RE comission

I have a property on the market for about $670k and the 2 houses next to mine are already on the market (one just sold) with the same agent i am signing up with.

I will get a flow on from their inquiry list from the other 2 houses as there have been a LOT of interest.

Their commission is 3% inc. GST for the sale of my property which is approx. $20k to them. My question is if they pull a buyer from the other properties, say tomorrow and sell the place tomorrow.

Are they entitled to the $20k in commission they would get from the sale of my place?

Its a lot of money to make a phone call, walk someone through and take an offer. I'm thinking i should attempt to get them to lower their comm. if they secure a buyer this way, with absolutely no marketing and only a couple days on the market.


Anyone been through this before? Thoughts?
 
I would say yes. It doesn't matter where they get the buyer from, as long as they get a buyer.

Look at it from the owner of the first house sold's perspective. Why should you get a discount for accessing the list of people who were looking at his house?

Having said that, I'd still ask for a discount. The RE agent can only say no.
 
I would say yes. It doesn't matter where they get the buyer from, as long as they get a buyer.

I'd agree. The way that I see it, is that you're not paying the agent for their time in finding you a buyer and negotiating a contract, you're paying them for the value of not having to sell it yourself.

If they can do that quickly and effectively by using their existing database of buyers, then all the better.

That said, I'd agree with Dan that there's never any harm in asking for a discount.
 
You're approaching the situation with the wrong viewpoint. When you appoint an agent, you want the best possible price in the shortest possible time and this is what you're paying for. If they deliver exactly this, isn't this when they should be entitled to the maximum commission?

An agent is not paid on the amount of groundwork they have to do, they are paid to sell your property as efficiently as possible, which in this case would be achieved.

Are you saying that an agent who has a property on the market for a year and does an open home every weekend should be paid $20,000 yet an agent who sells a property on the first day through their database should recieve less than this?
 
We sold a place a few years ago where the commission was 2.2% and $495 "marketing" fee. Property sold withing 48 hours to a buyer they were already working with. Tried to get back the $495 fee because no market was actually done apart from the sign out the front.

No luck they said the advertising had already been "booked". Just the normal REA BS.

You do know this house is going to be worth $800K next year don't you.:rolleyes:
 
evand, I'd have to agree with the others so far. You are paying for a result not the time and effort invested by the REA.

For evey house they sell easily, there will be one that drags on for months of inspections & Opens etc - so its swings & roundabouts.

It is the same for us. Sometimes we find a property for a client the first day we're out looking and othertimes it has taken 4 months of blood, sweat & tears. One is profitable, the other is not, but taken together it is reasonable business.

As for 3% comm - if it were me I'd be trying to negotiate it down to 2.2%. There are some REAs that do it for 1.1% but you get what you pay for with these guys:rolleyes:
 
The last PPOR I sold I had an agreement in writing with the agent that if the next door neighbour bought the house, their commission would be halved. But I made this arrangement BEFORE signing up with them. It was a $1m sale, so the discount on the commission was a fair bit. The neighbour did end up buying it. The agent was philosophical about it.
Your case is different. All good agents have prospective buyers they call up. I get called by a local agent all the time because I once tried to buy the house behind me and he knows I'm still keen on the area.
Maybe you can negotiate something on the advertising costs is there is a quick sale? I know advertising is often paid for before the campaign starts.
Scott
 
Nice POV Joel.

Evan, cost of doing business. The agent should be rewarded for a fast, efficient and optimal selling price even if that means a flow on from adjacent enquiry.

I don't doubt you've done your diligence to choose this particular agent/company to have a proven track record in your area for the type of asset you're selling.

I am assuming from your post you haven't signed them up yet. Consider a staggered commission based on performance. Perhaps a fixed amount (or percentage) up to a certain price point and more above that.

Keeping the exclusivity contract with them short should make them work more intensely. In the instance that you are likely in a decent market with sizzle and the rea's database and enquiry list should see a hasty sale if it's priced right, they shouldn't have too much of a problem with this.

Be creative.........everything is usually negotiable.
 
The last PPOR I sold I had an agreement in writing with the agent that if the next door neighbour bought the house, their commission would be halved. But I made this arrangement BEFORE signing up with them. It was a $1m sale, so the discount on the commission was a fair bit. The neighbour did end up buying it. The agent was philosophical about it.

