7 Secrets you must know before hiring a real estate agent! -(#3 could save you thousands!)
After being in Real Estate for over 20 years, I have discovered a majority of sellers are unaware of some of the options you have as a seller when signing up your home with an agent and what it all means.
Below I explain some “secrets” that you may or may not be aware of before you have your first meeting with an agent.
1. Why your agent is begging for your property - A listing is GOLD
When you agree to sell your property with an agent it is called a listing. Without a listing, an agent cannot earn money for themselves or the agency they work for. The more listings an agent has the more money they will make. Unfortunately, some less experienced agents and some “dodgy” agents could revert to tactics to get you to sign your property over to them, which we touch on below.
Once an agent gets a listing, they have contact with buyers who often become sellers at some stage, so not only does a listing (if it sells) earn an agent money, it also exposes them to future listings.
A listing is GOLD, without listings an agent will not survive.
2. Commission payable to agents is negotiable!
Agent commission rates vary depending on the state, area, and property type. They range between 1.5% - 3%.
The lower rate is generally for the higher-priced properties in your area. If your property is valued in the mid-range or mid-high range of pricing and an agent comes to you with a low commission rate, alarm bells should start ringing! If they do not see their own value and can’t quantify why they deserve a higher commission rate, and drop their own commission, how quickly will they want to drop the value of your home to a buyer?
This shows desperation and probably a lack of experience.
If they come to you with a high rate of commission, it should also send bells and whistles to your ears, you don’t want to get ripped off, however, if your property is in the lower price of the market for e.g. a one-bedroom flat as opposed to a 3 bedroom, 2 bathroom house, the agent more than likely will charge a higher rate as they still need to do the same amount of work for both properties so will want to receive a higher rate for the lower priced property.
Here are some examples – (please note below is a generalisation for example purposes only)
Property Type 1 bedroom apartment 3 bedroom house Premium Property
Value $480,000 $950,000 $2.2m
Commission Rate 3% 2.5% 1.5%
Commission payable $14,400 $23,750 $33,000
You can also offer a structured commission rate. You may offer a lower rate to your agent but then offer a 10% bonus over a certain amount. This figure could be your wish figure.
Eg. for $950,000 property – 2.2% up to $950,000 and an additional 10% for any dollar over this.
Sold for $985,000
2.2% up to $950,000 = $20,900
10% from $950,001 - $985,000 = $34,999 x 10% = $3,499
Total payable $24,399 compared to $24,625 on 2.5%
You can also offer a flat fee to the agent. Eg $22,000
Please remember in Australia 10% GST is payable on the agent's commission.
If your agent offers you a commission rate, you can negotiate with them to a rate you are both happy with. But remember the old saying - “Pay peanuts and you get monkeys”.
3. Sell your property without spending 1 cent on marketing!
Yes, you can! When the market is hot – there are a lot of buyers and not many properties available for sale or auction, many buyers miss out and feel disheartened. They get frustrated and will generally stretch their budget a bit further to avoid missing out on the next property. Your agent may have a list of buyers who are potentially waiting for a property like yours to hit the market! In this case, you may want to sell your property “off-market”.
There are pros and cons for this – I will explain.
PRO’s
Quick sale – usually a great price
No open homes or styling to be done
Private and confidential
No board out the front of your property
No Marketing cost saving you thousands of dollars
CON’s
If it goes out to the public there may be more competition thus pushing the price higher
The more people see your home the more it creates interest and is talked about
It is hard to sell a secret
A buyer searching for a home in the area will be unaware of the upcoming sale with no board out the front.
Selling off-market could cost you thousands of dollars depending on the market you are in.
Another advantage to showing your home “off-market” is that you can test the market to get feedback from buyers without affecting a potential upcoming marketing campaign.
If you keep hearing the same thing from buyers - “we wish it had a front fence” then when you go to market (if it doesn’t sell off market) it may be wise to put up a front fence first to avoid objections from buyers.
Your agent will be able to advise the best option depending on the market at the time.
4. Agents may tell you what you want to hear to get your listing.
Some agents will try to “buy” your listing, they will tell you your property is worth more than it is so they can get the listing and when there is no interest at this price, they will endeavor to get you to reduce your price to where buyer interest is.
