FREQUENTLY ASKED QUESTIONS ABOUT THE NZ REAL ESTATE INDUSTRY
1. What is the difference between a Real Estate Agent and a Real Estate Salesperson?
An ‘Agent’ is the Licensed Real Estate Company who is licensed under the REA 2008 to Sell Property. A Salesperson is a Licensed Salesperson under the REA 2008 who can work for an Agent and Sell Property.
2. How much does it cost to sell my property?
The only upfront costs to sell your home are those associated with photography and advertising. We always recommend the most cost effective ways to advertise your home without compromising the sales result. Houses are generally sold on a commission basis but the service is free so you pay no commission unless your house sells. When discussing commission rates with real estate agents, you will probably come across two approaches.
a) The most common is a commission quoted as a percentage of the successful result. Normally something like 4% for the first $350,000 and 2.5% for the balance of the selling price. This typically works out to being anywhere from 2.5% to 3.5%.
b) A fixed fee regardless of sales price.
Every seller would prefer to pay a low commission rate but beware, all agents are not equal. The ability of different agents can vary as much as the results. Make sure the agent you list with has the right qualifications and is working for you and not themselves.
But above all just remember that the cost is not what is most important, the result is what is important and a good real estate salesperson can typically achieve a 5-10% higher result in the sales price of your property.
3. How much will my property sell for?
No two properties are the same. Potential buyers will make an offer based on their knowledge of comparable sales and the emotional value they place on your home. Regardless of what you might think your property is worth, it is the buyer that ultimately sets the price they are prepared to pay. The method of selling is an important step towards achieving the best result.
Your licensed real estate Salesperson needs to be well armed with the best information available so that from the outset they can help you to make confident and informed decisions. Choosing a real estate salesperson with a solid understanding of your local real estate market and a well considered market appraisal will make this part easy. The appraisal should include an estimated sales range based on comparable sales in the area and take into account the current status of the local property market.
4. How can I get the best price for my property?
As with any quality product, it is to your advantage to present your home as best you can for sale. When considering where to spend money you should keep your target market in mind and what would appeal to them. For example, if you are targeting families and have the ability to stage your home with a second living space or usable outdoor space, these would be excellent places to invest a bit of time or money. If your property is more suited to a professional couple, an office will generally hold more appeal than a third bedroom. The more buyers you can appeal to, the more people will visit your home. Staging a property to ensure those people form an emotional attachment to your home, and subsequently make an offer, is the final step of the process. The more parties making an offer on your property, the more likely you are to achieve a result that could even be in excess of the property’s market value.
When investing any money it is important to see a positive return and some expenditure will be more worthwhile than others.
Again a good real estate Salesperson should know who your target market is and where best to invest to target them.
5. What is the best way to sell my property?
All methods of sale work. Some sales methods will work better for your property than others. Selecting the right method of sale for your home is dependent on three things;
a) The current state of the local property market. Local developments and market confidence can determine current property demand and vice versa. Some methods, such as Auction or Tender, will be more effective in a market with high demand for property. In more balanced and slower markets it would be best to consider using methods which give buyers an indication of price.
b) The style of property, be it a standalone home, townhouse or apartment. For example, a standalone home will attract more interest than a two bedroom apartment. ‘No price’ marketing methods such as ‘Tender’ or ‘Auction’ will attract buyers and encourage them to place their own value on the property. This is the opposite of apartment buyers who tend to shop with price in mind purely because of the supply vs demand with similar properties to choose from. Marketing an apartment with no price guideline could limit the number of parties viewing, and subsequent offerings for the property.
c) The target market for your home. Using the right sales and advertising methods to attract your target market is essential. For example, first home buyers tend to search for property online and register to receive alerts on properties meeting their criteria. They will shy away from competitive situations such as auction and place a lot of value in having building and LIM reports provided. High value properties will attract experienced home buyers who will search via online and print media channels. These buyers are savvy and more inclined to seek their own professional advice. For the right property, methods of sale which put buyers in competition with each other such as tender and auction, can produce excellent results.
Some real estate Salespeople have a preference for one method over another. But it is important to choose the right method for the right reasons. The most important aspect of this decision are the type of property, current market trends and supply and the owners expectation both in terms of price and timing.
6. How long will it take to sell my property?
As no two properties are the same it is very hard to give an exact time frame for the sale of your home. The Real Estate Industry of New Zealand (REINZ) publishes statistics for ‘average days on the market’ but these do not differentiate one style of property from another so are likely to be skewed by apartment timeframes etc.
