Entry level question

[Lilith]

Hi there,

my understanding is, in australia, the buyer is not responsible for paying for realty agent commissions, the burden is on the seller. Here are some follow-up questions:

1) Is it better to bring in a buying agent myself? Since I don't like the situation in which an agent can act on behalf of both the buyer and the seller.

2) If, let's say, I don't bring in a buying agent, can I ask the seller to shave some $$ off the price since he doesn't need to pay my agent? Or, the selling agent will automatically be appointed to represent me (in such case, I guess I'd be motivated to bring my own agent to begin with)?

3) How difficult it is to get an agency licence so that I can represent myself in the future transactions? Is it worthwhile?

4) Any good links for self-taught buying process? Preferrably for QLD.

Thanks a bunch!

 

[always_learning]

Originally posted by Lilith
Hi there,

my understanding is, in australia, the buyer is not responsible for paying for realty agent commissions, the burden is on the seller. Here are some follow-up questions:

1) Is it better to bring in a buying agent myself? Since I don't like the situation in which an agent can act on behalf of both the buyer and the seller.

2) If, let's say, I don't bring in a buying agent, can I ask the seller to shave some $$ off the price since he doesn't need to pay my agent? Or, the selling agent will automatically be appointed to represent me (in such case, I guess I'd be motivated to bring my own agent to begin with)?

3) How difficult it is to get an agency licence so that I can represent myself in the future transactions? Is it worthwhile?

4) Any good links for self-taught buying process? Preferrably for QLD.

Thanks a bunch!

1) In Austalia the real estate agent is acting on behalf of the seller, nobody else, dont think they are there to act in your best interests.

2) I think in Australia this would result in puzzled looks. You are representing yourself unless you ask someone to represent you.

3) You dont need one in Australia, if you can read the contract of sale documents, sign your name and that's it. Most sales are via industry standard contract of sale documents. Many people however ask their solicitor to have a look thru to verify everything is OK.


Simply speaking most people in Australia buy a property (normally subject to finance), then ask a solicitor to do the legal work (around $1000) or you can ask a para-legal convayancer to do it (less than $500 ).

Maybe a talk with a professional mortgage broker could help you understand the process, first step in my opinion is to review your finance options.

 

[Lilith]

always_learning,

thanks for the reply. It's interesting that there is actually no buying agent involved.

This perhaps also explains why realty is a more important investment vehicle down under. In the US, sellers will have to shoulder the commission of both the selling and buying agent, which usually amounts to 7% of the price, plus other processing fees. The total bill can go as high as 9% of the selling price.

 

[abcdiamond]

Lilith

Your comments on the costs in the US are, to say the least, interesting. I come from UK, and find the Australian rate of 3-3.5% to be high. My last sales in the UK have cost me 1.5%, the normal going rate for an agent. All I can say is WOW, at 9% i'm not sure I would want to buy and sell !!

 

[Lilith]

Hi ABCD,

I just sold a property in Washington state. For the first $100K, I paid 3%, each. For the next $200K, it was 2.5%, and 2% for the balance. So that was close to 6% just for agent commission. If you take into consideration the escrow cost, county fees, etc., I ended up paying clsoe to 7%. The US realty agency business is definitely due for a big shakeup!

However, just across the border in Vancouver BC, the agent commission is almost close to nothing due to fierce competition. Lots of Canadian agents are offering flat CAD 5,000 per transaction regardless of the price.

 

[abcdiamond]

Lilith
What does escrow cost ? and exactly what is it ?

I looked up the definition as "Money, property, a deed, or a bond put into the custody of a third party for delivery to a grantee only after the fulfillment of the conditions specified."

But how does it actually work, from what I can tell we don't do that, it goes from seller to buyer with no third party, that I am aware of.

 

[Aceyducey]

Lillith,

Currently in Australia to sell a property via a RE Agent it costs between 2% and 8% depending on the location, type of property and your negotiating ability.

You are legally allowed to sell your own property and can either do this entirely by yourself, paying for ads & marketing as required, organising a sale contract via a solicitor and managing the relationship with the buyer.

There are also organisations such as AusReps around which will provide you with a sale template and hold your hand through a sale process for a fixed fee or very low % - much lower than RE charges.

When buying property you CAN use a buying agent in Australia, however they are a relatively new phenomenon & currently cater mostly for IP purchases. There are some people who have gotten good returns this way, however the industry is not really regulated and it can be hard to ensure you have an agent who is representing you effectively. People do require a RE Agent license to practice as a buyers' agent, however there is not any specific training provided so that they are good at buying rather than selling.

Also make sure you do plenty of research into the buying and selling process, your legal rights and obligations as they differ significantly from the US market and also vary quite a bit state to state here.

Cheers,

Aceyducey

 

[Lilith]

ABCD,

no, in the US, the buyer doesn't pay directly to me. Since I still owed a mortgage balance, the money from the buyer had to reside with a third-party escrow company when the deal closed, so that the seller, namely, me, wouldn't be able to take the money and run off to Mexico . Then the escrow distributed the money to my mortgage lender, and finally the remaining equity to me. Therefore, escrow takes a cut in the transaction too.

Escrow is a must in all realty transactions that involve a mortgage. I am not sure what the situation is like for an all-cash transaction, but I guess there should be some kind of mechanism to make sure that the money reaches the intended party with legal acknowledgment.

 

[abcdiamond]

Hi Acey

What part of the US are you from Using words like "gotten"

I was just explaining to my daughter last night that the word "gotten" isn't an Australian word. But it does seem to be creeping in slowly here and there.

 

[Aceyducey]

What are you on about ABCD - 'gotten' is as Australian as going to jail!

Cheers,

Aceyducey

 

[Lilith]

Aceyducey,

thanks for the advice mate

 

[abcdiamond]

Originally posted by Aceyducey
What are you on about ABCD - 'gotten' is as Australian as going to jail!

It is ???
I suppose i'd better not help her too much with her English homework, till I learn this new language then I've only been here a total of 13 years