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Selling agent fees, option to buy

Discussion in 'The Buying & Selling Process' started by Burramys, 9th Jul, 2015.

  1. Burramys

    Burramys Well-Known Member

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    Advice is sought about selling an IP. I've asked four REAs to give me an idea of the likely sale price and their costs. The sale prices cited are similar and more or less as expected. An agreement with an agent has not been signed, still looking for the best deal.

    One agent said that he has a customer who is interested and wants to look at the IP. This could be just a ploy to have me sign with the agent. However, it may not be. If the agent can get a sale in my price range of high 700s then it is attractive and I may accept it. No advertising, no OFI, quick and simple.

    The question of the agent's fee has not arisen. This fee is usually north of 2%. However, with virtually no time or effort involved it seems to me that something lower is indicated. There is no s. 32 yet. Is it possible to have an option to buy signed before the s. 32 is prepared, and if so, what sort of deposit and agent fee should be paid? TIA.
     
  2. Big Will

    Big Will Well-Known Member

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    You can discuss it but without a s32 you cant form an offer.

    Agents fee, worst he can say is no but why not put it out to the market?

    With the agent who has a buyer you can give him authority for a week or two to show the buyer through and extend if you wish.
     
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  3. Kael

    Kael Well-Known Member

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    +1 that.
     
  4. Genia

    Genia Member

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    ... And no marketing expences.
     
  5. Burramys

    Burramys Well-Known Member

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    Thanks, all very helpful. I emailed about six REAs, only three replied, and one was the PM. Must be a busy time of year. One is asking 1.5% + 10% of anything over $800,000, plus about $5000 in advertising, plus their tradies to make the place spiffing. The other is asking 2.2% and says they have a person who is interested at about $800,000. I did the maths and the 2.2% one is less at around $800,000. I'm thinking that offering the 2.2% REA plus 10% of anything over $800,000, two weeks exclusive. Paying 2.2% for a few weeks of effort is too much. Still waiting on the OC to send the documents for the s.32.
     
  6. Be Developer

    Be Developer Property Developer Business Member

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    @Burramys

    10% of anything over $800k seems too much IMO.

    Why not just stick to standard commission?

    Or go for auction!
     
  7. Burramys

    Burramys Well-Known Member

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    I agree that 10% is a lot. However, the best estimates are high 700s, and anything above that is above the estimate. Also, there will be no advertising and the agent will have two weeks to sell. The commission structure is negotiable, and I cannot see the value for me in paying 2.2% for a very short time to sale. A private sale is preferred as the bidders do not know what the other bidders are offering, or indeed if there are any other bidders.
     
  8. Burramys

    Burramys Well-Known Member

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    The agent and I have what appears to be a deal. He will be given authority for 14 days and the rate is lower. One small catch. We have been using rates such as 2.2% as the fee. GST has not been mentioned. The agent now advises that GST is on top of the fee, which is another $1500 or so. Whilst I obviously want to pay as little as possible, I do not want to breach convention.

    So, the question is this. When citing a fee such as 2.2%, is this normally understood to include GST? TIA.
     
  9. Be Developer

    Be Developer Property Developer Business Member

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    If I was told 2.2% fee, I would have ASSUMED that it is Inc GST.

    You can negotiate with REA.
     
  10. littletee

    littletee Active Member

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    Why not sell it yourself? If it's true the Agent has a buyer, I can guarantee you they'll see your Ad on Realestate.com.au or Domain.com.au and will come knocking anyway? For $650 you'll save yourself around $15k by the looks of things, that's a lot of money.
     
  11. Esh

    Esh Well-Known Member

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    Whatever you do put it on the market and sell it with a priceless strategy. You never know a buyer may see more value in your property than others. Its true you can sell it yourself but the reason you chose an agent is for them to get you that cream price. Why dotn you set 2% and 10% incentive for anything above $820k?
     
  12. Burramys

    Burramys Well-Known Member

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    The 2.2% + GST agent backed off to just 2.2% including GST, but his EPR is low compared to the agent who looked at the place today. The 2.2% bloke said high $700s and the agreement he wants me to sign starts at $740,000. Interesting. I checked the law - GST is implied, meant to be included.

    The possibility of having POA appeals. Let the market decide. The price range from different REAs is staggering: $650-850,000. Two have suggested having no tenants and hiring furniture. Losing rent is fine as long as this is reflected in a higher price. I saw one estimate of $3-4000 for furniture hire for four weeks, and if it does not sell in that time then there will be either an empty property or higher costs. Neither appeal much. One suggestion was to buy basic items from Ikea for a similar amount, and sell the furniture online after.

    Advertising costing $5-7000 has been mentioned. I cannot find prices for Domain, Realestate.com, etc. How much do these websites charge? Is $5000+ reasonable?

    I'm using the proceeds to buy another property, and don't want to have these proceeds in my bank until I'm ready to buy, which may be longer than 90 days. The strategy so far has been to sell via an option, with a holding deposit of, say, $20,000, and when I have found the new property use a bank cheque from my buyer to pay for the new place. Having the current property vacant while this is done does not appeal. It's manageable, and having no rent will offset CGT. If the buyer intends to rent I could rent to the buyer on a monthly basis.

    I dont sell much, tend to have long-term holdings, as in 20+ years. This is why I am fumbling with a sale - the last one was about ten years ago.
    * Tenants in place or not?
    * Hire furniture or not, maybe buy?
    * Need a way to work around not holding a large dollar value balance while I find the place I want to buy and attempt to synchonise the two.

    TIA.
     
  13. Jacque

    Jacque Buyers Agent and Bookworm, Sydney Business Member

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    Are you paying for a few weeks of effort or a great result? You need to decide here as ultimately the best agent should be able to achieve a price outcome you can't. Regardless of how long this takes hence why agents charge commissions and not hourly rates :D
    The only way to quantify this is to give selling privately a go, or alternatively you could ask the agent for a sole agency agreement (which gives you and the agent both the right to sell without losing commission to the agent if you sell)- not sure how many VIC agents would go for this as I know exclusive would be preferred but it doesn't hurt to ask.

    As for selling tenanted vs vacant (and staged) it depends if the tenants are neat and clean, happy to provide access regularly etc. If the place could look better and the tenants are proving tricky with access then I'd consider them an impediment to achieving an efficient sale. Only you can decide here, based on what the tenants are like. A tip: if they are neat/nice etc and being cooperative then please reward them by reducing the rent for a certain period or giving a gift/voucher etc. Goodwill returns in kind and I always consider a gesture the least you can do for good tenants as it's their house being shown regularly to strangers.

    Best of luck with your impending sale.
     
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