Scott, given you thought there were strong prospects of the neighbour purchasing, did you consider approaching them for a private sale prior to having the property listed?
 
It was complicated and I have some good stories about the process. The next door property was a church - Greek Orthodox. Money for the purchase had to come from the arch diocese (sp?). The place needed a 'for sale' sign out the front to get the priest (who I liked and used to have coffee with) to act. Have you ever negotiated directly with greeks? They're tougher than me. I needed the agent as a third party in the tussle.
 
Quite honestly I thought you were a bit of a guru evand....the one who claims to be on top of everything investing....? :eek:

Thought you'd been thru the mill but seems you have unanswered questions....:confused:

I know and agree it's alot of $$$ to agents for seemingly not a great effort but I'd have to agree it's up to you to negotiate before signing anything.

Just don't fall into the trap of showing them you are an absolute tight--ss or they will not bother helping you at all. I know...it happened to me...!:D
 
Evand,

I agree with Wylie. Try to negotiate the agent down, and if they say no, then just cancel your agreement with them. Make sure you do it in writing. I would put a up a big 'For Sale' sign in front of your house with your contact details. I would also advertise the property on-line at a discount to the house next door. If you save yourself the $20,000 agent's commission, then you can afford to lower the asking price.
 
. Have you ever negotiated directly with greeks? They're tougher than me. I needed the agent as a third party in the tussle.

If you can survive a deal with the Greeks you're doing ok. I love/hate dealing with them. You need to lift your game and stay sharp at all times or you will be done.

By the way the coffee was part of the negotiation process although you may not have realized it:D
 
If you can survive a deal with the Greeks you're doing ok. I love/hate dealing with them. You need to lift your game and stay sharp at all times or you will be done.

By the way the coffee was part of the negotiation process although you may not have realized it

The coffees had been happening for a few years - I used to give him eggs from my chooks in exchange - but there were quite a few funny meetings with the Greeks during the period the place was on the market.
One day I even had the Archbishop come through - he was stumping up the cash and wanted to see what he was getting. He showed up in a big black Mercedes with three huge Greek blokes dressed in black cassocks.
Father Nicholas was very nervous that day. I saw him out the front of the church waiting by the kerb.
I went out and said: 'What's up?
He said: 'You know what it's like when the boss comes.'
'But isn't God your boss?
'Yes, but God doesn't get on the telephone and shout.'
Father Nicholas was relieved that at the door I geeted the Archbishop as 'Your Emminence'. The Archbishop took my arm and we walked around the house together with half a dozen people trailing behind. It was a huge house and in the main room I had a full size snooker table. I asked him if he time for a game.
Afterwards, I was standing out the front with Father Nichloas and a few of the old guys from the church and I said: 'If I was Greek, I would give you the house'. One of them slapped me on the back and said: 'If you were Greek, you would charge $2m, not $1m. I hate dealing with Greeks.' They all agreed.

Sorry to hijack the thread, Evan.
 
.....Afterwards, I was standing out the front with Father Nichloas and a few of the old guys from the church and I said: 'If I was Greek, I would give you the house'. One of them slapped me on the back and said: 'If you were Greek, you would charge $2m, not $1m. I hate dealing with Greeks.' They all agreed.
....

As a Greek, I resemble those remarks :p Ok, there are ol' school Greeks that are pains to deal with.
 
Keeping the exclusivity contract with them short should make them work more intensely...

Note the Victorian REIV Exclusive sale appointment has, in its fine prints, the flow on period whereby:

- If the property is sold within 3 months *after* the exclusive period expires
- The buyer is introduced to the property by the first agent
- The owner has no exclusive agreement with another agents

Then the first agent is entitled to get full commission.

Watch out for this one.

:)
 
Nice info there Kenny...Of course if one engages another exclusive agent the commission goes there however was unaware if it comes off and the buyer came (in the first instance) from the original listing rea, that this was the case. Some interpretation and shades of grey and legal stoush might enetred into, however that usually costs more in legalities in the long run, and greater losses.

I wonder if it's similar in other states?

Any non Victorians care to share?
 
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