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How to raise your apartment’s earthquake rating?

Posted in Blog, Body Corporate, Buying, Imageless, Not A Property, Things To Know About Apartments, Value Updates.

Summary:

The earthquake rating is based around an IEP assessment by the council which are done off the plans, not looking at the actual building. This means they are often not accurate.

As a Body Corporate you can potentially change your rating which will therefore raise the value of your property.

This can be done by employing a private party to conduct an IEP. This does come at a cost of around $2000 but it means the engineer comes and physically looks at the building and makes a far more accurate assessment. In some cases, it does come out higher, this works in your favour in terms of values of the property.

The final step you can take, does come at a considerable cost but it is where an engineer takes a further look and looks at the materials of the building by drilling and a number of other procedures to see how strong the building is. This is not usually necessary but may be in certain situations.

TRANSCRIPTION:

Good day!  Andrew Murray from the Apartment Specialists, on raising your earthquake rating. Now you’ve probably seen in the papers, quite a bit of publicity around character apartments and how the earthquake ratings are affecting their values, and a lot of owners are scared around this.

There’s a number of buildings around the CBD – I don’t really want to mention them – that are going below that 33 per cent threshold, where they have to be restrengthened. That’s a very expensive exercise. One example is obviously St James. It is at 28 percent. It is a stunning building, and to get those earthquake ratings up means a knock to the values. Currently, they’re being sold below their value because of this. So I wanted to talk to you today about what I did in my own building, and how I raised the earthquake rating in my own building.

Now I’m a chairman of the Regency Apartments. Obviously, I work with the owners’ committee here, and I meet with the Body Corporate secretary here, so that’s Paula Beaton from BCA, so I can’t take the credit myself.

But basically what we did is, earthquake ratings are based around what’s called an IEP, which is a Initial Evaluation Procedure, and that’s a brushstroke approach done by the council, where they don’t actually inspect the buildings individually. They look at the original plans. And these are often incorrect.

So what they do is they look at these plans and give a bit of an idea. And they put a rating on it. These ratings are done in a longitude and latitude way. So they’ll have a rating, let’s say we got the Regency for example. It was around about 66 percent longitude. So if there’s an earthquake, going up and down, it had a 66 per cent strength, which is great.

But then the latitude, because it’s old, and it’s where these character apartments often fall – so as in not fall, but fall down. So the earthquake rating was only 35 per cent. Now so that means the IEP rating, or earthquake rating, falls on the lower of two. So it came out as 35.

Now yes, that just scraped through past that 34 per cent mark, which is, you know, the pass mark. But that’s still quite close so it does affect a purchaser’s opinions on what they’ll pay for the apartment .So what we did, is we looked at getting another IEP rating. That’s when you get an engineer in. It will costs you a couple of thousand dollars. They’ll come in and actually assess your building, and actually find out what the IEP rating really is.

So what we did is, we got another engineer in, an independent engineer, to do an inspection of the building. An inspection of  how it was constructed, and actually really really look into closely the strength of that building. And we had a very positive report that came out, showing that the plans that were in the council did not actually reflect how strong the building was. And that came out at 55 per cent, which is fantastic, because that lifts the ratings. And it lifts the value of the building. Being an owner, it was fantastic.

So when you’re dealing with a building, and if you are looking at purchasing a building or you own in a building which has an IEP rating or earthquake rating which is low, talk to your body corporate. Talk to your owner’s committee. Talk to your body corporate secretary and have a chat about getting another IEP opinion.

So get another engineer, to do an independent report, and yes it could come back at the same amount, but it also could come back a lot higher. So before you start thinking, Oh I’m stuck with an apartment with a bad earthquake rating, make sure you go down that avenue.

Now, if that fails, then you can go into– and you still believe that it could be stronger, you then go into a DEE, which’s is a detailed evaluation. That is done by an engineer and that’s very expensive. So that’s when they actually go into, they actually drill holes and look at what kind of steel was involved and all that kind of thing.

