Is it worth using a real estate agent?

RNZ News

19 hours ago

Three quarters of agent-listed properties in the past 10 years were successfully sold, compared to 65.1 percent of privately listed properties. File photo.
Photo:
123rf.com
You might pay a real estate agent $30,000 or more to sell your home. But is it worth it?
Analysis by property data firm Cotality suggests it might be.
Each year, a small number of people opt to sell their homes privately - from a low of 3.1 percent in 2021 to 8 percent in 2016. Last year, it was 7.6 percent.
But Cotality head of research Nick Goodall said agents seemed to sell properties more quickly and effectively.
"The sales success rate is higher for agent sales - by an average of 11.5 percent over the 10 year period."
Roughly 76 percent of agent-listed properties in the past 10 years were successfully sold, compared to 65.1 percent of privately listed properties.
Last year 65 percent of agent listed properties sold, compared to 52.8 percent for private sales.
Goodall said real estate salespeople would often have an understanding of which buyers might be in the market for a particular property and could target them more effectively than a private seller might.
"The typical days on market for agent sales is also most often shorter. In 2021 - the market peak - the median days on market for agent sales was 24, while it was 40 for private sales. Interestingly last year was the one year to buck that trend, with agent sales taking a median of 75 days, compared to 71 days for private."
He said the median sales price for properties sold by agents was higher, too, but that could reflect a different mix of properties being sold.
"Vendors may be more likely to sell their property privately when it's a lower value property, whereas owners of more expensive property might be more likely to use an agent."
He said last year's higher rate of private sales could reflect vendors being aware that prices were not strong and looking to save money where they could.
"Nonetheless, for the record, the median sales price of properties sold by agents this year is $740,000, compared to $662,500 for private sales. Last year the respective figures were $735,000 for agents and $704,000 for private."
Goodall said the data was not definitive enough to say whether agents were delivering enough extra value to pay their commission. At Barfoot & Thompson, for example, a $750,000 sale would incur $23,978 in commission. A $1 million sale would mean just under $30,000.
"The figure for this year is almost $100,000 so I'd say that would justify it if it was like-for-like properties. But the year before was closer so you might be sort of borderline there."
Goodall said people selling privately would also need to account for the time they would need to spend on the process.
"Having to take time off work or the opportunity cost or what else you could be doing if you have to spend all that time preparing to sell a property on your own, you know that might bring the calculation a little bit closer as well."
Real estate agent Brooke Gibson said she could understand why people would sell privately. She did it herself before she entered the industry.
But she said she could see that agents would add value for most people, particularly when it came to negotiating.
"You could actually easily kill the deal because you know, if someone comes up to you and you're opening up your house to them and they go 'how much do you want?' and you say $1 million and he thinks it's worth $700,000 for example, he's going to be like 'nah not interested."
Wellington salesperson Mike Robbers agreed. He said agents would also often present properties a bit better than private sellers would, with professional photography and home staging.
"Private sellers often start out with a very high price in mind, then reduce it over time when there's no interest, but by then the listing has gone 'cold'. Agents tend to use their market knowledge to get the pricing strategy right from the outset, so the listing doesn't sit as long on the market."
He said some buyers also expected to pay less for a private sale because the seller did not have to cover commission.
Real Estate Authority chief executive Belinda Moffat said whether it was better to sell privately or through an agency would depend on the seller's specific circumstances, the property itself and the seller's knowledge and experience.
"Licensed real estate professionals are trained and experienced in working on behalf of homeowners to help them navigate property transactions with confidence and are legally required to seek the best outcome for their client."
She said all real estate salespeople were required to follow the standards in the Code of Professional Conduct and Client Care and meet their obligations under the Real Estate Agents Act 2008.
"If a person works with a licensed real estate professional, and an issue arises with their professional conduct, the person has the option to make a formal complaint to REA and/or to raise the issue with their agency."
Agents should provide a current market appraisal (CMA) of what a property might sell for before they signed an agency agreement.
"(CMA) of what they think the property might sell for before the seller signs an agency agreement. The CMA must be informed by comparable recent sales in the area and can be helpful in understanding what the property may be worth. They will also prepare a proposed marketing plan which the seller can discuss, amend and agree to.
"They also understand and can advise on the important legal disclosure obligations a seller has when selling a property, including in relation to defects and unconsented alterations. If a seller knowingly fails to disclose relevant information to buyers, they could be in breach of the terms of their agreement with any buyer, meaning the sale could fall over or the buyer could seek compensation and take court action."
She said vendors might be able to negotiate commission.
People choosing to sell privately should research the process so they understood what was require, she said.
Moffat said confidence in the industry had lifted from 70 percent in 2021 to 82 percent last year.
Goodall said there was demand for property but there remained high numbers of listings.
"I think if you're willing to be very, very flexible on that price then it's probably not that difficult to get a sale, but it's all about you know, your expectation, what you want to do, if you're buying in the same market, if you're moving elsewhere..."
He said some people were still hung up on the prices being paid at the peak of the market and were finding it hard to adjust their expectations.
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