I’m selling my first property and am appalled at the real estates commission. It appears that the going rate is 2% which equates to about $6500.
Is this the standard throw away line for the inexperienced?
Should I consider alternative selling options?
What are they?Your advice would be appreciated.
[biggrin]
You reckon you have a contact list of buyers, expertise in presenting a property, negotiation skills, exposure to buyers?
if yes then sell privately.
If not then pay someone good to do it for you.
Not all REAs are worth paying 2%. Some aren’t even worth feeding. The trick is to finding the best one available.
Might be false economy to sell outside of the mainstream. You might save the 2% but get 10% less than a top agent could get for you.
My daughter needed a tooth pulled recently – cost me $140. Reckon I could have done it myself and saved the money but my daughter dissuaded me from not using the professional …
Simon Macks
Residential and Commercial Finance Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Originally posted by Ash75:I’m selling my first property and am appalled at the real estates commission. It appears that the going rate is 2% which equates to about $6500.
Is this the standard throw away line for the inexperienced?
Should I consider alternative selling options?
What are they?Your advice would be appreciated.
[biggrin]
Unless you have the time and are close enough to conduct a selling campaign yourself, there is not many other options I’m afraid. I have sold a property on my own; it was a pain it the a***. Most of the enquiries were agents trying to tell me how good a job they would do of selling my property. I saved a few thou, but the personal time I sacrificed to sell it was nearly the same amount. Lots of tyre-kickers.
A couple of tips though;
1. get the property valued professionally by a valuer first (your bank can provide one) for a few hundred dollars- don’t use an appraisal by a r/e agent to assess the value. Don’t tell the agent what the valuation was. This way you will know what the property is really worth, and you won’t fall victim to the agents’ over-quoting games to get your listing. If the property is the right price it will sell very quickly.
2. don’t tell the agent your bottom line – they will tell the purchasers to offer that much just to get the sale through quicker. In fact, after the valuation; tell the agent not to contact you until the price you stipulate has been met. That way you won’t get ‘conditioning’ phone calls every few days to try to get you to drop the price.
3. tell the agent to pay for any advertising they want to do (they hate that). Basically, your potential purchasers are already out looking, so as long as the property is listed in the agent’s window and on the internet, the buyers will see it. Don’t get sucked into the big advertising campaign that the agent will try to sell you. It is amazing how many agents say “we have a list of potential buyers waiting” then try to get you to spend thousands on ads. what the?
4. if you like to have fun, tell the agent if they try to sell it below a certain figure their commission will be 1% (or none), and above a certain figure the commission will be 2.5%. Put this in the agent’s contract. Or, offer them $5k flat rate whatever the sale price. It is up to you and make sure it is written into the contract how you want.
5. tell the agent what price to list the property for – not a price ‘range’. for example; you want $250k, they may try to advertise it as “$220k plus”. the only offer you will get will be $220k or even worse; $200k by a hopeful investor like me!
If you leave it to them they may try to advertise it as a price well below what you want, which will only attract buyers who can’t afford the property. Then they will try to get you to ‘meet the market’ and drop the price.
6. last of all – give them only 30 or 45 days to sell it with an exclusive listing. They will hate this too and try to get a longer selling period. This will keep them working to sell it. A long selling period allows them to have the property listed with them for longer, and makes their ‘inventory’ look more impressive. But they will lose interest after a month or so if they can’t get you to drop your asking price, and may even use your property as a ‘bait and switch’ to sell another property.
You are probably thinking my opinion of agents is low? Correct! Some are good though, but you want to protect yourself.
For further info on how to handle agents, look up the Neil Jenman website. It is great, and so are his books. they will save you a lot of money.
good luck.Cheers,
Marc.
[email protected]You don’t have to pay the asking price, you can negotiate, we have our house on the market at the moment. The agent started at $21 thou. we settled on $9.000. With her paying for advertising. Always get at least 3 valuations. And although the gentlman befor seemed to know what he was talking about in my opinion I have always found the banks to under value.
great advice by L.A Aussie there..helps me a lot too..thanks
Originally posted by L.A Aussie:A couple of tips though;
1. get the property valued professionally by a valuer first (your bank can provide one) for a few hundred dollars- don’t use an appraisal by a r/e agent to assess the value. Don’t tell the agent what the valuation was. This way you will know what the property is really worth, and you won’t fall victim to the agents’ over-quoting games to get your listing. If the property is the right price it will sell very quickly.
2. don’t tell the agent your bottom line – they will tell the purchasers to offer that much just to get the sale through quicker. In fact, after the valuation; tell the agent not to contact you until the price you stipulate has been met. That way you won’t get ‘conditioning’ phone calls every few days to try to get you to drop the price.
