What is the Hourly Rate for selling your home by a Real Estate Agent?

Barry Osborne

No matter whether you are contracting a builder, electrician, a TV Repair man or even the notorious Lawyer, you are always told what is going to be the charge up front and the hourly rate of the services. Why is it that when you are selling your home by a Real Estate Agent you do NOT get told what you are going to get and the hourly rate of the service offered?

I am amazed how this Real Estate charging has been accepted and even tolerated by the general public, including you and me. It is like the old Snake Oil Salesman, who promises great things and then once committed you are left with not what you thought you were getting. It is amazing when people enter into a transaction with a promise of something wonderful happening; our logic appears to go out of the window.

It is not that the fees are minor, they are astronomical when you think that they take a percentage share of your assets and it doesn’t matter whether you are gaining or losing on the transaction their fee is not greatly affected. A drop in the sale price of $20,000 maybe significant to you but will mean only a minor change in their fee.

What are you getting for that fee?

Of course, you will receive hopefully the sale of your house. But usually with any contracted services you receive a full detailed list of the inclusive services that will be carried out and a very professional opinion as to the success of the contracted service. But in fact what do we receive:

  • A valuation of your property. Sorry many agents leave this to the market to decide and there advice for that reason is to Auction the Property which is an extra charge.

  • An Advertising Campaign. Sorry this is extra also. But more importantly the high costs of doing this is via Press Advertising which is now being found to be very ineffective and more importantly cannot be monitored.

  • Their expert advice on preparing your property for sale. But again you will pay for the repairs, the storage of excess furniture, or even renting of better furniture. Maybe even moving out of the house for it to be sold.

  • Open House Inspections. How many do you receive and the duration of each? Again, they like Auctions so it forces a set period of time for the Sale process and therefore a limited number of 30 minute inspections.

  • Follow up on all enquiries. Most of this would be short phone conversations, where someone needs to ask more questions and so are mainly just answers. You would love to think that there were hundreds in numbers but are more likely only a few.

  • Negotiation of Sale. Again this is not going to be too great of a deal, because it will simply come down to price. Yes, it may take some convincing of Buyer to lift their offer or Seller to drop their expectation. But it is a fairly straight forward negotiation focussed on that one factor price.

  • Contractual arrangement. The involvement of the agent is minimal but is needed to discuss any of the conditions being asked for. Your solicitor draws up the contract which you pay for. But even the specialised Conveyance Solicitors are now being pressured to fixed rate fees. 

On a particular property, how much time would an Agent allocate?

Would it be one or two week’s work? The problem is that most agents are working a number of properties at once so it would be very hard to determine the actual work allocated to just one property. But I would be surprised that an agent was spending 40 hours on a particular property in order to achieve a sale. That would mean an Agent could be receiving a fee of say hundreds of dollars per hour. Now if the sale price achieved was above expectation than the owner says so what. But how often is that the norm; probably the same odds as winning the lottery.   

In the case of Professionals which takes years of study to gain their credentials, I think in the case of Real Estate Sales people where a 2 week course can get you your licence; this type of fee charging is ridiculous.

But times are a changing. Hard earned money cannot be squandered. There are new thinking hitting the market as discribed in this article from NZ.The Internet Marketing world will drive these changes and make industries like the Real Estate sales more transparent as to what you are getting for your money.

But to understand some of the Future Trends download this FREE eBook now.

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