barnsleymat

Yeah, why the big mystery? I'm sure there's plenty more like me that if there's no price there's no point looking.

Synky

I'm used to the cold but I'm used to my DG and CH too! It's not for myself I worry so much but my young kids. I don't want them to be cold. Loos like our rental search will be long and difficult (if we get out there).

chris the property man

Hi Neil

Thanks for the 'well done'. By doing the job right, as far as I'm concerned, I've got nothing to hide or be ashamed of, so why wouldn't I 'front up'. I'm just an average guy doing a job. Unfortunately, the industry does attract a lot of criticism..some due and some not. I'm just putting my side forward just as the industrys' detractors are putting theirs, and quite rightly so.

So, $25-$40k. That type of commission is only charged (by my company, Harcourts, anyway) for top end properties. The average property in Eastern Beaches area of Auckland, where I work, is around $625k. Our standard commission charge for a house of that value would be $21,677 inclusive of GST. Once you get to property prices that would be fetching a commission of $40k, you can bet that the owner will have negotiated a big discount to bring it down to more like $25-$30k. Any one paying $40k is...well...overpaying...let's leave it at that.

As for what a real estate company does to justify these charges, it would take me ages to list everything that we do to earn that commssion. Don't get me wrong, as an industry, we do charge a lot. Just the way barristers, doctors, investment bankers etc. do. The difference is, as pointed out, real estate can be taken up by anybody that can pass the NCEA course and apply for a license. That is where I agree that there should be more vetting and training done to avoid dodgy ex car salesmen coming into the industry and giving it a bad name.

However, you should realise that it is a big risk for someone to give up a safe, salaried job earning a steady $70-$80k with company car, phone etc. for a self emploed position in real estate wgere you are completely self reliant on getting the business and earning a living wage. Many only last 6-12 months and realise that it's not as easy as they thought, and slink off back to the safety of employment. Others do okay and equal or slightly better what they were doing before. Others take to it like a duck to water and are earning $200-$300k after a few years. The top 2% can earn upwards of $1m per yaer, but these are few and far between. In general, 80% of the business is done by 20% of the agents in the industry. The rest scrape a living and as such there is a high turnover.

Don't get me wrong, I'm not whingeing. I made my choice knowing the risks. For me, it is still early days, but I am confident that within 2-3 years I will be earning 2-3 times what I was before. But, if I'm wrong, I could go broke and end up in the mire. It's this kind of uncertainty that can be a contributing factor to some agents doing dodgy things just to earn some money. No excuse, but a reason.

Hopefully, that gives you a bit of an insight into how the fees etc. work in my industry. It's a tough industry to be in but can be a great way to make a living. You meet tons of people from all walks of life, helping them with the biggest asset they are likely to own at a stressful time. I love it, hence me throwing my hat into the real estate-bashing thread going on here.

Please remember...we agents did not invent the fee system that we work within. You can always try to negotiate on the amount and make it more subject to getting the result that you want. And remember...if we don't manage to get a sale at a price that is agreeable by the owner then we earn nothing. Zilch. But we have done all of the work, some things at a cost to us or the company we represent. So it is always an educated gamble when we take on a house to sell. When we 'win' the gamble, it pays well. If we 'lose' then it will have cost us time/petrol (whilst we could have been doing something else, safe). We work stupid hours, weekends, are at the beck and call of both buyers and sellers...I could go on. As I said, I love it...but it's not all good.

Next!!!!

Chris

Snap Shot

Synky,

You can get ahead of the game by looking at available properties on www.Trademe.co.nz. Just take it as read that there's no DG and CH in nz houses unless specifically stated in the house details. A log burner is a 'stove' that just burns logs and/or coals. You will be responsible for buying/stacking/storing enough logs for winter. Yes, really. It will be the only heat source in the house. Do you know how to set up a fire with kindling etc ? Do you want the chore of clearing the ash before you set the logs, kindling etc all over again ? Your idea of warm and a kiwi's idea of warm will be two different things.

chris the property man

Hi again Snap Shot

To answer your question about why real estate agents won't give you a figure to work to with regards to a price for a property, I need to first explain a few things.

Firstly, you will get this kind of response from agents when you ask about a property that is going to auction. This type of sale method has been huge over the last 9-12 months. It is what happens when we are in a sellers market - lots of people looking to buy, not enough selling. The law of supply and demand comes into effect and even crappy houses have many people after them.

