1,650,000 house would be $44,677.50.

Difference (in Barfoot and Thompsons favour) is $8,797.50.

Marketing costs are all extra.

Harcourts Cooper would re-imburse the Marketing Costs for a successful sale. They would not discuss a discount.

Barfoot and Thompson said they rarely gave discounts and if they did it would be to a company that did a lot of business with them.

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David321

485 posts

Ultimate Geek

#3235201 27-May-2024 12:25

Interesting calculator, cant believe Bayleys would charge $30,000 to sell a $620,000 house, makes you wonder why people sign up with them, what extra do they do that Arizto don't that justifies the extra 15k-ish they charge?

I noticed they did not have Total Realty but with their 1.5% plus $1200 advertising they have come in the cheapest for me, next cheapest was Arizto with their $12,500 plus gst charge, but they would have been a few K more and their trademe listing is the lowest rank whereas total realty give the next rank up on trademe (I think it's called the silver package). If my house was worth more Arizto would be the way to go as their flat fee would work out less than a 1.5% comision on sale price.

_David_

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