A recent one was done in the Wiltshire, which it came in where the earthquake rating was very very low, so, I think by memory, don’t quote me on this, about 23 per cent, and then they got a DEE, so a detailed evaluation, and that came in, by memory, at around 83 per cent. So it shows you that these earthquake ratings aren’t set in stone, and the initial ones that are given by the council are just a brushstroke approach. There are options here to see if you can lift that, and just lift the values of your apartments, with the apartment you own, and the value of the whole building, basically.

So feel free to give me a ring on 021 424892. 021 424892, or andrew@apartmentspecialists.co.nz, if this concerns you and you’d like to have a conversation about it, because yeah, it’s all not lost and there’s some hope out there.

So anyway, hope that helps.

Cheers, thank you.

How important is an owner’s committee?

Posted in Blog, Body Corporate, Imageless, Not A Property, Things To Know About Apartments.

Summary:

The owner’s committee is more important than the Body Corporate, it is one of the most important aspects of an apartment building.

The owner’s committee is comparative to a board or group of directors who direct the future of the building and keep the Body Corporate honest.

Within a committee there is a chairman, this person’s role is more like a facilitator rather than a director.

There is a nominated secretary who deals with all the income and expenditure.

Then there is the building manager, who may or may not be in the committee but we think it is important they are due to being in the building and in know of what is happening all the time.

Someone has the responsibility of keeping the minutes and then communicating these to everyone in the correct manner.

The owner’s committee deals with all concerned in your building and it not a small task. It is job that needs to be done to high standard with efficiently and sound communication.

TRANSCRIPTION:

Good day, Andrew Murray from the Apartment Specialists.  Today I’m talking about Owners’ Committees and how important they are.

Now, an Owners Committee is more important than the body corporate company. It’s one of the most important parts of a building. It’s like having a board on a company or a C.E.O. It’s what actually directs the building into the future and it’s what keeps the body corporate honest.

Now the known key aspects to do with an Owners’ Committee that needs to be occurring very efficiently and to be covered to be able to run a building very well. It’s very, very important.

Obviously, first of all, is the obvious one, you have a Chairman. The Chairman isn’t like the boss. He’s the facilitator. They run the meetings. They are making sure that everybody’s gelling and that there’s, basically everybody has their say. They are making sure you get through your agenda and everything is communicated properly, and everybody’s doing – He’s overseeing the whole process.

Number two, you obviously have your body corporate secretary. Now that’s whoever your body corporate is, whether it’s body corporate admin, whether it’s Australia, whether it Crocker’s, whoever it is, the point of the company is actually an administrative role. So they’re dealing with the income and the expenditure.

Then you have the Building Manager. Now a lot of Owner’s Committees don’t have the Building Manager there and I think that is incorrect. I think a Building Manager should always be at the Owners’ Committee meeting. Why? Because they’re the ground floor. They can tell you what’s happening.

A lot of people in the Owners Committee’s who don’t live in the building or if it’s an investor building, how do they know actually what’s happening day to day? It’s very important the Building Manager is there so they can give their feedback and actually talk about what’s happening. What contract is coming in, what contract is coming out, what problem’s they’re having.

The next is having a person in charge of the accounts. This is where you’ve got to choose from your Owners’ Committee members, who is best suited for certain roles. In a perfect world it would be great to have an accountant on your Owners Committee but we can’t all have accountants on Owners’ Committees or accountants living in our buildings who are willing to give up the time. It’s really important that someone is in charge of accounts and is looking over the whole administration of their current expenditure. What’s going in and out and making sure everybody’s on the same path.

The next is somebody who is keeping the minutes, if they’re body corporate’s, but more importantly checking them and making sure that what is being said, is communicated properly in those minutes. It’s very easy for words to come across in the wrong way and come across, I suppose, giving a different message. It’s like we’re sending a text message. Sometimes you get a text message and if you think your friend’s angry with you when they didn’t mean that at all.

It’s just like that with body corporate minutes. They’re really, really important because they communicate a message. If you get that wrong that can lead to all kinds of things. For example someone thinking there’s a big issue with the building, when really there isn’t, and that kind of thing. It also means you’ve got a reference to go back to and say “This is the decision that was made. We all agreed on this and this is the terms of that decision.”

