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Is a real estate agent really necessary?
By arlene | February 13, 2009
At some time or another, it crosses the mind of just about everyone engaged in a property sale to save on the estate agent’s commission and do a deal without one. There is a considerable saving if everything goes according to plan. The normal commission structure charged by members of the Institute of Estate Agents varies with the price of the property, as shown below:
House Sales: 5 percent on the first 20 000 and 3,5 percent on the balance of the purchase price.
Vacant residential land: 7,5 percent on the first 10 000, 5 percent on the next 90 000, and 2,5 percent on the balance. Commercial properties (including blocks of flats and industrial buildings): 5 percent on the first 50 000, 3,5 percent on the next 950 000 and 2 percent on the balance.
Farms: 6 percent on the purchase price.
Letting: 5 percent on the first year’s lease for negotiating the lease, or 5 percent on the monthly rental where collection and administration is undertaken.
The saving at current price levels is likely to be in the region of 3 000 or 4 000 and it is certainly possible to find a property and come to a binding agreement on it without the help of an agent. In fact, considerable care has to be taken to show that the sale was indeed executed without any assistance from an agent, who will otherwise quite justifiably put in a claim for all or some of the commission that would have been payable.
In other words, the buyer and seller will have to have come in contact with each other without the help of an estate agent’s advertisement or advice. This does not, however, present any insurmountable obstacles. Any seller or buyer can place an advertisement stating what they have to offer or what they want and are prepared to pay. Once contact is established and agreement in principle is reached, the lawyers of both parties can be approached to draw up a suitable Deed of Sale.
Sounds simple, doesn’t it? The trouble is, it just isn’t likely to be. The first real obstacle is the lack of choice a buyer is subjected to by skirting the agents who will, after all, have most of what is available in the market on their books.
The second obstacle, however, concerns human nature and is almost insurmountable. Consider that most buyers will want to bring down the price of the seller’s home and will cast a critical eye about the property. Who can blame a buyer who does not like a particular garden, wall colour, carpet type, and so on, that falls into the personal taste category, for saying he does not like them if that is the case. And yet the seller can also hardly be blamed for reacting to what could be considered a slur on his judgement.
Most people are proud of their homes and are accustomed to being complimented on what they have done. But put your own home on the market for sale by yourself and this situation will rapidly change. Frayed tempers are never conducive to a good deal, and it is amazing just how fast they do fray in direct negotiation between the owner and a prospective buyer. Where large sums of money are involved, negotiations require a certain degree of skill, level headedness and objectivity.
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Topics: Commercial, Land, Market, Property, Rental, Residential, Sale | 6 Comments »
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