Wednesday, 17 October 2007

3 ways to save on agent commissions

You want more cash in your pocket at the end of the day! So where can you save money when purchasing or selling your property! Lets start with 3 methods to cut costs when using estate agents.

Gone should be days of paying 7% commission to agents. It's firstly a rip off and secondly it's costing you a fortune! Well lets show you how to save some cash.

  • Negotiating down your agent's cut

  • For Sale by Owner - Private property sales

  • Going "HANS" Solo

Negotiating down your agents fee's
Most real estate agents take a commission of roughly 2.5% to 3%. Their total cost anywhere between 6% and 8% of which the difference is paid out to the companies and parties involved in the sale. RIP OFF! However as more and more smaller agents and online businesses start coming into the fold real estate agents are becoming more and more susceptible to discount "chat". Taking reductions in their commissions. After all, we know they're earning too much money, lets take some of that cash back.

  • To get that commission reduced: Ask a couple of agents in the area for a estimate of what the current property rates are in the area

  • Chat to each agent, control the meetings you have with them as they're known for putting you on the spot even though it's your place you're trying to sell. Tell them how much you are expecting to make from the sale of the house and ask if they will lower their commission to the percentage you want. Even if it's 1% commission drop, you're saving alot of money.

Remember, if your house is in the upper end of the market, you're going to stand a better chance and you might be able to get a good 2% or 3% drop in commission rates.

For Sale by Owner - Private property sales
With sites such as Private Property and MyRoof and millions of other free list site popping up on this ever expanding WWW :) who needs to pay real estate agent commission fees?

Private Property charge a once off listing fee, and as far as I know HomeSouthAfrica and MyRoof offer free listings.

Going "HANS" Solo
Well what more can we say about going "HANS" solo. You saving R30 000 - R40 000 commissions. Remember though, that you going to need time to sell it, put it on show and remember to clean your house people... This is not always the easiest route to take but if you've got someone whose permanently at home it's easier, if not (Get your unemployed buddy to stand in and buy him a couple of beers)

That's the end of my 3 tips to saving money on agent commissions


Kerry said...

I'm not an estate agent, but I work with a number of them.
Yes, the commission amount may look like it's a lot of money, and yes, by all means negotiate. But selling a house is not always as easy - or as cheap - as it looks. Advertising costs, legal fees cost, and yes, a Sunday afternoon spent sitting 'at work' - because that's what a showhouse is, also comes at a cost.
So does an estate agent's negotiating skills, their knowledge of an accurate and fair price for your prroperty (to make sure you don't get ripped off, or that you don't sit with a house on the market for months and months).
Yes, the amount looks like a lot if you take it out of perspective. But the good ones do work really hard, and even those only close a couple of sales a month - for which they only get paid 4-6months down the line.
So think carefully before taking it on yourself - it's not as easy as it sounds.
If you do choose to use an estate agent, try and find one that's recommended to you by someone - don't just go with the biggest brand that makes the loudest noise though.

WizardMan said...

Hi Kerry, Absolutely. The reasons agents are there are to help those people who don't have the time, or the patience or simply just cannot do the job that agents can do... And in all fairness that is why thy charge the exorbatent estate agent fees that they charge.

This article is for those who are wanting to save money or those who just like DIY.

Thanks for your comments.

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Anonymous said...

The agency fees are one thing but how about saving on the cost of the property when you are a buyer. How can you be in charge of the negotiations? Have a property inspection done on a property before you sign the papers. I saved myself R100.000 rands by having a R2000,- report made by a professional company named Independent Property Inspectors (IPI). I showed the seller (after receiving the report within 48 hours) what the issues were with the property and the estimated costs which came down to approx R100.000,- and all the seller could do was agree with me. We shook hands had the paper work done and that was it. Plus I now know more about my new property then I ever would have. Thank you Independent Property Inspectors

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