In a buoyant or rising market, it can seem as if property sells itself.
Surely anyone can do it? So why not cut out the middleman?
As a vendor, it’s very tempting to think that you’ll save money by not using a real estate agent. After all, the commission fee you’ll pay your real estate agent is one of the biggest expenses you’ll face when selling. So if you didn’t have to pay it surely you’d be better off, right? Probably not.
Here’s a true story that shows you how using a real estate agent can actually save you money.
Would you use an agent if you had received reasonable private offers?
We recently listed a two-bedroom unit for a local client.
His neighbours knew he was planning to sell, and before he came to us he had already received two offers privately, from two separate owners in the same apartment building.
These offers were reasonable, if a little lower than the asking price he ideally wanted. But both neighbours had suggested that it would make it cheaper for them all if they cut out the agent.
If he already had two genuine offers, why did he come to us?
How paying a real estate agent’s commission can make you money
Our client was an astute businessman and thought he would still put the property on the market. So despite the private offers, he signed our selling agency agreement and paid his marketing costs upfront.
We quickly got to work, advertising his unit for sale publicly and to our database of contacts.
Within the first two days, we had an offer that was $20,000 more than the initial offers his neighbours made. This instantly accounted for any commission he would have to pay and set him in the same financial position he would have been if he’d accepted the neighbours’ offers.
We then received a full price offer from a second buyer. Then two more buyers came in and started bidding the price higher still, making multiple offers between them.
In a matter of days, our client signed a contract to sell his apartment to a buyer who offered $25,000 over his ideal asking price and an amazing $65,000 over the initial offers from the neighbours.
Even accounting for paying us almost $20,000 in commission and having spent $1,100 on marketing and advertising, he was around $44,000 ahead. He had sold in a matter of days, with no stress.
What is a vendor really saving?
After contracts were exchanged we caught up with our client for a coffee.
“They said we could get it cheaper by cutting out the agent,” he told us. “But what they really meant was they could make it cheaper for themselves.”
How much does a real estate agent cost?
Agents’ commissions are deregulated, and across Australia, they vary depending on the market and location. Commissions range from around two to three percent in most city and metropolitan areas, to a little more in regional areas. So it’s a significant chunk of cash to part with and you’ll want to know your agent is working hard to achieve the best sale price.
Commission fees and structures also depend on other factors including the property type, the individual agent or agency, what the sales package includes (eg promotion and marketing) and, ultimately, the sale price of the property.
But, as the example above illustrates, for this commission you gain access to the agent’s local market knowledge. You also gain access to a pool of potential buyers on their database, and access to excellent sales and marketing to expose your property to the widest possible audience.
Because we’re real estate professionals, you’re hiring someone to take the stress away from selling your home, someone who knows how to do it properly. But most importantly, you’re employing a skilled salesperson and negotiator, who can achieve top dollar for your property in any market conditions.