Myth Busters

What is the average income for a real estate agent in New Zealand?

Circa $42 250.00 Net (Individual)
($84 500.00 – Gross on Individual Sales/2019 MBIE Stats)

How is an agent’s selling fee calculated on the sale of a property?

The most common fee structure in this industry is a Commission, which is calculated as a percentage on the sale price of a property. This typically ranges anywhere from 1% – 4% with variations of flat or stepped calculations, i.e. 3.95% up to $500 000 plus 2% thereafter. There are also a handful of Fixed Fee practitioners offering their service on a fixed amount, anywhere from $6 000.00 – $12 500.00.

It is difficult to determine which of these to choose with such a wide variation on the cost for essentially the same service, as neither deliver any tangible transparency around the quantity or quality of the service they provide.

Does the most expensive real estate agent get the best result?
No.

Remember, the fee (in the mainstream industry) is a percentage calculation on the sale price of a property. So, to be the most expensive is simple – charge the most commission. The ‘best result’ is a measure of outcome that would need to be in your client’s favour in all respects; the sale price, the terms & conditions of the agreement, a short confirmation period and an agreeable settlement date. These rarely go hand in hand.

Consider this: “If you required critical ‘one shot only’ spinal surgery to preserve your mobility, would you engage the most expensive surgeon, the cheapest surgeon or the surgeon with the steadiest hand”?

Should I sell my property privately?

No.

If you have no factual information on the current property market or an intimate knowledge of the sale & purchase process, then do not do it. Most people think they can paint a house, cook, write a book, or compose at least one song if needed in their lifetime. Having ‘a crack’ at getting the best outcome on selling your own property in the same vein, is just not a good idea.

Give this matter the respect it deserves, realise the gravity of the transaction you are about to enter in to, recognise your limited knowledge
and experience in this process. Make a list of the things that don’t work for you using a real estate agent and a counter list of what does work for you by selling privately. Then reassess your situation.

Consider this: “A lawyer who represents himself has a fool for a client.”

(Abraham Lincoln)

How do Private Sell companies work?

All of these businesses are some form of provider who supplies you with a bunch of advertising products, some ideas, information and suggestions that are largely opinion based and a ‘one size fits all’ step by step process for marketing your property. It’s a bit like reading the full operating manual on a Piper Cherokee, then climbing into the cockpit believing you can now fly it.

What is the main reason for a property not selling?
Vendor expectation

Its in fact, the only reason. If your property is overpriced, it will be ‘on the market’ and it will remain so, indefinitely. If your property is priced competitively, it will be ‘in the market’ and it will sell.

Is it harder to sell a $4000 000 property than a $400 000 property?
No.

The process is identical in every way, from start to finish. The only difference is that the $400K property may cost $15 800.00 in commission and the $4000K property may cost $87 800.0 in commission.

That is a significant difference.

What questions should I ask a real estate agent when appraising my property?
  • What did you do before you became a real estate agent?
  • Why did you get into this industry?
  • What do you like/not like about this business?
  • What works/does not work for a property owner when selling through an agency?
  • What marketing methodologies are you familiar with/how do they work?
  • How would you market/advertise this property?
  • Where do you see the current market price for this property/how did you arrive at that?
  • What experience do you have in selling property?
  • What is your list to sell ratio?
  • What makes your proposition different from any other agent?
  • Why do you think properties don’t sell?

If you are not connecting with this person at this point of the conversation, move on to the next one.

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