Thursday, 17 May 2007

The house is on the market

My wife just rang me to say that the "For Sale" sign is on the fence and is there for all the see and admire. Hell, that means that our house is really on the market.

Before the sign went up, we were negotiating with our chosen real estate agent what commission they will be getting for the sale of the house. This is an interesting aspect of the house selling process and could make quite a different to the money that goes into your bank account.

Some of the ideas are:
  1. Offer the agent a commission only sale. This means that all you would pay the agent is the commission. You don't pay for any advertising or the preparation of conveyancing or any other cost associated with the sale.
  2. Offer the agent a structured commission. Say you are wish to sell the house for $250K, but would be happy if the agent manage to sell it for $225K. Offer the agent the full commission if it is sold at $250K, a smaller commission for less than $250K, and even smaller for $225K or lower. This would give the agent an incentive to try harder for your price.
  3. Negotiate with the agent for a non-exclusive contact. Most agents will want you to exclusively market your property through them. If you are able to advertise the property with the other agencies, the size of your potential buyers would increase. I feel that this idea may not bear much fruit as most astute buyers would try to look at properties from many different agencies, but may be a strategy worth trying if there are a lot real estate agencies in your area.
  4. Get the agent to pay for the GST. The commission quoted usually does not include the GST, so be very careful on the figure quoted as the GST could end up coming out of your pocket.
My other posts on house selling are here.

I have found the following around the net on this topic.
  1. In Queensland, it seems that the real estate commission is regulated. Check it out at the REIQ.
  2. An interesting article for agents on how to handle a commission discounting exercise by the vendors.

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