lizard

We are wanting to sell our house. Does any one know what the commission percentage for the real estate agent is?

Dolores

lizard - if this is in NZ the amount of commission payable should be on the contract you signed with the Real Estate agent. They do differ from area to area and company to company.

lizard

It is in NZ ( Bay of Plenty) I just wanted a rough idea before we contacted a real estate company. I think it may be 3 or 4 percent. Its just I wanted to work out finances before we get the ball rolling.

Dolores

That is generally around the sort of amount you are looking at lizard - some will also charge one rate to a certain amount then a lower rate over that figure...............you would get a good idea if you rang around a few local agents. You could also try selling it yourself on somewhere like Trade Me.

CAN2NZ

There was a show on TV tonight that deal with the recent REINZ attempted prosecution of the Jones'. The Jones' offer a flat fee of $8000 plus GST. When you consider that the house prices have doubled in the last five years, that means that the real estate fees have also doulbed. I am a chartred accountant. I know that real professional fees, those of accountants and lawyers have not doubled. You should be careful that you are comfortable with the fee for service offered.

Ash1

I would PM Am Loolah . She will be able to give you the best advice.
Ash

lizard

thanks for that, she has been in touch and already given me some advice.

Batty

The percentage charged hasn't doubled. It's stayed the same - it's just that house prices have increased. There is a difference. Sorry, but it made me mad - it was a really biased article - Jones' are subject to the same code as other estate agents and if an agent from one company rubbishes another they get disciplined - it only made the news because it WAS the Jones' and the media jumped on the fact that they charge the flat fee and that must be why the complaint was being made. And yes, I work for a real estate agency - same one as the agent who was interviewed actually. I also know people who left us to go work for the Jones' and left within a very short period of time. I'm not an agent but I have never worked so hard in my life - the level of service that's provided to both vendor and purchaser here is unbelievable - We've bought and sold houses in both England and Ireland and never got anything remotely like the service that's offered here.

My husband is a salesman (not real estate) and if we were selling our house (in a good market) we would probably try to do it ourselves first (the company I work for don't really sell in our area). I don't know that I could put my hand on my heart and swear that we would get the best price selling it on Trade Me at the moment.

Woodlea

Well I think Realtors here are a bloody rip-off.

Here's an example of their fees.

Firstly a fee of $500 plus 3.95% on the 1st $250,000
Secondly on the balance a flat fee of 2.0%
All fees plus GST.

And they recommend an advertising investment of $630.00.

So a grand total of $21,380.63 (inc GST) for selling a $650K house, and that was their cheaper rate!!

Standard fees would have been, $27,990.00 (inc GST).

Robbing bastards!!

zoej

I get the idea on selling a $400,000 house you would pay around $16,000 in agents fees to sell. Ouch.

Plus you need cash for the deposit on your new place (apparently you can no use the deposit you receive on your house like in the UK, but mortgage lenders will sometimes let you have this upfront). Also the money for Lim, removals, solicitor and builders report.

Lim is anywhere from $200-$400,
removals from $95 per hour to $160 per hour
solicitors - we are paying $870 + dispersement of £130 just to buy.
builders report cost us $400
Mortgage arrangements fees $400
valuations if needed ?

moving house isn't cheap!

We are just buying privately off trade me after looking around the area for a good 4 months. I have noticed more and more private sales coming up.

Batty

Hiya

What you can do with regards to the deposit is go unconditional on your new house after you go unconditional on your sale. The deposit is paid on unconditional date usually and you can ask for an early release. This is not encouraged though because the purchaser is waiving rights to investigate title etc but it does happen quite often. For this reason I suspect.

I'd question the 'mortgage arrangement fees' - with competition as it is at the moment you should be able to have these waived. Some banks pay solicitors fees too. It pays to use a mortgage broker - they cost you nothing and can get you the best deal going.

You can go to Council and look at the house record (LIM) for about $20.

The building report is money well spent though - that $400 could end up saving you hundreds of thousands. If the property is suspect with regards to leaky issues, make sure the builder is qualified to report on moisture content as well as actual building work. Any moisture reading above 20% is not good.

Am Loolah

I got one of my vendors $20,000 more through my agency than he'd been conditionally offered through TradeMe. My buyers activated the cash out clause and he still walked away with over $5,000 more after commission through using an agency than he would have got if the offer made privately had come to fruition.

Neither he nor I would say he had been robbed ....

Sorry, forgot to say, try getting an LIR instead of a LIM + Builders Report. It's basically both in one report, (LIR - Land Information Report - as opposed to LIM - Land Information Memorandum) $500 including GST if paid on receipt of the report.

weebossyboots

I've been moaning at my estate agent in Glasgow for not doing enough (well the estate agents on the NZ property programmes work really hard) but I didn't realise the NZ Estate Agents earned 1000 x more than i am paying my estate agent.