3. tell the agent to pay for any advertising they want to do (they hate that). Basically, your potential purchasers are already out looking, so as long as the property is listed in the agent’s window and on the internet, the buyers will see it. Don’t get sucked into the big advertising campaign that the agent will try to sell you. It is amazing how many agents say “we have a list of potential buyers waiting” then try to get you to spend thousands on ads. what the?
4. if you like to have fun, tell the agent if they try to sell it below a certain figure their commission will be 1% (or none), and above a certain figure the commission will be 2.5%. Put this in the agent’s contract. Or, offer them $5k flat rate whatever the sale price. It is up to you and make sure it is written into the contract how you want.
5. tell the agent what price to list the property for – not a price ‘range’. for example; you want $250k, they may try to advertise it as “$220k plus”. the only offer you will get will be $220k or even worse; $200k by a hopeful investor like me!
If you leave it to them they may try to advertise it as a price well below what you want, which will only attract buyers who can’t afford the property. Then they will try to get you to ‘meet the market’ and drop the price.
6. last of all – give them only 30 or 45 days to sell it with an exclusive listing. They will hate this too and try to get a longer selling period. This will keep them working to sell it. A long selling period allows them to have the property listed with them for longer, and makes their ‘inventory’ look more impressive. But they will lose interest after a month or so if they can’t get you to drop your asking price, and may even use your property as a ‘bait and switch’ to sell another property.
You are probably thinking my opinion of agents is low? Correct! Some are good though, but you want to protect yourself.
For further info on how to handle agents, look up the Neil Jenman website. It is great, and so are his books. they will save you a lot of money.
good luck.Cheers,
Marc.Excellent advice – and if you follow any of these, or heaven forbid a combination or the full set of the above you can be absolutely guaranteed that the Principal of the Agency shall never agree to such slanted conditions on their “standard” listing contract.
Sounds great of course…..but as with all things in real life, to have an agreement usually takes two parties….not one party smugly dictating conditions and the other rolling over like some fluffy puppy dog.
Good luck anyway – have a crack at the “tips” as listed above and see how far you get.
I agree with most of the above points apart from dealing with an agent that is prepared to cut their own commission.
Give me an agent that is prepared to walk away from my listing rather than cut their fee. If they are going to give away their own money, what chance have they negotiating the best price of my greatest asset?
Originally posted by Dazzling:Originally posted by L.A Aussie:A couple of tips though;
1. get the property valued professionally by a valuer first (your bank can provide one) for a few hundred dollars- don’t use an appraisal by a r/e agent to assess the value. Don’t tell the agent what the valuation was. This way you will know what the property is really worth, and you won’t fall victim to the agents’ over-quoting games to get your listing. If the property is the right price it will sell very quickly.
2. don’t tell the agent your bottom line – they will tell the purchasers to offer that much just to get the sale through quicker. In fact, after the valuation; tell the agent not to contact you until the price you stipulate has been met. That way you won’t get ‘conditioning’ phone calls every few days to try to get you to drop the price.
3. tell the agent to pay for any advertising they want to do (they hate that). Basically, your potential purchasers are already out looking, so as long as the property is listed in the agent’s window and on the internet, the buyers will see it. Don’t get sucked into the big advertising campaign that the agent will try to sell you. It is amazing how many agents say “we have a list of potential buyers waiting” then try to get you to spend thousands on ads. what the?
4. if you like to have fun, tell the agent if they try to sell it below a certain figure their commission will be 1% (or none), and above a certain figure the commission will be 2.5%. Put this in the agent’s contract. Or, offer them $5k flat rate whatever the sale price. It is up to you and make sure it is written into the contract how you want.
5. tell the agent what price to list the property for – not a price ‘range’. for example; you want $250k, they may try to advertise it as “$220k plus”. the only offer you will get will be $220k or even worse; $200k by a hopeful investor like me!
If you leave it to them they may try to advertise it as a price well below what you want, which will only attract buyers who can’t afford the property. Then they will try to get you to ‘meet the market’ and drop the price.
6. last of all – give them only 30 or 45 days to sell it with an exclusive listing. They will hate this too and try to get a longer selling period. This will keep them working to sell it. A long selling period allows them to have the property listed with them for longer, and makes their ‘inventory’ look more impressive. But they will lose interest after a month or so if they can’t get you to drop your asking price, and may even use your property as a ‘bait and switch’ to sell another property.
You are probably thinking my opinion of agents is low? Correct! Some are good though, but you want to protect yourself.
