Real Estate commision - a way out of exorbitant rates?

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PhantomNVD

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#154622 2-Nov-2014 22:02

So (real question) is there any reason I can't stipulate a condition of sale as the seller?

I'm thinking to limit the sale price of my house to say $100K (leaves a 'fair' commision fee to the broker), and then stipulate this to be conditional on the sale of my phone for $X00K... to make the total sale price agreeable to both parties, but not pay the ridiculous amount that 2 weeks of 1/2 an hour sitting in my house showing people through will otherwise net my 'general' listed Real Estate Broker.

Ethics aside (please!) is there a LEGAL reason this is not lawful?

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#1167184 2-Nov-2014 22:16

Good luck to the buyer getting a mortgage under terms like that. If your place is going to sell that easy then sell it on TM as a private sale.

Elpie

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#1167198 2-Nov-2014 22:41

Sell it yourself privately or negotiate a commission you can accept. As to the legality of your proposal, only a lawyer can advise you of that. Real estate law is complex these days and sellers have loads of responsibilities. One of those is getting sound legal advice.

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#1167208 2-Nov-2014 23:05

it's negotiable down to whatever you want it to be, in a buyer's market (not so many sales)

catch is, the agents that sell more houses for more money sell more houses for more money. they are probably less negotiable, BUT, keep trying until you get a good one that will negotiate.

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#1167209 2-Nov-2014 23:06

and don't tell anyone this, but there are dirty agents who will sell your house secretly to bypass paying their franchise (usually 60% of his cut)

mattwnz

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#1167216 2-Nov-2014 23:22

joker97: and don't tell anyone this, but there are dirty agents who will sell your house secretly to bypass paying their franchise (usually 60% of his cut)

Would have thought that would have been pretty difficult these days, unless they are hired indpendantly.

I would suggest looking at 200 square if the OP wants to look at cutting the commission. I don't believe in commissions myself, as it should cost the same to sell a house no matter what it's value is. The agency usually makes big margins on advertising contracts anyway, so the commission is just part of it.

PhantomNVD

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#1167238 3-Nov-2014 06:53

lxsw20: Good luck to the buyer getting a mortgage under terms like that. If your place is going to sell that easy then sell it on TM as a private sale.

Well that's one I hadn't thought of...

Guess it's not really feasible, but damn those agents fees are ridiculous for what they do :(

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#1167252 3-Nov-2014 07:24

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.

trig42

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#1167278 3-Nov-2014 08:37

You will not get anyone buying your house for (say) $100k then another item (your example - a phone) for (say) $300k to make a total of $400k (I assume that's what you are getting at in the OP). Their bank would never agree to it - you cannot take a mortgage out on a phone, and a bank will not lend more than the value of a property.
I suppose you could find someone cashed up who might agree to it, but if you are on those sort of terms with a buyer, you may as well just cut out the agent anyway, and sell the house privately.

Fred99

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#1167281 3-Nov-2014 08:46

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.

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#1167283 3-Nov-2014 08:48

I managed to cut commission from 5 to 2% once. But he was useless

Batman

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#1167284 3-Nov-2014 08:50

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

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sxz

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#1167287 3-Nov-2014 08:52

I'm thinking to limit the sale price of my house to say $100K (leaves a 'fair' commision fee to the broker), and then stipulate this to be conditional on the sale of my phone for $X00K... to make the total sale price agreeable to both parties,

Not an accountant - but this may have tax implications. You're essentially selling your house for way under value (and selling your phone for way over value). That can have unintended consequences. This may be an implied gift to the Purchaser.

I presume you live in Auckland? I find it interesting agents in small towns can survive on their 3% cut (maybe $6k commission on a $200,000 sale), but Auckland agents insist that they also need their 3% cut ($24k commission on $800,000 sale).

As has been said earlier, you have a contract with an agent, all contracts are negotiable. If you cap the commission by agreement at (say) $12k then the agent will have no incentive to push for a higher price for you. 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.

sxz

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#1167290 3-Nov-2014 08:57

Guess it's not really feasible, but damn those agents fees are ridiculous for what they do :(

Some agents work very hard, and really do work buyers off against each other and achieve the best price. As will all industries however, there are bad ones too.

It is always frustrating to see a house that sells itself within a few days and the agent taking a $20k cut.

You should see farm sales. Often the agents commission works out at over $150k. 2 sales for the year would be more than all they need (after their agency taking their cut).

I don't know why more farmers don't semi-retire and become farm agents.

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#1167293 3-Nov-2014 08:59

Would it be fair to say Asian agents esp Chinese ones will do it for anything, even 1%?

Check them out.

timmmay

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#1167296 3-Nov-2014 09:07

Just sell privately, or at least give it a shot before you get an agent. Too many potential problems the way you're considering.

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