This leads to a situation where buyers are prepared to pay more for a house than it is probably worth. As such, real estate agents would not be acting in the best interest of their client (the seller - who is the one paying the commission) by putting it on the market with a set price. If it is set at a price that is lower than what somebody was willing to pay in an auction situation, then they will lose out. If they "chance their arm" and put it on with an inflated price, then this could work or it could scare people off and it goes unsold. Then the price would need to be reduced, and reduced until it is eventually sold. Again, this is not in the best interests of the seller.

So, the property is taken to auction. The theory is that for 3-4 weeks of open homes, there are as many people viewing the house as possible. The agent does not give a price indication for fear of either putting potential bidders off (too high a price) or under estimating the eventual sale price which could lead to a legal complaint for "misleading" a potential buyer. By giving no price indication, it is left up to the people that want to buy the property to decide what it is worth.

Most people looking at buying a house do their homework as far as what has sold recently in the are and how much for, They can also get a registered valuation done, although these can be way out by the time the house has sold at auction. One way or another, potential bidders must decide what they are prepared to pay for that house at this time and then put their money where their mouth is.

The result is that at auction, people often pay more than what they wanted to due to the fact that they don't want to lose the property to someone else. The thing is, if tey buy it for that price and somebody else was willing tp pay, say, $500 less for it, then surely this is the real market value, isn't it? It doesn't matter what a real estate agent or a registered valuer thinks a property is worth...in reality it is worth what somebody is willing to pay for it.

That is the whole point of selling a house at auction and why agents wont/can't give buyers a price to work to...they don't know what it is "worth" until the hammer comes down. Then we know!

Once we are back on an even keel and supply and demand are reasonably equal again, then auctions will be replaced by the good old set price, open to negotiation situation. But whilst we are in this sellers market, this is how it is. Again, we agents don't make these laws of supply and demand up, and we have to act in the best interest of the person that is paying us, the seller.

As a buyer, this market is horrible. As a seller, it's fantastic. The last house I sold had a reserve price of $750k. Had I marketed it with a price, it would probably have gone on the market for around $775k to leave some room for the inevitable negotiation. However, it went to auction (with me not giving anyone a clue as to the expected selling price, just that its' CV was $670k) and it sold under the hammer for $845k with the under bidder willing to pay $840k and another few bidders happy to go upto $800k. Needless to say, the owner was very, very happy - $95k above what they were prepared to accept. Out of that extra $95k, our extra commission into the office was just 2% of that - $1,900. Now tell me that going to auction was not the best thing for the owner!

And the thing is, the buyer was happy with his purchase. Give it a few years or so and the house that he bought for $845k will be worth a million.

Our company charged around $25k in commission. By the time you take off GST and tax as well as the printing/advertising/admin costs etc. then split the remainder between the company and myself as the listing agent, it no longer looks like an unreasonable amount. I truly believe that the seller got a fantastic result and the buyer was also happy. I did a good job and can feel proud to have been part of this process.

I'm not saying that everyone will feel the same way when they have sold or bought a house, but if it is done correctly, by a company and an agent that has scruples and does what is best for his client and treats buyers with the curtesy and respect that they deserve, then the fee paid is quite justified and fair.

Getting back to the 'no price' question...does this go some way to explain? It's not because we are trying to be vague to annoy you...there is a reason behind it. You might not like it, and I can see why, but it works.

Roll on a more balanced property market, but in the meantime, this is how it is. If you feel out of your depth, I recommend using a real estate agent that you can trust...whether you are a seller or a buyer. As a seller, for the reasons pointed out above. As a buyer, having a real estate agent helping you look for a property, giving advice on its likely sale price, help at bidding at an auction etc. is generally a free service. As long as we introduce you to the property, we can claim a percentage of the commission from the listing agent. This means we don't have to charge the buyer a fee as we get paid, essentially, by the seller, out of the commission they have been charged by the listing company. Some agents won't do this as it can mean a lot of work for no pay, if the buyer goes direct to a listing agent or changes their mind.

Hope that helps...possibly not, but it's the way it is. I don't always tell people things that they want to hear, but I will always tell them the truth...no matter how much it hurts! That's one of the skills of a good real estate agent...giving people bad news, well. ;-)

Chris

chris the property man

Hi Barnsleymat

have a read of my reply to Snap Shot over this one. It's a bit long winded, sorry, but there's a lot to it.

Cheers.

Chris

Synky

I hear people talking about trademe but in the past would never go there for a rental or to buy, woud always go through an agency. Is this crazy? I would ave thought there would be a little more comeback with an agency than a private listing? Especially with rentals.

chris the property man

Trademe is a great go-to website for both rentals and homes for sale as it has both private advertisers on there as well as all of the real estate/property management companies as well. The individual listings usually have a link to the relevant companys website where there may be more information to be viewed.