For further info on how to handle agents, look up the Neil Jenman website. It is great, and so are his books. they will save you a lot of money.
good luck.Cheers,
Marc.Excellent advice – and if you follow any of these, or heaven forbid a combination or the full set of the above you can be absolutely guaranteed that the Principal of the Agency shall never agree to such slanted conditions on their “standard” listing contract.
Sounds great of course…..but as with all things in real life, to have an agreement usually takes two parties….not one party smugly dictating conditions and the other rolling over like some fluffy puppy dog.
Good luck anyway – have a crack at the “tips” as listed above and see how far you get.
I think I hit a nerve. You’re not an agent are you, Dazzling? If you are, and you’ve taken offense, then you must be one of the nice agents out there. Sorry.
I was an agent for a time. Still hold a licence. Couldn’t sleep at night.
Whether you believe it or not, this is how I always approach the selling process with a prospective agent, and of course, we always come to a mutual agreement, as they want to sell the house in order to get paid. It’s called negotiating.
They always try to snow people with the ‘standard’ listing contract, hoping people will blindly accept it and won’t try to negotiate the terms at all.
Naturally they don’t want to accept terms slanted in my favour – but is the ‘standard’ form slanted in the agents’ favour? Of course it is.
I just try to make the playing field slant my way a little. After all, I am ultimately paying them for the tiny amount of work they do.
You may think I’m smug, but I’ve been burned as have many others; none of us asked to be. If all agents were obliging, honest and caring we wouldn’t be having this conversation.Cheers,
Marc.
[email protected]Originally posted by emptypockets:I agree with most of the above points apart from dealing with an agent that is prepared to cut their own commission.
Give me an agent that is prepared to walk away from my listing rather than cut their fee. If they are going to give away their own money, what chance have they negotiating the best price of my greatest asset?
They do it all the time – it’s no different to asking for a discount off your car or plasma tv. I have even had agents tell me their commission rate, and before I open my mouth they cut the rate to make themselves look better. I have had agents TELL ME what to offer the Vendor to close the deal – below the asking price. Who were they working for?
They will of course try to get you the best price for your house within reason, but if the house doesn’t sell they starve. Where do you think the priority REALLY is?Cheers,
Marc.
[email protected]Thanks for all your posts.
Special mention to LA Aussie!
I have taken all into consideration, prior to my posting I had already been in contact with three agencies to get a feel of the market, each self promoted there organisations extremely well and I didn’t go home empty handed.
Glossy brochures, magazines, marketing proposal’s and page after page of referrals/thank you letters from happy clients openly expressing their gratitude towards the agent for selling there property above the agreed reserve.
It has been an interest process, I’m known to talk with a mouthful of marbles under water, but couldn’t appear to get a word in during our appointments.
I have taken time out to attend a number of open for inspections and auctions that each agency conducted over the last couple of months and believe that one agent stood out from the others.
He conducted his business in a very professional manner, was very approachable and didn’t do the hard sell by forcing the property down people’s throats.
I have done my homework to determine a realistic market value for the property.
The property was valued for refinancing purposes 10 mths ago, so I already had a copy the the banks valuation. I obtained a report on comparative properties in the same area over the last 12 mths through the REIV and have also been keeping a close eye on the market for a while as well.
I have now offered the agent an incentive based commission, which was based on my determined reserve (undisclosed to agent) and the agents value, which was very close to my reserve $-10k, so I offered him a 1.7% commission to his value, then 10% for the next $20k and 20% any amount greater.
I allocated $3k to marketing and also spent an additional $1.5k on presentation, as the place was vacant and looked small without furnishings.
I though whilst we where on this topic, I’d throw another scenario at you.
I am currentl in the process of finalising building permits for 3 townhouses in a Melbourne bayside suburb and would also appreciate some comment on selling and promoting. eg. Grouped commisions/exclusive rights to sell all town houses, Boards, internet, should we sell off the plan?
What advertising, gives the best exposure and is the best value for money?
Could anyone recommend an agent in the Mordialloc area.
In appreciation
Ash
[blink]
Well done Ash75.
By the sounds of it you don’t need our help to find an agent anymore!
With the townhouses, it may be a start to look at the local papers, ‘The Age’ saturday r/e sections and maybe r/e.com.au to see who’s doing some aggressive marketing at the moment.
Selling off the plan may get a quicker sale if you need to.
I have an I.P in Mentone and when I was doing the d.d I found that the local builders/developers at the time were about 50/50 on selling off the plan or on completion. It was a rising market and some were waiting until completion to see what they could get for them. They were betting on the price going up even more I expect. That was 2001 though.
Have fun with it.Cheers,
Marc.
[email protected]
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