Okay the next one is operations. Because you’re going to have things that are happening within the building. You’re going to have– it’s basically a project management role. This is to say for example, if the lift needs to be refurbished, you’re going to have somebody in your Owners’ Committee who you’re going “Okay, you’re acting as a Project Manager, you’re in charge of that project and you run it and use other members to be able to do that kind of thing.” That’s also making sure the quotes are coming in, making sure the decisions are made if they happen by email. That’s where obviously your Building Manager– your Building Manager is actually in charge of the quotation process and should be doing all of that. Why? Because they’re on site and they can meet the contractors.

The next is communication. Now communication is very important. How are you supposed to know when your next meeting is? How are you communicating what the agenda is? Are the agendas coming out on time so everybody can actually read them before the Owners’ Committee meeting. What’s going to happen at the A.G.M? Who’s supposed to be doing what? Is everybody keeping to the deadlines? Communication of this is very important and generally now this is done via email, which is great. Occasionally phone calls need to be made and things like that.

You also need somebody who is in charge of the long term maintenance plan. It’s great if you have enough members so you can have one person who’s just in charge of that and give feedback to the committee and report on that because we’re looking at looking after the building, not for that year, not for two years, but for ten, 20 years in advance. That is directly related to the babies because you’re building it to be well looked after. And a long term maintenance plan that’s really working, it makes a huge difference to the building and any projects you want to do it to enhance the values.

The final one is building management. Now that’s an interesting one when I say that because you’ve got to build a manager but you need someone that oversees the overall bulk building management. Is actually reviewing the Building Manager, and looking at how the whole building management is done. This is down to, how good is the cleaners? How good is this contractor doing? How good is such and such?

That gives you an idea of what’s actually involved in an Owners’ Committee. It’s a lot more than just sitting around and talking about issues. It’s about working where everybody has an area that they are specialized in, so that the responsibilities are, I suppose, given out to the people that are skilled for them. Then everybody comes together where the Chair actually facilitates the whole meeting so this can all be brought together and the result is a building, that when it’s done well, that is run properly and very efficiently and keeps everybody happy.

Anyway I hope that helps. Cheers.

How to make sure a Body Corporate is looking after your building?

Posted in Blog, Body Corporate, Imageless, Not A Property, Selling, Things To Know About Apartments, Value Updates.

Summary:

You don’t know exactly as you have nothing to compare it to and other only way to tell is to get a competitor to do an audit and address needs that may have been overseen. This doesn’t mean you get rid of your Body Corporate necessarily but may high light needs to be attended to.

TRANSCRIPTION:

How do you know if your body corporate is doing the best job? Good day, Andrew Murray here from the Apartment Specialists. In short, you don’t know if your body corporate is doing the best job because you’ve got nothing to compare it to.

I have seen one building that is looked after by one body corporate and another building that is being looked after by exactly the same body corporate. One of these is doing a great job and the other, not so great. So what is it that actually makes or keeps all businesses striving to make sure their service and what they deliver is always best for the consumer?

That’s capitalism. That’s what we’re founded on. That’s why we are not communism and it’s competition. That’s why one airline gets more business than another. It’s the service. It’s the price. So in short, the only way to really be able to tell the if your body corporate is doing a good job is to bring in an audit from the competition.

He comes in and looks at how your body corporate is looking at your property, from what they are charging for their service. And it doesn’t mean that you have to fight your body corporate. But what it does mean is that, I can almost guarantee every single time, you’ll find something where you can bring to your body corporate and say, the competition didn’t identify this area.

Maybe you can improve on this area. Or worst case scenario, they come in and expose that your building hasn’t been looked after and then you can go to the competition. But really, it’s not really about whose going to win the business. It’s about you having visibility and doing things right. The only way you can do that is through how every single industry is run – competition. So this is a very interesting topic because most body corporates didn’t actually win the business because they did a great job.

They got it because it was given to them from the developer. So the developer sold down the apartments with a body corporate already in place. That’s why, in my opinion, there’s a lot of buildings that aren’t being managed as well as they could be. Now, I’m not saying that that is on purpose. I’m just saying that the business came a bit too easy.

