Apartment Specialists Podcast No: 10
In this podcast, I’ll be talking about the best selling methods and common schemes of real estate agents, especially when auctioning your apartment and how they get more when they do.
Andrew Murray, Apartment Specialist, methods of sales.
Did you know real estate agents get paid more to auction your apartment than they do to list it with a price? Now, what I mean by that is, when the agent gets paid the commission, the listing agent will get a higher percentage of that commission if they auction the property. And the person who found the buyer will get a smaller amount of commission. And that has all kinds of implications. That often means that, if someone’s got a really good buyer that’s not on their listings, they would rather push their buyer towards a listing that’s listed with a price, because they get paid more money. It also means that – in a lot of occasions – well, if you ask yourself if you’re going to get paid 70% just to sell a property and not find a buyer, are you going to do as much work to find that buyer? Well, you can make that conclusion yourself. So, it’s quite interesting.
Now, about the other point… Okay, if you ask me right now. How I’d sell my house in Auckland, I’d say I’d auction it. So, what am I saying here? I’m not saying auction is not a very good way of selling. I’m saying that it has its time and its place. If you ask me how I would have sold my house three years ago – no way by auction. Because we weren’t in a burning market. We weren’t in a time where – basically there was more demand than supply. Now, I have apartments and my parents have apartments. If you ask me how I would have sold my apartment three years ago, I would definitely list it with a price. If you ask me what I advice I give my parents – list it with a price. If you ask me right now in a burning market how would I sell my apartment, I’d list it with a price.
Now, what’s the difference between an apartment and a house? There is a huge difference. And that’s the reason why statistically, when you look at all that, how the highest prices are achieved – and most buildings I know are through listing with a price. It’s because of due diligence. It’s because people are scared of buying apartments. They need to do their due diligence.
When you come into an auction, you’re making an unconditional offer. And a lot of people they want to have conditions. Before they purchase, they want to have a building inspection. They want to be able to go through the minutes with a fine tooth comb. They want to be able to get an evaluation and a conditional price. There’s a lot more conditions, people are a lot more scared when they’re purchasing apartments. Going to an auction, doesn’t suit them. Also, values.
Also, if you’re looking at apartments now, we’ve got so many of them. If you look in a suburb, there’s probably maybe 20 at the moment – 20 listings in a suburb, maybe 30, maybe 40. Well, in an open CBD, there’s about 700. And if you look at say 3 bedroom, there’s probably about 300. So there’s so much choice. You look at the traders, how do they sell their apartments? Now, these are people who buy apartments either directly from the owners or off real estate agents and then – they buy them undervalue and then sell them at the maximum price. And that’s their job. That’s their business. Do they auction their apartments? Nine times out of ten they do not. I see a lot in the housing market, but not in the apartment market. So, ask yourself, that’s their business to get the highest price “Why aren’t they auctioning their properties when selling their apartments?” Let’s look on Trade Me. Look at Icon City. That’s the biggest trading in Auckland apartments or apartments in New Zealand. And they’re not auctioning, they’re listing their price. So, that should give you a good idea.
If your agent does tell you that the best way to sell your property is by auction. Ask to see the values or the highest sales achieved in your building and find out what methods of sale were used to achieve those sales. And you can get that information from the REINZ. So even a real estate agent can get that information. So it is available and that will help you choose what method of sale is best for you. And if they are pushing auction and it’s not the best method so sale – you’ve got to ask where their motivation is. Is it for them? Or is it for you? So I hope this helped. I think it will have given you a very good insight – especially into the apartment market which is very different.
And next week I will be talking about knowing your building. How important it is that you choose an agent that knows your building and the questions to ask and to find out if they do.
Cool. So, if you haven’t downloaded it already, as I mention on each podcast. I had a lot of great feedback. This is just one of ten points on mistakes owners make that I see them making which costs them thousands of dollars in selling their apartments. Download it from www.apartmentspecialists.co.nz