Why are Real estate fees so high?

Signing a Listing Agreement?

When you choose a real estate salesperson to sell your home, you will be required to sign a listing agreement – a contract in which you agree to allow the salesperson to sell your home during a given period and at a given commission rate. The agreement says that you will pay the Real Estate Professional a fee when you sell your home. Most real estate salespeople are independent contractors who work for a company operated by a licensed real estate agent. (A salesperson is licensed to sell real estate through an agent. An agent is licensed by law to sell real estate to others for a fee and employ salespeople and other brokers.)

The amount of compensation you pay an agent is negotiable, but the real estate salesperson will usually have to follow the company’s policy regarding compensation. The amount of the fee will be spelled out in the listing agreement. Make sure you understand how the fee will be paid before signing.

Exclusive listing
Most real estate salespeople will ask for an exclusive right-to-sell listing. This means that you will owe them a commission regardless of who finds a buyer during the listing period. In other words, if you decide to sell the house to your cousin, your broker still gets a commission. The advantage of this kind of arrangement is that the salesperson is motivated to work harder to sell your home.

It’s possible that a salesperson from another company will find a buyer for your home. In that case, your agent is the listing agent, and the second agent is the selling agent. In this case your listing agent will agree to pay the selling agent a fee from the amount you pay the listing agent.

It is important to clarify with your listing agent/salesperson that they are willing to “conjunct” as not all listing agents will agree to share their commission with another agent.

 Length of listing
The listing agreement will specify how long you agree to list your house with a company. In New Zealand the standard period for a listing agreement is usually 90 days. You are entitled to opt for a shorter if you wish.

Remember that the listing agreement is a contract. You should get a copy for your records. Your Real Estate Professional is bound to the terms just as you are.

If you change your mind after signing an exclusive listing agreement you can cancel the agreement, in writing, by 5pm on the first working day after having received a copy of the agreement from the salesperson.

Are apartments a worthwhile investment?

Q: We are thinking of selling our home in St Heliers and buying a luxury apartment somewhere closer to the city, but will we get the same capital gain with an apartment? Bruce L.

A: Unfortunately no-one can accurately predict what will happen to house prices, or to apartment prices for that matter. There was a time when investing in apartments was considered to be a far inferior choice to buying a home or duplex. The value of real estate is in the land, the experts said, so you should put your investing dollars in houses where the land value appreciates for many years to come.

However, that rule doesn’t always apply – certainly not these days.

There are plenty of new up-market apartments being built around Auckland now, and not all of them are in the City centre. There are new developments springing up in the suburbs, from Meadowbank to Mission Bay and out to Orewa, and the majority are bigger, more luxurious and in better locations than previously.

What this means is that many apartments now offer good solid capital gains in line with houses, due to their position and location: It might be better to own a small slice of a highly valuable piece or land, rather than a large slice of a lower-value patch.

But as well as that, there are more single and two-person households today than there’s ever been, and most of these people don’t want to live in a five bedroom house out in the suburbs. They want to be close to the CBD, close to work and entertainment, so the apartment market is growing. Our lifestyle has become more cosmopolitan, with beaches, cafes, and restaurants creeping higher on the priority list.

So the answer is that we really can’t be sure, but that experience overseas tells us that this new style of apartment will hold its own in terms of capital gain with more traditional real estate.

Next week we will give you a few tips on what to look out for when buying an apartment, luxury or otherwise.

Ten More Top Moving Tips.

Here is the second instalment of our moving tips.

  1. Buy a roll of stretch wrap.
    It works like gladwrap but on a bigger scale. You can group items together, and it’ll protect your furniture from getting scuffed and scratched.
  2. Keep sandwich bags handy for holding any small parts of things you have to take apart, like curtain rods or mounted flat-screen TVs.
    Tape the sandwich bags to the back of the item they correspond to. You can also use this method with the cords for your electronics.
  3. Beer boxes are the best for books because they have handles on the sides.
    So be sure to hit up your local liquor store.
  4. Take a photo of how your electronics are connected so you can remember how and where all the wires go.
  5. Cut down on boxes by making all of your baskets, laundry bins, hampers, and suitcases work for you.
    Pack them with stuff. Use the wheeled suitcases for heavy things like books.
  6. The fastest way to pack a closet:
    Leave clothes on their hangers, simply grab a bunch, fold them once and drop them into a box. This makes for much faster unpacking.
  7. Change your address at least two weeks prior to moving.
    This might seem like a no-brainer for important things like utilities and cable but don’t sweat the small stuff. You’ve also got credit cards, your bank, magazine subscriptions, and your mail to worry about.
  8. If you own items that you want to get rid of but are too valuable to just give away, start selling on trademe at least 6 weeks before moving.
    It’s an easy way to make you feel like you aren’t procrastinating, and you might be able to make enough money back to pay for the entire move itself. It takes time for items to sell though so you’ll want to plan accordingly.
  9. Arrange for a charity organisation to come pick up the items you don’t want at least a week or two before moving.
    It’ll save you the trouble of having to take it there yourself.
  10. Remember to defrost your refrigerator at least a day before moving and wipe up any liquid.
    Otherwise you’re going to have stinky wet mess when you get to your new home.

