Ask agents: “How will you get the best price?”
Article originally published AUGUST 27, 2003 –Reviewed and approved.
By Neil Jenman
With prices at an all-time high and the market showing signs of being at its peak, it’s a good time to sell property. It’s also a great time to negotiate a great deal with a real estate agent. This is the advice offered by real estate commentator Neil Jenman.
“Prices are high, and properties are hard to find,” said Jenman. “Also, in many areas, buyers outnumber sellers. This makes it easy for agents to make sales. Their biggest problem is not finding buyers, it’s finding sellers.” According to Neil Jenman, these factors are perfect for homesellers. “They can get a good price and a fair rate of commission,” he said.
Jenman comments are similar to those of the Queensland Office of Fair Trading, which is urging homesellers to shop around when choosing a real estate agent to sell their home. “Take advantage of the hot competition,” said a Fair-Trading spokesperson yesterday.
Alarmingly, the majority of homesellers do not shop around for an agent. A survey has shown that more than 50 per cent of sellers select the first agent they meet. This can be an expensive mistake.
“Most people shop around for fridges and washing machines. They spend days comparing prices and brands of household appliances. But when it comes to the house itself – which is their greatest asset, most sellers go in blindfolded,” said Neil Jenman.
Jenman believes sellers should meet at least three agents before deciding. “When you are thinking of hiring an agent, treat it like a job application,” he said, “because that’s exactly what it is – you are employing a person to sell your biggest financial asset.”
The most important question you should ask an agent is, “How are you going to get me the best price for my property?” Jenman believes sellers should find agents who are competent negotiators. “Anyone can sell a house in a hot market. What an agent needs to show is how he or she can get the maximum price at the fairest fee.”
Few sellers bother to negotiate the terms under which they hire an agent. Neil Jenman believes most agents will reduce their fees. “All you have to do is ask,” he says. He warns, however, that sellers need to be careful choosing an agent solely on the amount of commission. He believes a good negotiator can mean the difference of thousands of dollars extra on the price of a home. “A good negotiator is worth a higher fee, but a poor negotiator is worth less than nothing,” he said.
Jenman’s most important advice is to never agree to pay any money for any reason until the agent has found a buyer. “This is the time to negotiate the commission rate,” he says. “If an agent wants you to drop your selling price, ask the agent to drop the commission.”
Sellers should never accept the line from agents that commissions are “fixed”. In most states, commissions are deregulated, and agents can charge as much or as little as they like. However, in Queensland, the commission rates are fixed at an upper limit. Many sellers make the mistake of believing that “fixed” means that the commissions cannot be lowered. This is not correct. In Queensland, there is a maximum rate of commission, but not a minimum. It’s a good point.
According to Jenman most agents are “grossly overpaid”. And, because most sellers do not shop around, it means most of them lose out in two ways – they get a lower price and they pay too much commission.
Jenman believes the advice being offered by the Queensland Office of Fair Trading should be heeded by homesellers in all areas.
Shop around and save yourself thousands of dollars.
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