You want an agent to be truthful with you regarding the value of your property and show you comparable sales prior to signing with them and prove why they believe you will achieve this price.
5. Think you have to have an Open Home – Think again
Open Homes are when you open your home to potential buyers, usually on a Saturday for around 30 minutes, when everyone can come through your home and have a sticky beak.
You do not have to have an open home, you can do only private inspections or inspections by appointment only. This again varies between states and areas, however, if you have the opportunity to do an open home I would suggest you do and this is why:
When buyers are in the market they will go from house to house looking on a Saturday and when they haven’t found what they are looking for they are glued to the computer waiting for a new listing as they want to be first to attend a new open home. These are usually the best buyers to have at your open as they will generally present an offer quite early as they do not want to miss out again.
Open homes create competition. If your home is priced well & presented well you should have several groups attend your open home. This creates competition between the buyers. If you go to a private inspection you have no idea if the property is of interest to anyone else, but if you attend an open home and there are 10 or more groups attending then the fear of missing out kicks into buyers who have interest, and they will usually “show their hand” earlier than they had anticipated.
Open homes get great feedback for the agent who then passes it on to you the seller. What they liked, what they didn’t like, can this be changed or fixed, how much they think the home is worth if they are interested. Buyers will show “buying signals” at open homes, such as asking lots of questions about the home and area, what settlement is required, and requesting building and pest inspections. These are all clear buying signals that they are interested in the property.
Private inspections can disrupt your life. If you know that on one Saturday for 30 minutes each week you only have to clean the house once and move the kids and dog out, it is more manageable than having to have 6 groups attend on 6 different times throughout the week, usually around dinner time!
If you have a private inspection after an open home, it is usually from a very serious buyer.
Nosey neighbors can help sell your property!
Who else loves your area like you? Your neighbors, who else loves the street….your neighbors…who usually have family that wants to live close by….your neighbors…..getting the picture…. neighbors are great to have at an open, sure some may be sticky beaks but they usually know someone, a friend or family member who wants to move into the area.
6. Avoid Agents calling and emailing you relentlessly! (Until you are ready to sell)
Once you make that call to request an agent to come out and give you an appraisal on your home they have their hooks into you. They will continually call you and email you until you are ready to list your home, as they do not want to miss out!
There are rules in commission-based selling. If you have regular contact with a seller (and sometimes a buyer) then they are classed as “yours” and no one else at that agency, unless agreed upon, can contact that seller. If they do not keep up “regular” contact then another agent at that agency has a right to “claim” you as their seller.
This explains why you will receive calls every 1-2 months and emails – they are keeping up their regular contact.
To avoid this it is best to contact an agent when you are close to wanting to sell, you can get an appraisal and opinions on any maintenance you should do prior to the property going on the market.
If you are only after an appraisal to see what your home is valued in this market, let the agent know this from the beginning and that you have no intention of selling in the near future. They will still keep in contact, however, you should not be inundated with calls and emails.
7. You can decide the length of time you work with the agent.
When you have decided which agent you would like to work with they will have you sign what is called an authority. This does differ from state to state in Australia. For example in Victoria, you will generally sign an Exclusive Authority, meaning that you will only work with this agent and agency for a period of time. The time length is usually 60 days. This gives the agent time to prepare marketing and get your property on the market and maybe show some buyers “off-market” prior to it hitting the internet and the board going up. This can take around 2 weeks, they then have 30 days to sell your home and an additional 14 days depending if the market is slow. This totals 60 days. There is then a re-occurring time put in – most agents will put 30 days – this should be ample time to sell your home giving 3 months in total – any more than this then the property looks stale and that there is something wrong with it- turning potential buyers off. Depending on the market at the time, or if your property is unique – a longer time may be necessary.
Please be aware that you can not engage another agent while you are still in authority with another. Speak about the time required on the authority to sell your home so you feel comfortable, you do not want an agent to sign you up for 180 days unless they have a very valid reason to.
Good luck in your journey to sell your property, we hope you got value from these secrets – If you are unsure of how to find the right agent for your property, do not have the time to commit to researching or don’t want regular contact from an agent yet, we offer a Free Service to locate and research the right agent for you and your situation www.myagentscout.com.au
For further information on selling your home please see the link below.
https://www.myagentscout.com.au/blog/preparing-your-property-for-sale