What we haven’t mentioned is that there are several very helpful services that look after transferring internet, power, gas, Sky etc. from your current to your new home. Call us if you would like our recommendation.

 Good luck with your next move!

Top 10 House Moving Tips!

This week we thought we would share some really useful tips for when you are moving house. We know how stressful this can be so we put together the following list to make your life easier. (Special thanks to our friend Andrew Duncan for his input.)

  1. Pack an overnight bag containing all your essentials.
    You will be pretty worn out at the end of moving day so you’ll want easy access to your essentials, including a change of clothes if you’re going back to work the next day, as well as all your toiletries.
  2. Pack the items you will need FIRST in a clear plastic box.
    This includes things like a box cutter, eating utensils, select cookware, phone charger, toilet paper, tools, etc. The clear bin allows you to see inside; it also separates itself from all the cardboard boxes.
  3. Wrap your breakables (dishes, glasses, etc.) in clothing to save on bubble wrap.
    Two birds, one stone (no pun intended!): you’re packing your clothes and kitchenware at the same time!
  4. For extra padding, pack your glasses and stemware in clean(!) socks.
  5. In addition to labelling what’s in your boxes, add what room they’ll be going into.
    When you arrive at your new home, unpack BY ROOM. Unpacking will feel more manageable. Remember to label the SIDES of the boxes – you’ll be able to identify them even if they’re stacked.
  6. Use the colour-coding system.
    Pick a colour code for each room and label that room’s boxes accordingly. Label the door of each room with the corresponding sticker/tape so that movers know where to place the boxes.
  7. If you can, show up to your new home before the move and pre-clean the bathroom and kitchen.
    Put up a new shower curtain and stock some new bath towels and toilet paper, as well. You’ll want to take a long hot shower after a long day of moving.
  8. Cover the openings of your toiletries with gladwrap, then put the tops back on.
    Then put them in a zip-lock bag – this will keep your toiletries from breaking and leaking all over your stuff during the move.
  9. Pack plates vertically, like records. They’ll be less likely to break.
  10. Keep drawers intact by covering them with gladwrap.
    Dresser drawers are like their own moving boxes — this will keep you from having to unpack and re-fold their contents. It’ll also make moving the actual dresser much more manageable.

That’s it for this week – next week we will have another ten tips for you.

Why are Real estate fees so high?

Q: You probably won’t answer this. I think agent’s  fees are exorbitant how do you guys justify them? Nick H.

A: We love a challenge Nick and we absolutely understand how people feel when they see how much agents charge, especially when they think all we do is run a few open homes, set up an auction and pick up a big chunk of money.

This is far from the truth. Firstly, we (the agents) don’t  get the entire fee: The agency takes a big piece of it.  (The split between agency and agent varies and we’re  not at liberty to say how much that is.)

What many people forget is that agents only get paid once they have sold a property for a price that the seller is happy with – no sale, no pay. And a good agent will more than pay for themselves – as we described in a recent article, sales through agents in the USA get an average of 20% more than a private seller. (The average commission in the US is 6% by the way). That 20% will more than pay for the agent’s  commission.

Secondly, there is a lot of time and effort that goes into each successful sale, from the effort and expense of winning the listing (most sellers interview several agents, and only one gets the listing so there is the expense with no reward for the agents who miss

out). Self- promotion too is an expensive part of every  agent’s outgoings – if potential sellers haven’t heard of you how will you ever get invited to sell their home?

Once we list a property there is plenty of work to  be done. We have a 185-point checklist that we  follow for every property we sell, so there’s way too  much to cover here, but highlights include: writing  advertising copy, arranging photography, collecting  and reviewing all documentation (LIM, title, etc.)  implementing a social media campaign, arranging/  running open homes Saturdays, Sundays and  possibly Wednesdays, following up every single

inquiry from advertising and open homes, arranging  access for building inspectors , valuers, etc., staying  in contact with all buyers to ensure they come to the  auction, arranging the auction, plus much more. And

of course if it doesn’t sell at auction then continuing the sales process (open homes etc.) until it is sold.

As we mentioned above, we can go through this process and if the property doesn’t sell we don’t get paid, so it  is certainly in our best interest to get our seller a deal they are happy with and to help them move on.