Today we publish the next of our blogs in our 12-week blog series, THE ULTIMATE GUIDE TO SELLING YOUR HOME.
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#5: ASK ABOUT YOUR AGENT’S REAL ESTATE COMMISSION WHEN SELLING YOUR HOME
You have made sure that you understand exactly what service you can expect from an estate agent. You now need to ask the agent about the sales commission you are eventually going to be charged. Once you select your agent, you will be asked to sign a sole mandate with the agency. Long before that happens, you want to have the sales commission issue resolved.
On the one hand, the commissions charged by estate agencies often seem out of sync with the service you may receive. This may not necessarily be as a result of poor or inadequate service on the agent’s part. You have, after all, carefully pre-selected the agent based on the thorough process described earlier. However, sometimes properties sell relatively quickly. The time, effort and cost expended by the agent during the marketing process often does not match a very large sales commission.
What is more, sales commissions have historically been calculated as a percentage of the eventual selling price of a property. It means that a R 5,000,000 property will incur a lot more sales commission than a R 2,000,000 property. You may think that this is equitable, as a more expensive property requires more time, effort and cost to market. However, this is simply not the case.
Statistics show that there is a massive discrepancy in this price/commission relationship. After all, the ratio of the cost, effort and time is most certainly not 5:2 (R 5,000,000 vs R2,000,000).
The times, they are a changing
That is the reason for the current revolution in the real estate industry. Estate agencies such as our’s provide a more equitable solution by charging a flat fee for any property transaction. And, contrary to the pervading opinion of the ‘traditionalists’, that flat fee still gets the home seller the full, personal real estate service. We just do it more efficiently through the use of effective systems and infrastructure and then pass the saving on to the seller.
So, it is critical that you negotiate the sales commission with the agent prior to signing the mandate. It should certainly not be the traditional 7.5%, those days are long gone. And it should preferably be a flat fee, unrelated to the price eventually fetched by your home.
NEXT WEEK: DON’T SET AN UNREALISTIC PRICE FOR YOUR HOME