Wow, that’s a lot!
I hear that or a variation of it most weeks, almost daily...
Why is that?
It’s because I work in Real Estate and the fees in the industry are considered by some to be a little bit (or a lot!) on the high side.
There are plenty of choices when it comes to selling your property, and almost as many ways that we as an industry talk about fees.
I’m going to explain what I do, and who helps me with that along with where the money goes.
That way, you can decide if it’s worth it or not to work with me.
Let’s go with the average sale price in the Whangarei region at the moment - for July 2021 it is $655,000**
Based on that, most of the big Real Estate companies in NZ, including who I work with, would be suggesting a fee of approximately $25,000 (incl GST). Yep, that is a big number!
I think that the shock of that fee comes from people not really explaining the breakdown, and also not providing an insane amount of value to the transaction that you’re needing help with.
Here’s the first thing - I don’t get all of that - not even close!
There are certain different ways that it goes, but on average half of that $25,000 goes to the office, and half of that goes to the agent. So for this example, that’s 50/50.
So now that $25,000 is down to $12,500.
That includes GST, so we need to take that away, bringing it down to $10,625.
There is also tax to save to pay the IRD - factor in 20%, so we’re now down to $8,500.
The other half that went to the office?
They also have tax and GST to pay, along with the staff.
Well, we have an amazing team of support staff to help behind the scenes - Real Estate is getting more comprehensive all of the time. The liability, legal obligations, compliance with rules and regulations are all very important parts to it, there’s a lot more going on than just throwing a sign up and putting it on TradeMe.
Plus, that helps to keep many local families employed, and spending their income locally.
This is now where real estate salespeople have a choice about adding a lot of value to their services, or not…
I’m at $8,500 for my fee for service on your house sale.
Because I need the value I provide to you to be much higher than the fee charged, I include all of the marketing essentials in this fee. Otherwise, I just couldn’t sleep at night.
It is 2021, and it was always vital, but more so post COVID - that your property is exposed to the most amount of people locally, nationally, and where necessary internationally.
It blows my mind that a lot of other agents don’t see that their fee should cover the marketing of the property they are helping to sell. A simple question of “what are your greatest skills you bring to the table” should provide all you need.
If the agent answers “marketing and negotiation” but then proceeds to charge you - what is in reality - twice for doing the job of marketing, then how does that work? I could go on about this, and in fact I will in a future post…
Anyway, back to the breakdown. We are at $8,500.
A comprehensive marketing campaign, including photo/video, council files, pre-sale builders report, auctioneer if needed, and all of the online sites along with paid ads, and last but absolutely not least is the way I uniquely bring all this together - will be around $3,000/$4,000.
Anymore than that, and they are taking the piss a bit…
There are times to go all out, and spend much more than that, but in this example we are keeping it relative to the average house sale of $655,000 - the marketing tends to be a sliding scale on the overall value of the property, but that $3-4k gets it done very well in most cases.
So, let’s take the middle of that marketing bill and use $3,500.
Taking that away from the $8,500 we were at for my fee, we get to $5,000.
$5,000 to sell my house, mate that’s still a bit high!
Let’s just go one more step…
The average days to sell a property in Whangarei is 42 days**.
So if we divide the $5,000 by the 42 days, we get to $119 per day.
I think that puts me in a much more realistic range for a fee to help you with your property sale, it’s $119 per day to get it done with you.
I can’t speak for what other people are saying about the fee they charge you, but I am driven everyday to offer you a value added service, so the fee is fair for you.
At the end of the day, every situation is different, so I’m always happy to talk about it and negotiate on my fee at the time of sale if we need to.
It can’t get much fairer than that.
**Figures from the REINZ stats website - July 2021
Helpful and interesting info from Paul, and Bayleys to help you with your property journey.