Advice about what to pay agent

[Brits]

Hi again
I am going to be selling my rental property in the near future. I have done loads of research and have definitely decided to sell it privately probably using For Sale By Owner.
However today I got a call from a real estate agent who I actually quite like and keeps me in the loop about possible buys. He asked me if I was considering selling my unit. I asked him why does he want to know. He said he may have a buyer for it. I said strangely enough it is very much on my list of things to do in the next six months.
Now I know this bloke and when he says he may have a buyer he means it.
I will let him show these potential buyers through and if by chance they are interested in buying what would be a reasonable commission to pay the agent do you think?
I thought I would just offer him a set fee. The unit looks like it might fetch 320,000 to 330,000 and I was thinking of offering him say $4000.
Is that reasonable seeing he's really not had to do that much or is that too much seeing he's not really had to do too much?
Like to hear what others think.
Brits

 

[Big Will]

Could always ask the question, $4,000 isn't a great deal for the agent but if he does have the buyer he might be okay to take a lesser rate as it is a quick flip for him.

Out of the $4k there is usual 20% for the listing agent and 20% for the selling agent (40% if they do both). So he would walk away with $800-$1600 in the agents pocket.

Wouldn't be a bad hourly rate if I was the REA and had a buyer for a 30 min inspection and 30 mins for contracts. However he might have been working with the buyer for a while so my numbers might not seem as appealing.

I would go back with a 1% to 1.2% and negotiate up to 1.3% inc GST commission which works out to be about $4,000 on a $300,000 sale. Rather than a fixed rate of $4,000 as I would want to pay him more for getting me more not a fixed rate where he has no incentive to get more.

If you really felt generous or wanting to gamble go back with 1% up to x (300k or 330k) then 5% even 10% after 330k for any amount after that.

E.g. 1% to 300k then 5% after would = on 330k sale $3,000 + $1,500 or total$4,500 but if he got 20k more (350k) he would get $5,500 (you get 19k above what you thought would be a good result).

 

[Terry_w]

He would be wanting around 2% I imagine.

Keep in mind if you advertise it yourself you may get the same buyers approach you direct, but once he introduces them you could be bound to pay him - depending on agreement.

 

[Brits]

The way I see it is he approached me. If he really has a buyer at the price I put on the place he can have say $4000. I don't want him to negotiate more for me.
All he need do is show the potentials through, tell them it's $xxxxxxx and if they want it at that price he gets four grand. Simple. I will be putting a price on it that I know is right and fair.
Yes I know most agents want at least 2% commission but I did not ask him to work for me. He asked me. If these potentials don't want it at the price I put on it and he does not want the set fee I offer him then I could not really care. I will go ahead and do the repairs and maintenance I was intending to do and sell it myself but it will be for a higher figure.
As far as him wanting a cut if the people come back when I am selling it myself I will not be meeting them or know who they are. I will not have signed anything with him. I don't see how I am indebted to him at all. If he knows my price and knows I won't budge on it (which I won't) and these people are not wanting to pay that sort of money he should not bring them through.

 

[Jamie M]

The way I see it is he approached me. If he really has a buyer at the price I put on the place he can have say $4000. I don't want him to negotiate more for me.

Hi Brits

Seems like a fair deal - but the only way you're going to find out is by asking the question.

If the REA isn't interested - just advertise it yourself and hopefully the same person will approach you.

Cheers

Jamie

 

[Brits]

Thanks everyone
Yes I think I'll just have a chat with the agent before he brings the potential buyers through. I'm going to tell him the price is $330 000 and if he has a buyer at that price I will pay him 4 grand.if he says he doesn't think the unit is worth that much or that he would expect a larger commission for that kind of money I'll say thankyou for contacting me but I will find my own buyer. I will let him know, and hopefully he will let these potential buyers know, I intend to do some painting, gardening and other work on the place and the price I will be asking then will be at least 5000 more. It is a very tidy unit in a very sought after location. With some detailing it really will come up beautifully.
I win either way. It's a great feeling when you know you have a property that is desirable and you call the shots. So important to buy in the 'right' areas.
Brits

 

[JDM]

It always interests me that people believe an agent should be paid a lower commission for a quick sale.

