Can someone let me know why they charge so much , I'm not even trying to stir I'm curious
The house I bought 2 years ago the couple were charged 25K , they payed for the type of advertising ,pay for stamp duty . So is it just for opening the house for an hour on a sat/sun or is there some big fee they pay.
The house I sold , sold the first day with bugger all fuss , 10K for his trouble , same deal I payed $300 for advertising and settlement agents
Maybe I'm missing something , let me know

We need to make a living to !!! and some toys to have fun ! and a nice wife (or 3) to show-off !

Running any business in this country is a very costly exercise. Throw in a bit of compliance, documentation, legals, training, renting office space, membership of industry assocatiations and appropriate registrations and it mounts up pretty quickly.

There are so many agents out there, so it has to create a reasonable level of competition generally speaking.

That's my 2 bob's worth.

Clarence

I once lived in a rental house that I liked and said to the owner if you ever want to sell, let me know, maybe we can cut out the middle man. She rings me up one day...I say ok give me a few days and I'll make you an offer. I did some research and made her a realistic offer. She says she has had the house valued by agent at a price about 100-150k higher. So I say ok, do what you have to do. Four months of "marketing strategy" (including putting up a MASSIVE sign out front to attract passing trade when we live in a cul-de-sac!) and open houses, a pitiful auction that no one showed up to. I get a call from the agent. Owner has decided to drop price (to around my original offer). By this time I've already started packing up, and sealed a deal on another property. So even if I had been able to buy it, she would have made less (after agent's cut and the reduced offer we would have then made) than what she could have done with my offer four months earlier. So I have to move when I could have stayed, the owner losses at least 50k compared to what they might have got four months earlier with no stress. Yeah, estate agents, great...

Like anything, they charge what the market is willing to pay.

It is generally a % - Hendo the 25k fee - how much was sales price?

Commission rate will vary form area to area - state to state.

In Sydney maybe 1.5- 2% (sometimes this includes GST sometimes plus) plus marketing (anywhere from $1500 - $4000)

Often the actual agent is contracted to actual agency so there is a split between agency and actual listing agent - this varies. Can be anything between 40% - 60 % to lister.

Older agents recall when the comm was set at 3% - no GST back then - government said cant use fixed fees - so they deregulated it and the sharks s charged some unsuspecting people 10% !

Some agents will try 2-2.5 % and justify it on their negotiating skills and will claim they will get more $$ back for the seller than the increase in extra commission. sometimes the magic dust works and sometimes not.

Got it cheers guys
Sorry for posting in the wrong section too

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musorianin said..
I once lived in a rental house that I liked and said to the owner if you ever want to sell, let me know, maybe we can cut out the middle man. She rings me up one day...I say ok give me a few days and I'll make you an offer. I did some research and made her a realistic offer. She says she has had the house valued by agent at a price about 100-150k higher. So I say ok, do what you have to do. Four months of "marketing strategy" (including putting up a MASSIVE sign out front to attract passing trade when we live in a cul-de-sac!) and open houses, a pitiful auction that no one showed up to. I get a call from the agent. Owner has decided to drop price (to around my original offer). By this time I've already started packing up, and sealed a deal on another property. So even if I had been able to buy it, she would have made less (after agent's cut and the reduced offer we would have then made) than what she could have done with my offer four months earlier. So I have to move when I could have stayed, the owner losses at least 50k compared to what they might have got four months earlier with no stress. Yeah, estate agents, great...

I had something similar where I offered the kids of the owners, when the owners moved into a nursing home, a figure based on research in the local area. I even told them that they can still have a sales contract with the agent that allows them to deal directly with me.

No. The agent told them they would get much more and that a 'barely liveable' house not far away had already got $X, so they would easily get $Y. The 'barely liveable' house was actually similar if not a bit better than the one being sold..

So, on the day of the auction, there were two couples competing and it sold for almost exactly what I had offered. I guess the agent got his commission, so its all good for them.

I have read before and I think its right, that an agents job is to promise you what they need to in order to get the job, and then beat you into submission to accept a lower price.

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FormulaNova said..

I have read before and I think its right, that an agents job is to promise you what they need to in order to get the job, and then beat you into submission to accept a lower price.

What do you expect? They are sales people first and foremost. In essence they are selling to both parties.That said I put them in the same category as recruitment agents and car sales people. They'll make up any crap just to get a sale.

The actual legal/commercial arrangement for an agent (for anything, not just real estate) is that they are engaged by a seller to find a buyer and then get paid the agreed fee if a sale is made. They are legally obligated to act in the interest of the seller because that is who they have the agency contract with. The agent is NOT responsible for setting the sale price or negotiating for a different sale price, this is the responsibility of the seller. The legal/commercial role of the agent is ONLY to introduce a buyer to a seller.

Where this legal arrangement gets blurred starts with the seller getting hoodwinked by the agent into thinking that the agent can get the seller a better price. The seller nominates this higher price to the agent to keep things legal and satisfy their greed. This play on the seller's ego is done by the agent to essentially "buy" business.

Where it gets really blurred is where one of the conventional theories of economics takes over. "Individuals will be motivated by gain" The agent DOES NOT get paid until a sale is made so now it is in the agent's interest to act against the original legal/commercial agreement they have with the seller so they need to coerce the seller into selling at a lower price in order to get paid. The agent knows that if they are on a 10% commission, a price drop of $50k will only cost them $5k off the commission that they thought they might make (but cost $45k to the buyer who they now don't give a sh!t about), but no sale will net them $0. This leads to another conventional theory of economics "Decisions are made on the margin"

If you wanted to "motivate" your estate agent to get a good price for you, maybe offer them 50% of every dollar above the price you'd be happy to sell for (instead of 10%). The marginal gain for them is larger over your happy price and you're "playing the game"

Third conventional theory of economics is "All decisions are rational" it doesn't always happen in real estate