Useful things you need to know before signing a real estate
Useful things to know when signing a real estate agreement to sell your property:
- Ensure you have an appraisal, then you know and understand your apartments worth
- A recommendation on how to best sell your property by the agent for example auction, listing price or tender.
- Sole agency vs general agency – the difference being the one agent selling your property vs any agency being able to sell it
- What is the commission? This leaves you clear about what you be left with after sale
- Cost of marketing
- Discounts with commissions – we are up front from the beginning
- Legally binding when signing – have your lawyer look over it
At Apartment Specialists we don’t lock you in- you are in control, for further information, contact us and we can give you more details.
Good day. Andrew Murray from The Apartment Specialists. What you need to know before signing a real estate agency agreement? Now, I put it down to eight things.
First of all, even before this, an agent has to give you an appraisal - i.e. what's your apartment worth - because how are you supposed to know if you want to sell your apartment if you don't know what it's worth? Because what you're doing when you're putting your property on the market is, you want to get money for that property, and if you don't know how much, how can you make the best decision for you? So first of all, that's number one - there needs to be a market appraisal for your property.
Number two, a recommendation of how best to market your property - i.e. is it auction, is it tender, is it listing a price? This will come down to your type of property. Make sure they're very clear on why, the type they choose, the type of sale they choose as the best for your property, and ask for sales evidence as well as - and I'm talking about recent, okay? So that's really important in the agency agreement, as well as is it a sole agency or is it a general agency? It's really important that you know the difference between the two. Sole agency means only that agent can sell your property or a person in - or agents in his agency, where a general means everybody can sell it. Now, there is a bit of a difference because of how we operate, but I'm talking about the general - basically all the real estate agents in New Zealand. Our company does it a bit differently, but anyway, that's what you need to know.
Now, what is the commission? What is that charge? What is their percentage? That should be on the appraised price, so it gives you an idea of upfront payment. What is expected to be paid? So when you're looking at that price, when an agent rings you to sign a purchase agreement, you can pretty easily get a rough idea of what's going to be in your hand because that's what you really care about. How much money, after all the costs, are you going to be left with? So that needs to be really clear in the agency agreement. Another one is cost to market. Are you paying for it? How much is it going to cost? That's another thing. I mean, you need to know these things.
Now, discounts with commissions. For example, a lot of real estate agents, especially - I won't go into details but often, there'll be rebates or commissions that they will get. For example, they'll charge you $400 for the photography and they may get $100 back or it may not cost that, so they need to declare that income. If they use an auctioneer, that auctioneer may give them a discount. Now, how we operate is we actually send you the invoices directly from the people who provide us services to help us market your property so there is complete transparency. There are no discounts or commissions. We will never charge them. We're here to do a job and it's selling property. Otherwise, we shouldn't get paid at all. Anyway, be aware of that in the agency agreement.
The other one is be aware that it is legally binding. The agent should have given you a guide provided by the REAA about agency agreements and when listing your apartment, so make sure you read through that thoroughly. Be aware yes, this is a legally binding contract, this is really important. So make sure you pass it on to your lawyer to have a look through it. Even if you think you're pretty comfortable, it doesn't hurt for your lawyer to look through it and give you advice and make sure there's nothing in there that you're not aware of.
Okay, so I hope that helps when looking at agency agreements for you to understand what's really important. Now, what we do differently is, we try to take the risk away from the owner. We try to put the control back with the owner because at the moment in the New Zealand industry, I see the control being with the agents. That's not where it should be so what we do is we basically have - if you come to agency with us, any other agent can still sell the property just like in a general agency but they get a full buyer's commission. Now, on the other side of it, you also can cancel that sole agency. A sole agency generally means you're locked in for 90 days even if that agent was doing a bad job. Basically, we put our money where our mouth is. If you don't like us, fire us. Hasn't happened yet but I'm sure I'll have some person I have a disagreement with. But anyway, that's for your benefit.
Hope that helps. The main question was what you need to know about an agency agreement and I think I've stated that clearly. I look forward to talking to you next week. Fire me any questions if you have any.
Thank you, cheers!