Real Estate commision - a way out of exorbitant rates?

Forums › Off topic › Real Estate commision - a way out of exorbitant rates?

1 | 2 | 3 | 4

Mad Scientist
29761 posts

Uber Geek

Trusted

Lifetime subscriber

#1167306 3-Nov-2014 09:25

go with a discounted agent. lots of them out there. it will give you a much much much higher sale price than you can get yourself.

but it's up to you. if you're not greedy then sell privately.

Fred99

13684 posts

Uber Geek

#1167309 3-Nov-2014 09:32

joker97:
Fred99:
joker97: Only if your house is easy to sell.

But I have bought and sold before, privately usually you can't get what you want, where as a good agent can.

Which has been the basis for an incredibly profitable business model.
Sellers get told not to worry about the the massive commission - because the agent will jack up the price of the house to (more than) cover it. Buyers get told not to worry about the massive commission - because the seller's paying it.
Discount commission agents (ie the "1% & GST agencies") don't get much business because "everybody knows" that they can't give the property sufficient market exposure for the price (unbelievable in the internet age).
Agents always ranking as the lowest of trusted professions - yet we (80% or so anyway) choose to use them when buying/selling our largest assets.

Because someone's got to do the dirty work.

You can say that bout lawyers until you get sued.

You can say that about plastic surgeons until you get a burn.

Etc etc

I don't trust myself to be able to "DIY lawyer" or "DIY skin grafts".
The complicated "dirty work" in real estate transactions is done by lawyers anyway.
RE agents main challenge seems to be avoidance of being caught lying. It's one of several professions where having a psychopathic personality profile will be a huge advantage - the ability to convince everybody that you really do care - when of course you don't care at all.
From my experience, lawyers and surgeons usually do care about their patients/clients.
Of course, if you do get caught lying (by omission usually), expected penalty from REAA is a few hundred bucks paid to the authority, and you might have to offer an apology to the buyer/seller (who may have suffered considerable losses). If you work for a large respected agency and get caught lying (by omission), then bucket loads of cash appear to pay for expensive lawyers to represent you in repeated appeals against authority rulings - until you hopefully find some way to get off on a technicality.

Fred99

13684 posts

Uber Geek

#1167322 3-Nov-2014 09:40

sxz: That said, on a 3% cut an extra $10,000 will only mean an extra $300 commission, which isn't really any incentive at all considering all the back and forward the agent needs to do for that $10,000 increase.

Exactly. That's is a serious flaw in the theory that they're out to work in the interests of the seller to get the highest price. It's all good at the moment when there are plenty of buyers. But in a market less bouyant than AKl and Chch, given the choice of $15,000 today or $15,300 some other time - with no guarantee, no sensible agent would work in the true interests of the client.

n4

959 posts

Ultimate Geek

#1167326 3-Nov-2014 09:48

Fred99:
sxz: That said, on a 3% cut an extra $10,000 will only mean an extra $300 commission, which isn't really any incentive at all considering all the back and forward the agent needs to do for that $10,000 increase.

Exactly. That's is a serious flaw in the theory that they're out to work in the interests of the seller to get the highest price. It's all good at the moment when there are plenty of buyers. But in a market less bouyant than AKl and Chch, given the choice of $15,000 today or $15,300 some other time - with no guarantee, no sensible agent would work in the true interests of the client.

Which is why all agents are pushing auctions these days. Not because it gets a better outcome for the seller. But because it gets a better outcome for the agent. A fast sale is a good sale - if they can turn over 4 sales a month at 15k rather than 3 at 16k that will be a much better outcome. For them.

Samsung Note20 Ultra, on 2degrees

Batman

Mad Scientist
29761 posts

Uber Geek

Trusted

Lifetime subscriber

#1167342 3-Nov-2014 09:55

not true. if you have 2 serious buyers an auction will get a higher price. but the 2 need to be serious, and slog it out.

Batman

Mad Scientist
29761 posts

Uber Geek

Trusted

Lifetime subscriber

#1167345 3-Nov-2014 09:56

in a flat market, if your house is a wanted type, privately selling will get you the same price as an agent. and auction would be suicidal.

if your house is a not wanted type, in no AKL/Chch market, you won't sell it privately even dropping the price by 30k it won't move.

gundar

488 posts

Ultimate Geek

Trusted

#1167372 3-Nov-2014 10:36

I've considered this before - selling my place myself. What I did to start was pop into Whitcoulls and pick up one of those self-help books - How to Sell Your Own Place - or similar title. After I read through the legal, moral and technical issues, I figured I'd just give to an agent to do and ask for a price that covers their fee. As has been said, nothing prevents you from going it alone and if you don't have any problems with your house that could come back at you later, if it's as good a deal as you say, the self sale should be just fine, but then, in that perfect world, the agent will see thhe potential and get you a better deal - they also want quick profitable sales.

The thing that always comes to my mind when people complain about agent's fees is the number of startups that have tried other models of real estate agency practice and failed, some spectacularly, for example - The Joneses.