So if you’re an apartment owner and you want a body corporate and you want to check out how well your body corporate is doing, bring in the competition and see what they have to say.

I hope that helps. Give me a ring on 021424892 or flick me an email andrew@apartmentspecialists.co.nz if you want some more information because it’s quite a complex situation. But I hope this has been of some help.

Cheers. Bye.

how to use a feature ad to sell your auckland apartment

How a feature ad can sell your apartment?

Posted in Apartment Marketing, Blog, Imageless, Not A Property, Selling, Things To Know About Apartments.

Apartment Specialists Podcast No: 30

Summary:

Third on the series of questions of owners on “How Do I Sell My Apartments?” – aside from professional photography and putting the apartment in the best light possible, you’ve got to use feature ad. How important is it and How to Use a Feature Ad to Sell Your Auckland Apartment is a matter that we will dwell on thoroughly in this podcast.

TRANSCRIPTION:

Hi I’m Andrew Murray, Apartment Specialists. The third part and the question I get asked all the time is  “How do I sell my apartment?” Online presence, as I say it each time, is so important to sell your Auckland apartment. So, A. You’ve got to have professional photography; B. The professional photography has to be putting the apartment in the best light; and C. You got to have a feature ad. Now what I mean by that is you pay another $69 on Trade Me. And now that is virtually nothing. And it means that when your apartment is searched for – after those first couple of weeks when it is further down to list – it comes up a lot higher.  So it is an absolute must.

It is kind of like – if you don’t have a feature ad – your apartment is going straight to video. As in it is not in the cinemas. No one really knows about it. And the common saying in real estate is that you can’t sell a secret. So I will go straight to the point. What I’ve done is, I have actually got two apartments here that are in the same building. Very similar but one is slightly superior to the other. The slightly superior one is already under contract and it’s gone unconditional – I just put it up on Trade Me just purely to show this. And you will see what I mean.

So we’ve got the first one. It is bigger than most. And you can see both. If you look through – both professional photography, both the same complexes – but one is a feature and one is not. So let’s go back to the first one. The photos look great. Now this is a tenanted apartment which you’re seeing. We did a lot of work with the tenants and they let us come in. Look around their things. All that kind of thing in order to stage the apartment, it came up great. I won’t go through all the photos and bore you. Anyway, let’s go to the other one. They were basically put up right after each other so exactly the same time, yesterday morning. Let me look at this one. You see this is a superior one, looking fantastic. This one has got a view.

I prefer this one to the other one. Now, this is the one that is actually already sold. Look at it. Let’s look at the views on them both. First one, 374 views. Still very good probably because of the presentation of the photos and it looks really good. Now, second one, 1122. That just says it all. If Trade Me charge $600 to make a feature ad, I would still recommend it purely on those numbers as it’s huge. Thank you for listening to this.

Now I hope you understand how important your online presence is. There’s a lot more factors that go into it, but these are the basic three things. Professional photography of the Auckland apartment in its best light, and it being a feature ad. Thank you.

Cheers!

staging auckland apartment look absolute best online

Staging your apartment to look its absolute best online

Posted in Apartment Marketing, Blog, Imageless, Not A Property, Property Value, Selling, Things To Know About Apartments.

SUMMARY:

Staging is an important part of your marketing campaign. Having stagers come in to your property prior to photos will ensure your apartment looks at its best for the photos that go online.

We understand that often you are selling a property that may be tenanted and with it not being their own place the furnishings often don’t fit certain areas or the aesthetically it may need freshening up.

We offer this as a free service and come in and clean, tidy and present it to a high standard. For further information, contact Apartment Specialists and we will be happy to help.

TRANSCRIPTION:

Andrew Murray, Apartment Specialists. “How do I sell my apartment?” The question I get asked most often.

Now, it is all about having your apartment looking its absolute best online. So that is about using professional photography. And what I’m taking about today is  not about you just paying for professional photography – it is having your Auckland apartment looking in its best light before the photographer gets there because otherwise it is a waste of time.