What is the role of a good agent? To get the best price in the shortest possible time. On this basis, an agent should be paid the highest commission for a quick sale and should be paid less if the property sits on the market for an extended period.

 

[Brits]

It always interests me that people believe an agent should be paid a lower commission for a quick sale.

What is the role of a good agent? To get the best price in the shortest possible time. On this basis, an agent should be paid the highest commission for a quick sale and should be paid less if the property sits on the market for an extended period.

Yes I hear you however I did not ask him to work for me. I prefer to sell myself. As I said I don't need anyone negotiating best price for me. It will have a price. I have determined that price. It is worth that price. If I work on the unit a bit it will be worth more than that price. However if he has someone who's just turned up and said they want to live in South Street (which is highly probable) and wants to pay $330 000 then he gets four grand. Wow wish I could get paid for that. Hee hee.

 

[RyanMcHarg]

Yes I hear you however I did not ask him to work for me. I prefer to sell myself. As I said I don't need anyone negotiating best price for me. It will have a price. I have determined that price. It is worth that price. If I work on the unit a bit it will be worth more than that price. However if he has someone who's just turned up and said they want to live in South Street (which is highly probable) and wants to pay $330 000 then he gets four grand. Wow wish I could get paid for that. Hee hee.

Why don't you say $4K for bringing a buyer, and then anything you achieve above $330K you will split with him. EG if he gets you $340K then he gets $4K + 5K totaling $9K.

 

[Brits]

Why don't you say $4K for bringing a buyer, and then anything you achieve above $330K you will split with him. EG if he gets you $340K then he gets $4K + 5K totaling $9K.

Hmmm yes I like that but it won't get $340 000. It's top price is $330 000. I know the market really well in this area.
I have actually decided to tell him not to bring his buyer through. I really could not be bothered with real estate agent talk. I know what is a fair price for the unit and know I can sell it myself probably with no more than a sign board out the front though I will be using the internet too.
I'm a little concerned about the animosity I will likely receive from local agents for selling privately. I know a lot of them as I'm always looking at properties (sometimes buying them). I know they hate private sellers because they threaten their livelihood. I fully understand this but don't think it would be a problem if their fees were reasonable.

 

[Simon]

Put it on the market. If there is a keen buyer out there he will find you.

 

[Brits]

Put it on the market. If there is a keen buyer out there he will find you.

Yeah I think it's real no brainer. It's in such a sought after area of Belmont that just putting it up there for sale will sell it. I know what it's worth and know it will be in high demand. Don't need a real estate agent, don't need a negotiator or a trickster of any sort. It will sell itself. Might as well save the commission and the nonsense of real estate agents - even the good ones.

 

[D.T.]

Stop trying to do him out of making his living. Either employ him to sell your house or dont.

 

[Brits]

Stop trying to do him out of making his living. Either employ him to sell your house or dont.

I think I made it quite obvious that I was not going to waste his time by allowing him to show his buyer through. I am not 'Doing' him out of anything. I did not contact him. He approached me because it's a p##s easy sale.

 

[tobe]

I would definately be confirming the commission before he introduces anyone to you. As others have said, once he does the introduction he has a claim to commission. He may or may not be successful with his claim, but to save any hassle, just agree on a commission before the viewing.

 

[Big Will]

I would definately be confirming the commission before he introduces anyone to you. As others have said, once he does the introduction he has a claim to commission. He may or may not be successful with his claim, but to save any hassle, just agree on a commission before the viewing.

Does anyone read comments before posting?

Also Brits the fees are reasonable for what they get. Lets pretend every house has the median price of $500,000 (Melbourne is $668k) and they receive 2% commission + GST.

That would mean each sale the agency earns 10k + commission and the average time on market being 56 days (source http://blog.rpdata.com/2014/02/aver...endor-discounting-reduces-significantly-2013/)

Doesn't sound to bad hey, however you don't sell a house every day, I did a quick search on RPdata for my suburb and in the last year 71 houses sold in the last 365 days. So lets pretend all houses gave 10k commission or $710,000 quick lets all jump on board!