I will probably sell my current house next year and I am considering this advice I got from a friend in the industry - If you want to make a few more k$ on your sale to make it worthwhile or to cover agent's fees for example, you could include other sweeteners - try including a new lawnmower and edge trimmer in the chattels list (if it's a big garden); banks are now offering iPads, cash, appliances etc on mortgages and there's no reason your list of chattels can't also include that wall mounted flat screen TV that would be difficult to move and diffficult to install anyway. How about some new whiteware that already fits well in the laundry room? How about a years paid up security monitoring? - these things cost you relatively little and actually add value and incentive to the new buyer if you get the market right. If you are going to target first home buyers, a new lawnmower would be awesome. If you live in a neighbourhood that has a bad reputation, a free security service would be sweet.

Good luck with your sale, it does seem to be a buyers market in Hamilton at present, some sales in my immediate area seem to have been really quick ('for sale' became 'sold' in a month or two, although I don't know the financial details).

GoodSync

GoodSync. Easily back up and sync your files with GoodSync. Simple and secure file backup and synchronisation software will ensure that your files are never lost (affiliate link).

jonathan18

7413 posts

Uber Geek

ID Verified

Trusted

#1167382 3-Nov-2014 10:50

Also, there are different ways to potentially reduce the commission you pay an agent. The last we house we sold the commission was lower if she sold the house within a set period, reflecting that there was less work/cost involved than if it had been more drawn-out.

One downside to selling it yourself is that every potential buyer also knows this! They have in the back (if not front) of their mind that the seller is attempting to save x thousand, and will no doubt take this into account in the amount they're willing to offer, so I doubt the seller keeps all the "savings". And that's assuming they've been able to extract the same interest from the same potential buyers, which I really do doubt... Personally, while I'll negotiate to get an acceptable commission and other conditions, I'm happy to pay an agent. Agree it's expensive, but I doubt you can ensure the same results when DIY.

Batman

Mad Scientist
29761 posts

Uber Geek

Trusted

Lifetime subscriber

#1167404 3-Nov-2014 10:59

is OP in hamilton?

Elpie

1304 posts

Uber Geek

#1167424 3-Nov-2014 11:04

It's a sellers market in Auckland and Christchurch. In the provinces its a buyers market and houses are often selling way below value. Agents in those areas are aware of what's happening to prices and are often negotiable on the commissions they will accept. In those markets, be aware that if a house takes months to sell then advertising costs can really mount up.

Batman

Mad Scientist
29761 posts

Uber Geek

Trusted

Lifetime subscriber

#1167427 3-Nov-2014 11:06

Trademe is all your need. it covers (I think) 95% of the local market. really.

Batman

Mad Scientist
29761 posts

Uber Geek

Trusted

Lifetime subscriber

#1167444 3-Nov-2014 11:08

n4:
Fred99:
sxz: That said, on a 3% cut an extra $10,000 will only mean an extra $300 commission, which isn't really any incentive at all considering all the back and forward the agent needs to do for that $10,000 increase.

Exactly. That's is a serious flaw in the theory that they're out to work in the interests of the seller to get the highest price. It's all good at the moment when there are plenty of buyers. But in a market less bouyant than AKl and Chch, given the choice of $15,000 today or $15,300 some other time - with no guarantee, no sensible agent would work in the true interests of the client.

Which is why all agents are pushing auctions these days. Not because it gets a better outcome for the seller. But because it gets a better outcome for the agent. A fast sale is a good sale - if they can turn over 4 sales a month at 15k rather than 3 at 16k that will be a much better outcome. For them.

we can say that about the work ethics of just about 100% of the workforce of the entire world! hence ... be smart about it, the same way you go about other things

Elpie

1304 posts

Uber Geek

#1167526 3-Nov-2014 12:21

joker97: Trademe is all your need. it covers (I think) 95% of the local market. really.

Not one phone call or inquiry from a TradeMe ad for me, despite over 5,000 views. Several came through the real estate agents site.

n4

959 posts

Ultimate Geek

#1167547 3-Nov-2014 12:29

Elpie:
joker97: Trademe is all your need. it covers (I think) 95% of the local market. really.

Not one phone call or inquiry from a TradeMe ad for me, despite over 5,000 views. Several came through the real estate agents site.

Any difference in the adverts? Price/description/timeframes? Otherwise if they were exactly the same that is unexpected.

Samsung Note20 Ultra, on 2degrees

jonathan18

7413 posts

Uber Geek

ID Verified

Trusted

#1167548 3-Nov-2014 12:29

joker97: Trademe is all your need. it covers (I think) 95% of the local market. really.

Out of interest, have you had any personal and direct experience in selling houses solely by this method??!!

My concern is you're over-simplifying what is a far more complex beast, with so many variables (eg location, wider market conditions, vagaries and specifics of the local market...) that should determine the appropriate methods to sell any given house. As posted directly above, a TM listing is no assurance of success!

1 | 2 | 3 | 4