So, looking at the list of things that I’ve just come up in the last two days – rather than comparing my own and all that kind of thing – I wanted to look at two apartments that are very similar and can actually be really compared. So again here, you’ve got one in Harvard and one in Zest. They are investor apartments. They are the ones that a lot of people have difficulty with with tenants.

And now that is not an excuse. You can create a relationship with a tenant. And you will see that, as in regards to the results of professional photography. So both have used professional photography here.

Freehold, two bedrooms, the apartment in Harvard. Eleven photos. Two bedrooms, one bathroom. Two bedrooms, one bathroom. Both exactly the same size. Very similar. Both listed at exactly the same time. So you’ve got here, Freehold, two bedroom apartment, and the photography- it’s professional photography. I mean, the appearance could look better but it doesn’t look bad. It’s showing the apartment in good light. And how many views has it got? 396.

Now, we then look at Zest which is very similar. Professional photography as you can see by the wide angle lens. But the presentation is shocking to be honest. I mean, if you were an owner, would you want your apartment to look like that? If you are a buyer, what are you thinking? And this is an example where it just doesn’t create the same amount of enquiries.

So, it is about creating relationships with the tenants. It is coming in and lightly staging with them – and actually talking with them – and that’s a whole conversation in another process. But it is the result that counts. So professional photography is a must. But you are wasting your money if you are taking professional photography of something that does not look good.

So, I guess that is the point that I want to get through today. And you had probably see in the views 286. So from 286 to – how many were there before? Very quickly, my apologies. So, probably about 30% more views. So that’s 30% more buyers looking at your apartment.

Thank you for that, I will be now commenting on the third part of this question, Is it a feature or not a feature?

Cheers!

myth 6 auckland apartment specialist agents get paid

Myth #6: All Auckland Apartment Specialist Agents Get Paid the Same

Posted in Apartment Marketing, Blog, Imageless, Not A Property, Selling, Things To Know About Apartments, Value Updates.

Apartment Specialists Podcast No: 23

Summary:

Is this true – Not all agents get paid the same? Well, we will discuss more about this myth on this podcast.

TRANSCRIPTION:

Good day. Andrew Murray, Apartment Specialists talking about the Auckland apartment market.

This is an interesting one –  Not all agents get paid the same. That’s quite a myth. You would think real estate agents all get the same – the owner pays a commission, they get their cut. This is actually not the case. A real estate agent is judged by their agency according to how much commission they bring into the company. Not if they get highest prices, not if they do the best job but how much money they bring into the company. What happens is the more money they bring in, they get a higher percentage of that commission. So what happens is, if a vendor pays $10,000 dollars towards an agent. If they are a beginner agent, they’re probably going to get most likely about 50% of the commission. So 50% of $10,000 –  if they list and sell a property goes to the agency – and 50% goes to the agent. Now, as an agent brings in more commission, their percentage will change.

A top agent may get 70% to 80% of their commission. This has quite a few implications because if you go through – if the lead comes through a company – as in the agency – the boss will more likely put that lead to where they’re going to receive the most money. When you think about it, if the agency is going to get $5000 off one deal and $2000 if they direct it to a more experienced agent, they’re going to give it to the least experienced because they’re going to make more money. There’s a bit of a conflict there.

So always, never choose the agency. Choose the agent. Also, when you’re choosing your agent, always ask for the history of the sales and how they stacked up. Because in the Auckland apartment market ,you can’t really tell who’s getting the highest prices unless if you ask them to show you their previous sales and how they stacked up – how they ranked -and the building they were sold in. They’ll tell you if you’re dealing with the agent you want to deal with.

Just a recap – Not all agents get paid the same. So never go through an agency. Call up the agency and go – I’m looking for an agent to represent me – because you’re most likely not going to get directed to the one that’s best for you. You are going to get directed to the one that’s on the lowest cut. I hope that helps.

Next week, I’ll be talking about sole agencies and what happens when you want to get out of one. How is this dealt within the Auckland apartment market? Do they let you out of a sole agency?