To help limit your time on the market it is important to choose the right sale method and target the right buyers for your property.
All of this needs to be decided with the consultative advise of a good real estate Salesperson. Equally important to this is good communication on feedback and progress from your Salesperson. Being informed during the process makes the decisions you need to make as a vendor much easier.
7. When is the best time to sell my property?
The price of an ice cream doesn’t change much over the course of the year but hot weather makes ice cream more appealing and this is when demand is at its highest. The same rings true for property. Demand for your property will be highest when it is at its most appealing.
Buyers are looking for properties at all times of the year so if your property is warm and gets good winter sun, why not market it at a time when there is less competition? Alternately you might have a well-established garden that flourishes in spring so this will be the best time to market your home. Whatever the season, take the time to present your house well to maximise interest and achieve the best possible price.
8. How do I choose the best real estate agent to sell my house?
When you are making the decision on the best agent to represent your property, do your homework. The most influential factor in the sale of your home is the person greeting the buyers at your door. It is common practice to seek the agent with the highest profile believing they must be the best, but more important to this is knowing that you have a Salesperson that is working for YOU and the result you want. So some key things to help you confirm the best agent and Salesperson are:
a) Choosing your Agent (Licensed Real Estate Company) and choosing your Salesperson are equally important. The standing of the Real Estate Agents Brand in the community is important, a more trusted brand will provide more assurance to both the vendor and the purchaser with a higher chance of the whole process being smooth and rewarding for all parties.
b) You need absolute confidence that the Salesperson is working for YOU and not themselves, this is a sad failing of many and typical gives the real estate industry a mostly undeserving bad report.
c) Meet with a few agents and get a feel for their approach. Did they make the meeting about your needs and your property or all about them? What ideas did they have for the marketing of your home? Did they seem honest and likely to show enthusiasm for your property? Were they knowledgeable of your local market and can they sell your community as someone buying your property is also buying into your community. Who, regardless of the commission rate, did you honestly believe was the right Agency and Salesperson to sell your home?
9. What is a buyer’s agent?
In New Zealand real estate agents usually work on behalf of a seller and are paid by the seller. In a number of other countries, such as the United Kingdom and the United States, buyer’s agents are also common. Buyer’s agents are agents who work on behalf of a buyer and are paid for their services by the buyer.
Buyer’s agents are quite rare in New Zealand, but there are some operating, usually in niche markets.
Buyer’s Agents are different to other real estate agents in the following ways:
- They are engaged and paid by the buyer, not the seller.
- They may offer a number of services, such as:
- Sourcing properties for a buyer, on the basis of criteria set out by the buyer.
- In some cases, they may also source property for a person seeking to rent rather than buy.
- Undertaking some inspections and checking of properties, such as obtaining a LIM or related information for the buyer.
- Negotiating with the seller on behalf of a buyer.
- Bidding at auction on behalf of a buyer.
Within New Zealand buyer’s agents usually act primarily for overseas buyers, who want to locate property in particular locations. But when the market is short of listings a buyers’ agent can be helpful to any buyer that doesn’t have the time to search.
Here are some of the more common FAQ’s
10. Does a Buyer’s Agent need to be licensed?
Yes. Any person carrying out real estate agency work, as defined by the Real Estate Agents Act 2008 must be licensed, regardless of whether they act for a buyer or seller.
Buyer’s agents are bound by all of the requirements of the Real Estate Agents Act 2008. This means that they must carry out work for a client under an agency agreement, disclose information, as required, under the Act and comply with the Real Estate Agents Authority’s Code of Professional Conduct and Client Care (Code of Conduct). The Code of Conduct includes specific rules for buyer’s agents. You can download the Code of Conduct from www.rea.govt.nz.
11. What does it cost?
There is no standard rate or scale of charges for buyer’s agents. It is important that you ask in advance about costs and what services will be provided as a part of this cost. If the buyer’s agent charges a set fee, you should check whether any separate charges are made for expenses.
12. When do I pay a Buyer’s Agent?
The terms under which a buyer’s agent is paid are generally negotiated between the agent and client. You should ensure that payment is made on the basis of achievement of results.
13. Can a Buyers Agent act for both a buyer and seller of the same property?
No. This is a conflict of interest. An agent cannot work in the interests of two different parties (the buyer and the seller) in a negotiation concerning a property. The Real Estate Agents Authority’s Code of Professional Conduct and Client Care specifically states that an agent cannot receive commissions from both parties to a transaction.
If you have any other questions about Real Estate please don’t hesitate to contact us about them.