Is 2% Reasonable for Sale's Agent Fee?

IWoNdEr on 06/04/2022 - 21:40
Last edited 07/04/2022 - 10:10 by 1 other user

Currently in a situation where a buyer agent approach my property manager company asking my intention to sale an investment property. My property manager asked a sales agent within their company to chat with me. I am always interested to see what the market value is so happy to know more.

However the sales agent advised if we need to negotiate on the price then will need to sign an official agreement (appointing them as the sales agent) which I totally agree.

Now the sale's agent has quoted low 2%.

Me personally think it is a bit steep considering there is practically no real effort required on her behalf (oblivious to any underlying cost of running a real estate company). A more reasonable way is probably a fixed fee.

What do the group think? I am located in Brisbane.

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Comments

  • JimmyF on 06/04/2022 - 21:50
    +1

    Now the sale's agent has quoted low 2%.

    I assume that is 2% on sale? So it depends on the value of your property….. If its a $200k property then its fair, its a $1.5m property, then no so much.

    • IWoNdEr on 06/04/2022 - 21:52

      Sorry you've got a good point. The property is probably somewhere between $600-$700k.

  • garetz on 06/04/2022 - 22:00
    +2

    Every property i have seen sold, which is 4 in the last 2 years from family and friends were charged 1.1% fee in a hot market.
    between 550k and 1.2 mill, 3 different agents.

    If the property is an easy sell i wouldn't pay more than that, if its not an easy sell 2% may be reasonable.

    Just like any service you should get different quotes, you may find a much better deal, also they approached you not the other way around.

    In the situation you described there could be conflicting interests, you are better off finding your own agent to sell it.
    conflicting interest, because the agent themselves might be the party wanting to buy your property.

    Hmm, i may have misunderstood the situation, the buyers agent is also charging the buyer, then also wants you to pay them a 2% fee to sell to the buyers agent which already has an interested party to purchase your property.

    They are always going to undervalue your property forcing a negotiation to 100% assure they get the 2% fee.

    In which case i would just say i wont pay anything to them, they are acting on their clients behalf, not yours, there is a clear conflict of interest here. Especially if they are acting on their own behalf as the interested party to purchase your property.

    • IWoNdEr on 06/04/2022 - 22:25

      Thanks garetz,
      The buyer is using buyers agent, I'm not sure how much they are charging their client.
      The low 2% is commission requested by the sale agent (same company as my rental property manager) to help me negotiate and settle the sale.

      Geez makes me want to be a real estate agent in these hot market, seems like they are getting all the pies.

      • garetz on 06/04/2022 - 22:28
        +1

        Yeah, if someone wants to buy your property and you know what you want to sell it for and the value of the property, why pay the 2% at all ?

        Seems like money wasted for no reason. It's not like they are actually doing anything for you like finding a buyer which is the hardest part of a sale.

  • George Washington on 06/04/2022 - 22:03
    +1

    Dont bother agree on a price with the buyer agent then talk to your solicitors and done deal

    • AndyC1 on 07/04/2022 - 08:04

      If you are okay on a price then get a conveyancer as they are cheaper than a solicitor. You will find that in most cases if you go to a solicitor firm they will have a conveyancer or a junior do the work.

  • TheBird on 06/04/2022 - 22:05
    +1

    What are your options?

    So that'll cost you between $12-14k. If they're skilled in negotiation, and they can increase an offer by at least $13-15k better than you can, they're worth it as you'd be putting an additional $1k in your pocket. If they cannot, then they're not worth it. So it can come down to, how good are you against a skilled and/or experienced negotiator?

    • IWoNdEr on 06/04/2022 - 22:17
      +1

      Haven't been in similar situation before so I think my option are:
      - accept a price that I can't say no to (in which case don't really need negotiation)
      - leave and continue as usual

      They are definitely professional negotiator , which I think when it is an open listing like auction would make a huge difference.
      When it is a close door deal , I don't know if they can do much more (especially when I'm not that motivated to sale to start with).