However lets break that 710k commission down, from the last 20 properties sold according to Realestate.com there has been 9 agencies so if each agency had equal share they would each receive $78,888* in commission. Still decent, but if we look at the agents from the last 20 sold there was 15 so it would be $47,333*.

However as an agent you can only usually receive a maximum of 40% (20% list/20% sell) of the commission is $18,933.33 for the year! I really cant be bothered with look at how many agents service an area, what the average sale price is but I think you are looking at their fees with rose tinted glasses.

Yes I know as an agent you can list in more than 1 suburb however in looking at some of the agencies most have 5-10 (sometimes more) agents and this would mean more competition. For the office and their 60% commission, they need to pay rent (main street shop frontage = large $$$, marketing, admin staff, bills, car allowances, insurance, training staff etc etc).

So you go work for $18k a year including weekends, late nights and early morning cause it is so over priced their commission... There is so much competition in their market they cannot be all overpriced or some jockey would clean up charging 5k commission for each sale.

 

[BayView]

If you have never tried to sell it yourself (I have) it is not that easy.

The time I did it, as soon as I put the sign out the front, I got flooded with harrassment by more agents than buyers - they wanted the listing.

I offered each of them a flat fee of $5k - none of them were interested, and in the end we re-let the place.

Offer him the $5k and see what he says.

If he is really desperate for a sale, and has the buyer as he says; he might take the deal.

 

[Brits]

If you have never tried to sell it yourself (I have) it is not that easy.

The time I did it, as soon as I put the sign out the front, I got flooded with harrassment by more agents than buyers - they wanted the listing.

Hi Bay View
I'm interested to find out why it was difficult for you in selling your own place?
I have done a lot of reading that suggests selling privately is simple and straight forward. I have just finished reading REAL ESTATE WITHOUT AGENTS by Terry Ryder and though I think he's very harsh towards agents almost suggesting they are criminals he does have some very good advice on how to sell yourself and why it's a very good thing to do.
What sort of issues did you have to deal with?
I am concerned about REA's bombarding me and also putting off potential buyers who may be interested in my property. I can just imagine them saying to someone who is looking around at different properties and mentions mine to them 'Oh you never want to buy from a private seller. That can go terribly wrong' or words to that effect.
I think Terry Ryder is quite correct in saying that people are so conditioned to buy and sell only through real estate agents they think that it cannot be done any other way. I remember when my parents wanted to sell their first home many years ago they put a notice up in the local supermarket and sure enough sold it in a couple of weeks.
The only problem I can foresee is lack of confidence on behalf of the potential buyers in that they might think something fishy is going on or it's unprofessional because there's not a expensively dressed young man turning up in a BMW talking Bulls##t. Ha ha
Love to hear more of your experience.
Brits

 

[BayView]

Hi Bay View
I'm interested to find out why it was difficult for you in selling your own place?

Brits

It's not that the process is difficult; it was the whole circus of the dealings with both the buyers and the agents who were hounding me to get the listing.

The amount of time talking to deehedds who wanted to low-ball your price, going to show the home to them, fielding endless calls and knocks on the door from the agents...

I reckon the $5k (or whatever the commission ends up being) was far better money spent to save me lots of time and grief and pain from doing it myself.

But, if you have nothing better to do with your time, and don't mind dealing with pains in the @rse tyre-kicking low-ballers; go for it and sell it yourself.

 

[alicudi]

Hi

I think the major deciding factor for me wanting to use a real estate agent or not will be determined by my excellent selling skills or lack of excellent elling skills.

If I was a natural born negotiator that can achieve the best deal on everything I buy such as cars, other investment properties etc well then maybe I would consider selling my own property myself.

But if I can find an estate agent that has excellent selling skills and can extract the highest dollar from a potential purchaser well I would get that agent to do the sale process for me.

I think it all comes down to the individual and whether they have the knack or not to achieve the best result.

After doing a small stint on real estate when I was 18 years old I realise I do NOT have the sales knack and this was further enforced after running my own business in a totally different field and hiring excellent sales people to do the specific task of sales.

But if you find a bad agent well then that's worst!

If it were me I would find an agent who will get the result you are looking for and you do that by finding pro-active agents who have continually achieved good sales results year after year.

Regards,

alicudi