3 things come from this
1. I will try my hardest to find a house in NZ that will do me till i die
2. I will leave my GB estate agent alone
3. How hard is it to change my career to estate agent in NZ??

Kiwiprincess

There are also some differences to real estate agents in NZ and the UK. I am speaking as the daughter of a former real estate agent (Wellington) and the friend of one in London.

Bearing in mind that what I say may not be the case for all agents, the differences according to both of them would be as follows:

1. NZ agents will almost never get a car to use. They must buy their own and it is generally expected to be a late model (ie pretty new) car. Ok, this actually applies to agents in the UK too, but it seems that more agencies have cottoned on to the promotional benefits that come if you provide a company car and emblazon it with signage. Apart from sometimes one office car this is very rarely done in NZ. The agent may get magnets to put on their car here. But they get stolen.

2. The commission and charges are high here and real estate agents aren’t badly paid. BUT the agency itself is the one making the bulk of the money. So, to get rich I would suggest being an owner in the agency!!

3. Commission versus self employed commission. By and large the agencies my friend worked for paid him a small (ok very small) salary and then commission on top of that. Whereas his experience without exception in NZ, as was my father’s, was that they did not get any salary. If they didn’t sell anything then they didn’t get paid. Ok there were exceptions (listing the property etc) but generally that was the case. It was lucrative but in the same way there was also a month or two where he didn’t get paid. I guess that is the case anywhere though.

That doesn’t really explain where the extra costs are being incurred though as you would think that it should even out. Which is why I think the owners (I don’t think that’s the right word but I can’t think of the correct one off hand….MREINZ??) must make an absolute killing here!!

Incidentally, my father has always sworn that if he sells his house they will sell it privately!! “Not paying commission for an agent to undersell my property etc etc” So go figure!!

CAN2NZ

[QUOTE=Batty;5449541]The percentage charged hasn't doubled. It's stayed the same - it's just that house prices have increased. There is a difference. ]

You are agreeing then with the obvious that when house prices double, the agent fee also doubles assuming that the rate charged remains the same.

The question is, is it realistic to conclude that the doubling of fees is reasonable?

In a manufacturing setting, an employer may not double the wages of his workers unless his workers can double the rate at which they produce products or there is some ability to push price increases on to customers. Where the productivity has not increased or higher prices are not able to be passed on, the business will enjoy declining margins, lower returns on equity, reduced capital spending and eventual redeployment of capital - ie closure.

So, in the real estate sector, higher prices have been pushed onto customers in that the house that used to sell for $250,000 and paid a commission of say $10,000 now sells for $500,000 and pays out a commission of $20,000.

The real estate industry has been able to pass the higher prices on to customers. The result of which has been to draw more agents to the business. Please look at the growth in the number of registered agents in New Zealand over the last few years. Certainly, there has also been growth in the business as a whole as noticed in the higher number of sales.

Now, we see an industry in transition. Customers are no longer willing to accept higher prices and are looking for different delivery systems that, to the purchaser of the services, represent a fair exchange of value for money.

I put it to you that the basic approach to selling has not changed appreciably in the last five years. Houses sell because there is a buyer at a price. Marketing of the house remains unchanged. There is the advertisement in the real estate papers, the open house, perhaps use of online services such as open2view. This is the minimum service and seems to represent the bulk of the service provided. Yes, these activities do take time to perform, and the agent does need to be compensated for this time.

The personal network of the agent is of little consequence as the sales cycle for any given customer is quite extended. Compare to the shoe or grocery sales cycle. It is very frequent. Frequency of purchase is a contributing factor to higher agency selling costs. Any given agent does not have a list of customers who are always looking for houses. A group of agents in a brokerage may have a number of customers looking and this may be useful. However, this is really a benefit of the overhead and so should be charged out to the seller of the house in the form of the commission.

Now, going back as this post is getting very long. Customers are balking at taking higher pricing. Therefore, more productivity will have to be introduced by agents, or agents will have to settle for lower fees to obtain business. Just as the manufacturer who has passed profits to his workers, all must consider taking a smaller part of the pie in order to maintain their position. In the end, there will be fewer agents just as lower returns drive manufacturers out of business.

You will never be able to tell me that you are twice as good as you were five years ago, when your efforts had very little to do with the increase in the value of the realestate. You do not operate the levers of the economy contolling employment, wage growth and mortgage interest rates. You created nothing and I cannot understand why you should receive twice as much as before.

Yikes!