      • TheBird on 06/04/2022 - 22:28

        I don't know if they can do much more

        The problem is most people don't know what negotiation can encompass. It's a little more than negotiation, but it's close enough. Since I've started (recently) to learn low level negotiation skills, I can already run rings around those who think they're great negotiators, who really aren't.

        Good negotiators often find added value in the least expected of places.

        Ok, lets hit this scenario: You get an offer that's too good to refuse. Do you take it knowing if you do, you're likely to have taken a price that left way more on the table than you'll ever know? That's what can happen. It can also happen on the other side too.

        That all being said, agents that are great negotiators are worth their weight in gold.

        • IWoNdEr on 06/04/2022 - 22:38

          Definitely not a good negotiator myself so pretty straight forward with price.

          My thought is just telling the buyer agent - "I'm interested, so just give me your best offer now and I will see if we can do a deal on that"

          Do you have suggest on any better question?
          (Currently the buyer agent has not said any thing about price they like to offer, merely check to see if I'm interested in selling).

          • TheBird on 06/04/2022 - 22:46
            +1

            @IWoNdEr: There's nothing wrong with it, but it'll get you a standard reply… which might work fine for you. But I'll give you one tidbit, your best offer is rarely your best offer.

            Better questions could be

            "Tell me something about your investor."
            "Why are you looking at buying this?"
            "What makes this place special for you?"
            "Has your client been buying a lot lately? If so, what, where, what price, what purpose" etc.

            Hell, even "That depends on how much?" would be better. You haven't given up anything in your position with that question.

            I just reread your post. You're in a townhouse or unit aren't you?

            • IWoNdEr on 06/04/2022 - 22:50
              +1

              @TheBird: Thanks for sharing those questions.

              It's a standalone house.

              • TheBird on 06/04/2022 - 22:51

                @IWoNdEr: It really helps to find out their motivation/goals. You get that by asking questions.

  • orangetrain on 06/04/2022 - 22:05
    +1

    If I were the sales agent, I would just ask for whatever and tell you I negotiated hard then run with my 2% cut.

    Why would the sales agent bother negotiating with a 2% cut when there's likely many other properties for sale?

    • IWoNdEr on 06/04/2022 - 22:19

      I actually think there's not much listing at the moment. Probably one of the reason to approach owner offmarket.

  • SF3 on 06/04/2022 - 22:17
    +1

    You want to take the opinions of OzB forums and show it to your agent as OzBargain has spoken?

    • IWoNdEr on 06/04/2022 - 22:21

      Lol :D

  • OzCheapo on 06/04/2022 - 22:20
    +1

    Depends, if you want to sell then 2% is the premium for immediate sale. If not, then negotiate and maybe walk away.

  • p1 ama on 06/04/2022 - 23:02
    +1

    Me personally think it is a bit steep considering there is practically no real effort required on her behalf (oblivious to any underlying cost of running a real estate company). A more reasonable way is probably a fixed fee.

    If that is the case, then do it yourself. I'm not being facetious, I actually do genuinely believe that if you don't value someone's service, then you are better off not engaging them.

    If you want to get a better indication of what is a "reasonable" price, then call around to several agents and ask them. It's a competitive market.

  • [Deactivated] on 07/04/2022 - 07:12
    +1

    2.2% inc GST would be absolute maximum for the average punter, but in this case I don't understand why you can't sell it without an agent. You have a buyer so you need to decide what is the net amount you wish to receive after all fees etc. No need for any marketing costs either

  • Euphemistic on 07/04/2022 - 15:24
    +1

    You only need a sales agent if you want to go to open market and need the agent to advertise, use their list of clients and run open house etc.

    if you have a buyer come to you, you negotiate the price and engage a conveyancer (solicitor) for the sale.

  • Halo375 on 08/04/2022 - 18:51
    +1

    In Melbourne I’ve been quoted 1.5 - 1.8% inclusive of GST from a few different agents. Negotiate!

  • Snax85 on 20/11/2024 - 23:55

    2% is fairly standard in Brisbane, but if you feel it’s steep given the circumstances, you could try negotiating a lower rate or exploring fixed-fee agents. Always compare with other agents to ensure you're getting a fair deal.

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