Well I am disgusted quite frankly dumbfounded at what I just witnessed being said to a Real Estate Agent.
“Your just a land shark and pissing in the pants of the home owners taking 4% of the sale for doing sitting on your a** and doing crap all. Conducting a few open homes and calling a few people hoping that someone buys the property. And when it doesnt sell you crunch the vendor to reduce their price but you wont reduce your fee.”
That quote is a rather watered down version of the conversation. There was a few more descriptive words that followed on. Trust me. Anyway it gets me thinking. Do they have a point or are they over the top. Honestly I can see both sides to this conversation and argument.
At the end of the day a Vendor has the power in the pen. I feel as an agen we do as much as we can to get an offer on paper to present to the Vendor. At this stage its really up to the vendor what they want to take. They know what the fees are and can take an informed descision on what to sell for. So the amount of commission that is taken out is a known factor.
But on the other side of the coin there is the fact that in some cases the comission could be 20 odd thousand dollars. Now that is alot of cash and in todays economic climate where money is rather tight that can be the difference between living and not living.This is rather dangerous as an agent. If you get a seller who is only playing around and not serious you may never sell it. Or you may do all the work till when it goes to a general and the seller sells it themselves.
But back to the topic. I did find it rather interesting what this person said. Would be interesting to hear your comments on this topic. negative, Positive or indifferent it all goes.
Deon Swiggs
Property Profits
12 thoughts on “Real Estate Fee's!”
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I say if the vendor has a problem paying the commission, tell him to go and sell his house with the Joneses, oh thats right, they went broke! They have the choice to go and sell it themselves. You know some places in Europe they charge up to 10%! I say get over it and stop being tight ass’s and just pay the damn fee’s. I guess its just another thing us kiwi’s can complain and nag to everyone else about… Get over it…
Unfortunately there are a few lazy agents out there who probably aren’t worth their fee. But the majority, I hope, are hard working individuals. This is just another case of the Minority bringing down the reputation of the minority.
Besides, if the vendor doesn’t want to sell through an agent, whats stopping them doing it themselves?? Nothing, in most cases they are just too lazy to do so.
Deon, well done, good post… Remember it’s not 4% comm for all houses either. On a million dollar sale fees are about 2.4% with my company and not much more with others. Start your listing presentations by explaining to vendors that your ultimate aim is for them to feel as though the commission they paid was great value for money, whether it takes you 1 day or 1 year to sell it for them. Then live that promise for the life of the listing. Cheers
John and Jared,
I here what your saying and agree with what your saying. Selling Real Estate isnt just as straight forward as a vendor may see. To command a premium market value. Its all about trying to show that we are actually genuinely trying to help.
I think confidence also has a good deal to play as well.
Steve,
Good to hear from you again. And yes you are right. As the fee goes up to those levels it can be negotiated.
Lets just hope it doesnt take a year to sell their house. But your right it shouldn’t matter how long it takes to sell a vendors house. If your service and performance has been up to a great standard a vendor should be happy to pay you your fee.
Sorry, just saw my typo above.
Line should read “This is just another case of the Minority bringing down the reputation of the majority”
Deon, I wasn’t thinking about negotiating the fee higher up. The fee I mentioned is just the standard fee, yours a tad higher but not much. Have a look at your fee for $1mil and you’ll see it’s about 2.7% from memory (of $1mil). The 4% that’s bandied about by people is often an exaggeration to make it look expensive, because the 4% usually only applies to the first $200,000 to $400,000 of the sale price.
Some offices are quite different. But I do know for a fact someone selling a property for 1 mil exactly and taking a commission for $40,000 + gst. So it really just depends on the office and agent i suppose.
Hi Deon, Loved your latest Spring post!
on the commission discussion, I believe that the property market (and property selling market) must be one of the closest examples of a free market that New Zealand has – very little artificial influence, easy to enter and leave, and the major forces at work are simply supply and demand. this works both in the housing market and also the real estate marketing industry. In most local markets I would say that commissions would sit at a level that is fair as governed by the competition and geographical isolation etc. In my market, I haven’t experienced any collusion between agencies to hold commission rates up. Put simply, the market will pay what it wants to pay to agents. As far as 4% goes, I haven’t heard of a 4% commission been paid on a house sale at any price level in our market for well over a couple years. One or two may have slipped thru 9overseas vendors or estates?) but we are generally seeing flat rates of 3% to 3.25% being paid. Within the last year, it wasn’t rear to find 2.5% or 2.75% being earned on house sales in the $350k to 450k value range. $20k in fees? try 10k if you’re lucky! And it was rare to see any vendor contributions to advertising etc.