The real issue is whether you deal with a private advertiser or go through a company. Here's my thoughts on both:

Rentals:

Private landlord - on the positive side, rent might be a bit cheaper as they won't have the management companys fees to pay. If you get a good one then dealing direct with the owner can get better, quicker results if there are any issues that need addressing.
On the negative side, if the owner is more reluctant to address issues then you don't have that third, independent party that can state your case. Your only course of action is tribunal which should only be used as a last resort.

Management Company - on the positive side, you should be dealing with a company that has streamlined systems in place to deal with any issues and they generally want to keep both landlord and tenant happy.
On the negative side, you could be paying extra for this service every week. Some management companys lean too far towards the landlord, seeing as they are their long term client, not the tenant, and so getting issues addressed can still be hard.

All in all it is really down to whether you get a good landlord or management company that will listen to your issues and deal with them quickly. It would be better to pay a bit more through a good, efficient management company rather than less straight to a bad landlord/owner.

Buying:

Private sellers - on the positive side you should be able to buy the house for less as the owner does not have to factor in the commission charges. You also don't have to put up with possibly pushy real estate agents pestering you or trying to talk you into the purchase.
On the negative side it can be useful to have a third party to deal with. You can speak openly to an agent regarding any issues that the house has which could be awkward dealing direct with the owner. Also, if the owner neglects to tell you about any problems that the house has or lies to you, you have basically no come back once you have settlerd on the house. With an agent you do - you can take them to court for misrepresentation/misconduct. This means that they (we, as I am an agent) are very unlikely to mislead you for fear of being fined/losing their license and if they have misled you, you can get satisfaction through the courts.

All in all there are positives and negatives for both. I have rented in NZ both privately and through a management company and have had various experiences. As a real estate agent, I am obviously going to back that corner, so I won't insult your intelligence there.

As with everything, if you can, go on recommendation - especially with management companies/real estate agencies. Not so easy with private landlords/sellers though.

Hope that helps.

Synky

Yes it does, thanks. Good to have an industry perspective.

MrsFychan

Chris - you have been very open and I hope it helps people understand a bit more of the ins and outs.

We had a very poor relationship with one agent but a very good one with another who actually worked for the same Company, needless to say any properties we were interested in whoever the agent on the board/web was we went to the one we felt more comfortable with and who had we believed gone above and beyond for us.

chris the property man

MrsFychan

Thanks for the acknowledgement. As you say, going with an agent that has proved themselves to you is the best option. If you haven't had a good experience with one yet, ask friends and family whether they have. Last option is to ask the agent for testimonials that you can verify. That way you are much less likely to have a bad experience. No guarantees, as with everything in life, but the least you should do is minimize the chance of being messed about.

Cheers.

Chris

Jan n Neil

But it,s not a true auction as if the price does not meet the reserve the seller will pull it so why not advertise the price the seller wants

I,m the same as the other posters if theres no price I wont bother looking,we very nearly moved recently so i went thru all the valuation bollox I told her (the agent) what i wanted for it but she still wanted to auction

I just dont trust them we didnt have a great experience with them when we got here you might be different ???? but then again you aint a Kiwi

I stand by my first post

Neil

Robbie2010

As a buyer, I wouldn't touch an auction with a bargepole! ... especially as they allow "Vendor bids!" to push up the bidding. They're a big con!

Robbie2010

Err, Yes you did.

chris the property man

As with motor car auctions, obviously there has to be a reserve - if there wasn't, somebody could end up selling their house for a ridiculously low amount.

Remember, nobody forces anyone to bid at an auction. At least you can see what others are willing to pay. In a multiple offer situation you don't know what the other people are offering. There is more 'smoke and mirrors' with that than at a public auction.

As I said previously, it's not the best way to buy a house but it is what sellers want, otherwise there would not be so many. Real estate agents don't force it on sellers. They have all options open to them...set price, tender, by negotiation. They know that auction will get them the best result.

Once a property is marketed as an auction it is unlikely that an early offer will stop the auction process - it just brings it forward. This is, again' for the benefit of the seller. They could still get more than the offer by still running the auction. Remember, it is the seller that is paying for this service via the commission that they pay - not the buyer. As such, the whole thing is geared towards the seller. As a buyer, that stinks, but you have to accept it. As and when you come to sell you can then take advantage of the situation. No, it's not ideal, but it is how 75% of houses are being bought and sold at the moment. If you don't run with it then you are limiting what you can buy to just 25% of what's available.

No, I'm not a Kiwi...is there a point to that comment? Does it matter? I am an average Brit living in NZ trying his very best to make a living as a real estate agent. I know that will p*** some people off but that's their problem.

Chris