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Agent commissions remove sale headaches

By Michael Crawford
17 October 2014 | 1 minute read

Homebuyers believe they can save money by buying privately rather than going through a property listed by an estate agent.

Unfortunately, that trick often works, according to Certified Practising Real Estate Agent chairman Geoff Baldwin.

Mr Baldwin said private buyers often believe that if the seller isn’t paying an agent then they should get a discount on the sale price.


Unfortunately, according to Mr Baldwin, that tactic occasionally wins.

“Buyers often negotiate a lot harder when they know a seller is not paying an agent and the unfortunate truth is that they usually succeed in buying lower,” Mr Baldwin said.

“When confronted with a lower offer from a buyer, private sellers tend to think that they are not paying an agent and hence are more likely to accept a lower price.

“Private sellers often run into difficulties when trying to assess the financial capacity of buyers, contending with ‘subject to sale’ offers, writing solid contracts, extracting meaningful deposits and many other aspects of ensuring a smooth, successful sales process.”

Mr Baldwin said listing a property with a proven, experienced negotiator cannot only justify the agent fees but in many cases will result in a sale price thousands, if not tens of thousands higher than sold previously.

Director of Avenue One property group, Peter Wildemoth, said there weren't many private sellers in a bad market and the idea of vendors selling privately to save on agent's fees is nothing new, although it is a perilous approach to listing.

Mr Wildemoth said first home buyers are not comfortable dealing with an owner directly and crave advice. Owners also need assistance with writing legal documents such as seller disclosure statements and in such a scenario a real estate agent becomes a useful ally to both.

“The problem of not using an estate agent is it puts the buyer and seller in an awkward spot as to who to seek advice from and the other thing, possibly the most important which most private sellers won’t accept, is there is the perception if a house is being sold privately it is too expensive for the market,” Mr Wildemoth said.

“It is almost as if private sellers won’t accept a price dictated by auction or an agent and a lot are back on the market with an agent within eight weeks.

“Another difference is estate agents know the market as far as price goes, what is selling and what buyers search for … and then comes the marketing and sales skills.”

Chief executive officer of Starr Partners, Douglas Driscoll, said those who see a booming market often think they can get the best price by sticking a homemade sign out the front of their home and an ad on Gumtree are delusional.

Mr Driscoll said there is no way he wouldn’t instruct an agent to sell a property he owns. He believes agents add intrinsic value to a sale in terms of time spent and money gained.

Most sellers, according to Mr Driscoll, are not natural negotiators and most buyers feel they have more of an advantage going direct and without a conduit between them and the seller, and both parties may feel they can act more pugnacious during the sale.

“The simple facts remain agents have a far wider and vaster net to cast. The reality is most offices have a database of between 15–20,000 potential buyers and those offering a private sale have to ask themselves if the ability to reach that many people is worth the money,” Mr Driscoll said.

“The more people interested in a sale, the more competitive it becomes, and when a market is buoyant the by-product is people think they can sell properties themselves and get a decent or fantastic price.

“You also need to look at the selling methods as a very high percentage of properties are sold at auction, which in many ways is an art form that most agents don’t get right. Given that fact, how can Joe Public get the best outcome?”

Agent commissions remove sale headaches
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