Anyway, thank you.

Cheers!

myth 5 agents able close deal auckland apartment sales

Myth #5: All Agents are Able to Sell Apartments in the Auckland Apartment Market

Posted in Apartment Marketing, Blog, Imageless, Not A Property, Property Value, Selling, Things To Know About Apartments, Value Updates.

Apartment Specialists Podcast No: 22

Summary:

In this podcast, we will talk about the common methods used by agents when selling Auckland properties and the policies they follow.

TRANSCRIPTION:

Andrew Murray, Apartment Specialists. Myth: All agents are able to sell your apartment.

Now in the Auckland apartment market, there are over a hundred apartment specialists. Now, unlike the housing market, these specialists represent all different demographics – different cultures, buyers that don’t go to newspapers, don’t go through Trade Me and only buy through particular agents because of relationships – and that I mentioned earlier.

When selling your apartment, an agent will nearly always say, “Yes, I do sales with other agents.” But the simple fact of the matter is, they don’t. You’ve got one of the major agencies – it’s their policy to not let other agents from other agencies actually bring an offer. I have actually called them and sent emails saying, “I will give you a listing price. I’ve got a buyer from overseas who’s going to pay really good money and give you a listing price for your apartment.”

And I get a response back saying, “Sorry. It’s not our policy to sell to other agents or give you a referral fee.” At the end of the day, every agent is out there doing a living. It’s a job for a reason. This is not doing what’s best for the vendor – now that’s an extreme.

Then you have the majority of the agencies in the Auckland apartment market which do conjunctional sales. So they will let another agent from another agency through the apartment. But the thing that they don’t tell you is – they will restrict the commission and that ranges from 20% or 30% or 40%.

So for example – if I have a buyer who’s going to pay top dollar for an apartment that’s been listed by another agency, I’ll ring them up and I’ll go, “Can I take a buyer through and will you do a conjunctional sale? They’ll say yes – they may only give me 30% of the commission.

Now if you ask yourself, if an agent has a really good buyer who’s going to pay top dollar – and that agent is trying to make a living, are they going to direct their buyer to a property where they’re going to get paid less or where they’re going to get paid freely?

So the key question is, when you’re choosing an agent to represent you, ask them not only do they do conjunctional sales – which is very important – but do they share the commission fairly and evenly?

Actually put a clause in that agency agreement saying, “That you, the agent, will share the commission after expenses, 50-50, with another agent from an other agency”. And you actually put that in your ad. What that does is – it means that you’ve got a whole market looking for you – which ensures that you get the highest price for your Auckland apartment.

Now I hope that’s been helpful – quite an insight. It’s hard to know what’s going on in the real estate industry unless you’re in it. Hopefully that’s given you a little bit more.

Next week, I’m going to talk about something that very few people are aware of. All apartment agents get paid differently, even if they’re in the same agency. And there are reasons for that. And that also has implications for you being a vendor.

Anyway, I’ll talk about that next week and talk soon.

Cheers!.

myth about urgent sales

Myth #4: Urgent Sales Require Underselling Your Auckland Apartment

Posted in Apartment Marketing, Blog, Buying, Imageless, Not A Property, Property Value, Things To Know About Apartments, Value Updates. 1 Comment

Apartment Specialists Podcast No: 21

Summary:

Are urgent sales really that disastrous? Is it really true that  you are going to accept a low price if you sell your apartment urgently? Learn more from this podcast.

TRANSCRIPTION:

Andrew Murray, Apartment Specialists. You know, I get this question quite often – and a lot of owners think that – if I have to sell their property or their Auckland apartment really quickly, it means they’re going to have to accept a low price because of their contract. Now, unless you’ve got to sell it within days – which is very unlikely – generally a bank or whatever the situation is that’s making you have to sell it, we usually have how many months time. Now, this means you definitely don’t have to accept a lower price or lower than the market value.

The reason why I say that is, most of the activity that happens when you list an Auckland apartment happens in the first two weeks. You can see this by the amount of hits or the amount of views. For example, when you put an apartment in TradeMe, which is where most of your leads come from. Because with apartments – unlike houses – people search more on the internet than they do on the papers.

