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In over 35 years of buying, building, renovation and selling real estate I have seen plenty of ups and downs, government policies, banking regulations and simple supply and demand that can make real estate a fickle mistress. When it’s good it’s great and when it turns it can give a nasty bite. The funny thing is that regardless of YOUR gains or losses, for the real estate agent its always win-win.
But food for thought, not all agents are created equal, there are good and bad agents everywhere but choosing to sell through a real estate agent using an old-fashioned commission structure will cost you thousands. Fact. Depending on where you live and the agent, the commission could be anywhere between 1.5% and 3% of the selling price. So at the top end of that range if you sell a home for $1million the agent walks away with $30,000. What is the agent actually doing to earn that $30k?
When I first started in property the local real estate agent knew everyone and every property in the area and had a black book full of potential buyers. The black book morphed into the mysterious “data-base” and with a few phone calls suddenly people were beating their way to your door. Ok, so that’s an exaggeration, but it was part of the sales pitch. Then other buyers would be attracted by glossy photos in the local newspaper or even went searching the windows of the agents office.
The internet has killed all that. Today 7.7 million Australians search realestate.com or domain every month; that’s where buyers come from. Times change, but not the old-fashioned commission collector, who is still doing business the same old way. WHY? Because until recently you didn’t have a choice and they were making a killing.
Sydney agents charging the same commission between December 2011 and December 2017 saw their cut increase 78%. That’s how far prices rose during the boom. Imagine not working any harder or smarter and seeing your wages increase 78% in six years! At 3% a commission collector in Sydney has gone from collecting $16,980 per average sale to $30,225. Nice earn if you can get it.
Fortunately there is a more up-front, fair and transparent way. Having researched their platform and met with their team I’ve agreed to join Purplebricks, the pioneers of flat-fee real estate in Australia.
Like their commission-collecting counterparts, Purplebricks charge upfront fees for marketing and admin. We’re talking signboards, copywriting, photography, floor plans etc. And with Purplebricks you get a premier listing on realestate.com.au, a listing on Domain and your agent hosting open houses and negotiating. In other words doing what you’d expect.
What you wouldn’t expect is a revolutionary online platform where you can track how your agent is performing; it lets you see offers in real time as they come in! No more taking your agents word for it. No more waiting by the phone. You also get online feedback directly from potential buyers. You see everything the agent sees and work as a team. You are not taking the risk of doing it yourself and you aren’t handing over all control.
Best of all it makes it impossible for an agent to lie about interest or offers. Then when you sell, you pay a fixed-fee. So from the start you know what you’ll pay. Across Australia you get all of that for a fair fixed-fee of $8,800.
What you don’t get is expensive offices, outdated marketing methods and other add-ons that do nothing to help sell your home. You get an experienced agent, many used to work under the old model. Like me they joined Purplebricks because they know it’s a game-changer. Indeed other fixed-fee selling agents are already joining the market.
So the simple equation for the average Sydney home is $8,800 (including gst) with Purplebricks versus $30k with the commission-collector, where you also add on your marketing costs, which could be anything from $2,000 to $10,000 or more. The money you save, stays in your pocket.
I am the first to admit there are some great agents out there. In fact when I started selling property I took a lot of advice from them. Frankly, in those days, the old fashion agent was a part of the fabric of our community just like the bank manager, things have changed for both of them. Anyone that knows me knows DIY is in my blood and I have sold several properties myself and, for me, I‘ve had great success. I will admit I am a born negotiator and not easily intimidated and a lot of the time I was on the site when potential buyers stopped by. I always had a sign up “To Be Sold On Completion”. I knew that would encourage people to drop in and ask questions and no one could answer those questions better than me.
The big difference is, most homeowners only sell once or twice in their life. Plus everyone is busy. I do think if you have the know-how it can be very profitable. Ask yourself some honest questions;
Finally, remember its not just about saving money on fees or commission. You should only consider selling a property yourself if you are sure you can get the best possible price in the shortest amount of time.
If so good luck, if not, get the right professional.