If the vendors is willing to rebate 6%
How do you justify this commission? When you're just putting someone into a new property?
Again I cant read your research because it's not working, but wouldnt your research have to rely on developers/builders coming to each area to be able to pay your commission for you to rebate to the clients?
Brady,
To answer your questions: Real estate agents charge between 2% & 3.3% depending on whether they are metro or regional. And we all know how much work a real estate agent puts into a single transaction.
We charge a flat 4% + gst. We are a one fee business, we only get paid by the buyer and keep no other fees from
any other source.
For our fee we do the market research (and lots and lots of it), by that I mean we look across the whole country and select one area to buy houses in and one area to buy apartments. Yes they are both in Queensland at the moment, we stopped buying houses in Western Sydney and apartments in Epping, NSW two years ago.
After narrowing down the next area (LGA) we will be buying in, we create a short list of developers. We look at who has land, and who is building stock a good 12-18 months before moving into a new market. Reviewing how much potential land stock is available to come on the market, sourcing data on who has building approvals, as well as looking though the current developments and land blocks to narrow down the best of whats on offer.
The next step is quality grading developers completed product, we do this by visiting rental open-for-inspections on their older buildings to get a better understanding of the quality of what they are building. Also taking the opportunity to surveying neighbouring owner-occupiers what they think of their apartment while we are there.
We then select the house designs or apartment floorpans that best suit the target demographic for the area, for a house design the selection process also includes fixtures and fittings, types of air con, etc.
For apartments we go back over past sales data and collect square metre sales prices to create a sales trend history to track the square metre rates being charged for new buildings coming onto the market in that given area. As an example for Fortitude Valley we have 1600 apartments graded and adjusted for floor level, aspect, car space, etc.
When we get given a set of floor plans for a new building (up to three months before being released to market for sale) we go though all the individual apartment floor plans and calculate all the square metre rates for each apartment, floor by floor to find the best value in the building. We then reserve those best "value" apartments on the first morning of release to the market for clients on our waiting list.
We get rental appraisals from all the major agencies in the area, as well as visit open for inspections of comparable stock. We track the rental market for 6-12 months before we start buying.
Once the client wants to go ahead, we help the client to get the best finance deal using 3rd party mortgage brokers, oversee the conveyancing process, help with document signing, manage funding drawdowns to builders, seek rental management quotes from the local agents, oversee the rental manager's letting progress, organise the final building inspections and oversee defect rectification, key handover and that the property is tenanted in a timely manor.
I don't how many hours we spend on each purchase, my guess is 100-120hrs from start to finish for a house and land, 80-ish hours for an apartment.
This whole process requires five well qualified staff to manage 8-10 transactions per month. Whether what we do is good value or not depends on how much time and knowledge you can bring to the table when selecting a property for yourself.
To answer the last question you asked: When an area is about to take off the local builders and developers are well aware of whats happening and have their fingers crossed that it's about to be their turn. They have been gathering stock for a while and are waiting for the crowds to arrive so they can finally trade their land.
To be clear, I am a property investment advisor and my partner David Ward is the licensed buyer's agent.