So the key thing there is to not panic and realize still – the fundamentals apply – which is presentation. So you’ve got to make sure that you take that week, to make sure that – say for example – what I do with an owner is, it takes me a week to make sure that I’ve got the apartment ready. All the information – I’ve got my sales pitch down, I’ve written the ad the best I can, I’ve got all the photos. So when it goes up on TradeMe, it’s got 12, 14, 15, 16 professional photos. Not putting up one photo and then adding them in five days time because it’s a rush. You’ve already missed the boat.

So the important thing for an owner to remember is you do not have to sell your – or undersell your apartment if you need an urgent sale unless you have to sell it in one or two days. And then what I’d do is I’d probably advise you to go to a trader and they can give you an unconditional offer very quickly. And I would gladly put you in touch with one and you won’t need to go through with a sales agent.

So I hope that gives you a little bit of justice. If you have to sell your Auckland apartment urgently, you don’t have to take that when it comes down to value. You’re just going to make sure you present your apartment properly. Do what you think is normal and just trust your agents to do a good job. And make sure that they explain it to you. And make sure that you follow how they market your property. It might take that time.

All right, next week we’re going to talk about another one. When an agent says that any other agent can sell your property. It’s a bit of a myth in this industry because it doesn’t actually happen. And I’ll explain to you why. Talk to you soon.

Cheers. Bye!

agents get paid the in selling auckland apartments

Myth #1: Agents Get Paid the Same However they Sell Auckland Apartments

Posted in Apartment Marketing, Blog, Imageless, Not A Property, Property Value, Selling, Things To Know About Apartments, Value Updates. 1 Comment

Apartment Specialists Podcast No: 18

Summary:

In this podcast, I’ll be talking about myths that you will commonly encounter in the Auckland apartment market and the whole real estate market in New Zealand.

TRANSCRIPTION:

Andrew Murray, Apartment Specialists. Today we’re going to be talking about myths. What you do not know about what happens in the Auckland apartment market, as well as the real estate market through the whole of New Zealand.

Now myth number one’s quite an interesting one. I would be very surprised if many people are aware of this. But the myth is, real estate agents get paid the same amount whether they sell Auckland apartments via auction or by price or by tender. Now that’s a myth. That’s not the case.

Agents get paid more to auction your property. What happens is an agency gives them 70% of the commission on offer to the listing agent. And then they only offer 30% to the agent who finds the buyer. That’s because an agency wants as many auctions. And I’ll be talking about that in the next podcast, the reasons why an agency wants more auctions.

Now specifically what does that mean? A listing agent gets paid more if they list a property by auction than with a price? Now, that’s actually a bit of conflict of interest because it means there’s an incentive to sell an open apartment or house by auction. Now to me it doesn’t swing. You’ve got to ask yourself – three years ago in the housing market, why there was still auctions when we all know that was the worst way to sale? There was no demand. And in the apartment market, why are there so many auctions? Auctions for leasehold properties when there are no buyers? And then it is just passed in again and again. And if there was a good buyer, they’ll only have to pay just above the other buyer who was most likely a trader or somebody who was just speculating.

Why does it have this effect? So what happens is, the listing agent gets paid more when they list it and they’re going to get 30% when they find a buyer. So what happens is, other agents who have a really good buyer – it’s all about paying the bills. That’s what agents do. You’ve got to think about it as your own job.

If you’re going to have a good buyer that’s going to buy property, are you going to direct it towards a property that you’re going to get 30% of the commission? Or are you going to direct it towards a property where you’re going to get more commission, or paid more? I mean that answers the question itself. And because of this, the IRA just come up with a new legislation to make sure that every agent – when they auction – actually declare that to the owner. Now whether that’s happening or not, I don’t know. That’s myth number one. A bit of a biggy and something you need to be aware of. And actually ask your agent who’s representing you, if they haven’t already told you that. Because they’re supposed to. Thank you.

Next week, we’re going to be talking about myth number two, and that is why do agencies want auctions?

Cool. Thanks.