With plenty of competition and also the likes of the Jones, all inclusive flat fees were also popular until very recently.
Demand and Supply rules!
As the time to sell has lengthened and the turnover has remained low and a whole bunch of sales people have left the industry (supply and demand again) commissions are rightly on the way up again.
I also think that you get what you pay for. There were a bunch of very disallussioned vendors in our market in the last few years who attempted to sell using the Jones’s or other low fees companies but ended up languishing on the market. Why? The staff didn’t do appointments on the weekends or after hours, the open homes were often run by people who didn’t have a salespersons certificate so weren’t allowed to answer questions or even enter the property they were doing the open home at (yes!!!), they simply stood outside and handed out a flyer.
The freephone number took you to a call centre outside of the local area and was transferred back to the local branch. The person who answered the phone may never have been to the property or even knew what suburb it was in.
So when a full service agency agreed to match the commissions charged by these “low fees” companies – which happened in the majority of cases to my knowledege, the vendor was getting almost double the service for the same price!
I say that fees are too low but I have to bow to the market and meet the price point that will gain me the business. Competition is good, and ensures that the average NZ seller is getting fair value when they sell their home.
As a homeowner, you can always get a free appraisal from a real estate agency and discuss fees. If you don’t like the commission structure, try another agency for free!
I’m not sure where this land sharks attitude comes from in NZ. i do think the media has quite a bit to do with the stereotyping of salespeople. I also think that many people fail to comprehend anything past hours worked for pay earned. Because the real estate industry bases their own pay on the value of the good being sold, it is seen as somehow ripping people off.
Here’s a thought – why don’t real estate agents work by the hour! It would be great in this current market with houses taking longer to sell….
lets see $25 per hour times say 3 and a half months to sell….thats about….40hours times $25 time 14 weeks + overtime for weekend and evening appointments of about $100 a week + admin costs + advertising weekly = about $43,000 – hmm sounds great to me. And if the house takes a year to sell? $100k???
of course, it wouldn’t take a year to sell because the owners would see the benefits of meeting the market if their costs mounted up each week.
Currently, owners bear no or very little risk or cost if the house fails to sell or takes a long time to sell. This cost is borne by the agency they have appointed. On a per hour basis you could fork out 40k and not have your house sold at the end of it.
I say the current fees structure with fees based on asset value and payment on sale is weighted firmly in favour of the vendor.
If value wasn’t seen by the majority of the population for an industry that helped people to sell their homes they simply wouldn’t pay for the help and the industry wouldn’t exist.
Supply and demand people!!
boy that was wordy!
sorry about that!
David,
That is some truely valuable input you have put there. Almost twice as long as the original post. lol.
But seriously you do bring up some very valid points and I tend to agree with what your saying. I thought i interesting how you mention about the time factor and being paid by hour. Would be lovely if it worked like this.
But we do do a lot of work for our vendors. I myself work well into the nights quite often and in the weekends trying to stich something together for the vendor.
The biggest problem I have with this and I will totally up front is the lack of commitment that a vendor has. It actually is not right in my opinion.
What I mean is, and you highlighted it here is that you can go and get free appraisal from crowd a and then crowd b. Then choose the one that you like the best to start with. Decide to maybe take the free advertising package and go from there.
Now the problem I have with this is there is absolutely no commitment from the vendor at this stage. They have not spent a penny so therefore I believe they have no accountability on the sale of their house.
What I mean by this is that because they arent paying any money for the agent or any money for advertising if they over price the property and it doesnt sell the vendor isnt loosing anything. But the agent and agency is. Someone has to pay for the advertising and as for the agent who may be marketing the house showing people through and doing open homes etc, the vendor probably doesnt care for their effort.
I believe that this is a flaw in the current system. And I believe it comes down to accountability. As if there is not any money being spent by the vendor they have nothing to loose. This is just my feeling.
We as an agent and agency then bare all the costs associated with the property being put on the market, usually at the end of the agency agreement when the vendor decides we are useless because we can not sell their property.
Then the cycle goes on to the next company. This is probably a little off topic but anyway.
Thanks for your comment again david. Makes one think doesn’t it.
Accountability!! We all need it to regulate everything.
As long as I have been in real estate, there have been objections to paying a commission. That will continue well into the future after I have gone. It’s human nature for some people to complain.
Focus on the positive and ignore the negative people in life. You will never win an argument.
Best practice is to just walk away. Say: “Thanks but I don’t need the listing under these circumstances” or some other courteous dismissal.
Remember, we have the power to walk away.
Mike T