SOME EXPERIENCE POINTS
Gerhard and Peet of Realty Lifestyle say:
“Correct pricing, low commission and cost of ownership as prime components of affordability and value within a time window of opportunity sells a property, not an agent or a mandate.”
- The seller is paying an agent for getting his/her money on results, and there is a lot of effort that we have to do to make sure that it happens. The process can take three months, so any commission/fee paid is hard-earned to protect your interest.
- Profit margins get pretty tight for agents/agencies working on a 50/50 split. A ratio of 35-40% is spent on overhead, 15% on marketing cost and 10% on management fees. The rest goes towards income/commission.
- The only advantage a sole mandate has is for an agent to go the extra mile for commitment from the seller and a safe exit should the agent not perform. Whether an open mandate or sole mandate, do not inflate prices and be aware that one property is not sold off the back of another! Agents work with a pool of buyers and will push a property where they do not share commission or have an exclusive sole mandate. Appoint only three agents/agencies (an independent one like Realty Lifestyle, one from a multi listing company and one from REMAX) on an open mandate for security purposes and control. Forego a sole mandate when the price and reason to sell is right – especially if the property offers a lot of value and is in high demand. A buyer will associate with the agent who costs less to conclude a sale!
- Lower commission does not translate to reduced service – a commission driven vs volume/service driven agent who curbs overheads and does not pass it to the seller/buyer. Commission is “downward pressured” due to an agency’s high overhead and seller’s opportunistic profits over realistic market values that buyer’s are prepared to pay for a property.
- Buyers compare properties on the market and have absolutely no loyalty to an agent – it is purely self-interest in paying money for value (not value for money) and the least cost of ownership for the buyer.
- Private sellers who hit the wall are quite happy to pay a commission having witnessed first-hand the expertise and task involved that face them! Selling a home is about peace of mind – and the security that comes from having a reliable agent from start to finish as this is well worth the extra cost of low commission.
- The enormity of the gap between asking price and commission on top, involves painstaking negotiation and expensive marketing costs in bringing a sale to fruition. The sad picture is that because of the huge price differential, homes are not shown to buyers who can actually afford them as they are “out of a buyer’s price range.” So, does a mandate or agent/brand expertise sell the house at the highest price as soon as possible? No!
- Market resistance to commission (private sellers) levels are countered by offering an alternative trend called “consultative selling” by an agent/agency who is fine tuning their services and products of choice to sellers and buyers alike according to what they are prepared to pay and can afford.
- Some of our diversified value added services (one stop service) will go a long way in differentiating our higher standards of products and service from our competitors. We are focusing on different buyer profiles, marketing mediums (exposure) and commission choice to attract and satisfy those different seller and buyer needs and adding value towards affordability and promoting fair home ownership equity.
- Properties that are priced correctly and with the lowest cost of ownership, will receive 60%+ of buyers’ attention, while properties that are inflated at 10 – 15% above the market value, will only see 10 – 25% of buyers to compare and make up their minds. A property that is undervalued will receive 80%+ of buyers’ interest and attract offers soonest.
- Buyers compare properties on the market with anyone. So, beware of exaggeration and listing at an inflated price tag with an agent or brand who promises to sell your property. Overpriced properties (due to wrong pricing methodology or reason to secure a mandate, commission and cost of ownership), attract few buyers, showings and offers. Establish the true market value of your property and make sure that it compares well with comparable properties on the market. Buyers will seriously consider buying a property if they find value and where total cost of ownership (transfer duty and costs and commission) is lowest – or reject it.
- When you sell your house, you have three important decisions to make: Selecting the right agent(s) that will operate in your interest. Selecting the correct selling price. And, lowest total cost of ownership to draw the right buyer. What you want to achieve is: The highest net price possible. A sale in the shortest possible time. The least possible hassle or negotiation.
- Beware not to fall into the trap of allowing agents to secure a sole mandate from you with exaggerated promises. You might find yourself tied down to someone or a group for a long time (out of the market) who will battle to sell your property at the expected price – eventually an offer will “force” you to sell or you might lose the ideal buyer.
- Remember, it is always about affordability and good marketing exposure (attracting buyers and offers) with a buyer and not a mandate! Buyers (and sellers) are not loyal; they move in a pool, shop around and want the best deal at the least overhead cost.
- Experience shows that when a property is priced right and offers exceptional value, the first offer is often the best offer. Buyers compare a lot of properties and when a listed property comes on the market and it offers good value for money, the serious buyer has made up his mind and will put in an offer immediately if it exceeds his/her previous expectation/experience. It has nothing to do with the agent or mandate, but all to do with the price, cost of ownership, affordability and value.
- It is all about a seller pricing the property for sale correctly, the affordability and total cost of ownership with buyers and the qualification (SAQA/NQF) and experience of the agent – especially where they protect the interest of clients.