How much commission is charged when selling an apartment in Auckland? You should know what you are going to be left with after all the costs.
You also should know what’s most important to you, as an owner, to look for in an agent. We’ll bet it’s that they’ll maximise the amount of money you’ll be putting in your pocket. Just because the commission costs are higher it doesn’t mean you’ll be getting less when your apartment sells!
Get insight on what real estate agents in Auckland charge for commission and why, sometimes, it’s better to pay a little more commission to get a lot more value.
The commission charged when selling your apartment vary depending on your apartments value. You are charged 4% for a value up to $500,00, 2% for a value up to $1,000,000 and 1% upwards from $1,000,000 plus GST.
It is not always about the sales price you can achieve but rather you want to know how much you are going to be charged in commission and what you are going to left with after the sale has gone through.
Usually you will be charged around 4% for a property with a value up to 500,000. 2% for a property up to a $1,000,000 and 1% for properties sold for more than $1,000,000. This is plus GST unless you living outside of New Zealand and can prove your residency, then you won’t be charged GST.
There is however a minimum cost you will be charged and this applies to properties worth 3,000,000 and under.
These can vary across agencies and Apartment Specialists we charge $11,500 plus GST
When you sell a property below 300,000 there is a minimum fee, at Apartment Specialists ours is 11,000 plus GST (This is subject to change without notice).
However, it is more than just what your commission costs are going to be – you want to ensure the agent you have chosen is going to get the best possible deal for you. Asking your agent for their recent sales and what records prices they have achieved is a good idea to inform you with what price you may get.
We have an advantage in the apartment industry to help you realise your apartments worth as there are so many like for likes, for example the same apartment that has been sold in the building with the same specs and so on.
Planning on how long this process will take is an important aspect to consider when selling your property. We can’t say exactly but we can estimate due to averages that a freehold property takes around 30 days to sell including the campaign and then another 3 weeks to settle from there.
Leasehold properties are different, and typically take double the time to sell (around 60 days) but the same time for settlement, 3 weeks.
Bearing in mind that if your property is tenanted (Periodic) in both situations you are legally obligated to give them 42 days notice in writing if a purchaser prefers vacant possession.
If you’re looking to sell your apartment in Auckland, although there’s no real ‘right’ time there is definitely a period you want to avoid which. we recommend the only time you avoid is December through to early January. If you sell during this time, it can cost you anywhere from $20,000-$50,000.
Selling at the wrong time can end up costing you more than you may have anticipated. However, apartments are very different to houses and most of the year is a good time.
However, the only time to avoid would be the December, early January period – the holiday period, this is due to a lot of events happening in people’s lives, end of deadlines, holidays, family commitments and so on.
By the square metre and different floors from the bottom to the top may very due to views and so on.
The units are priced by a set amount per square metre. The metre will be decided on level of the builder so the higher you go are usually more expensive.
This is predetermined by the developers prior to start of the construction.
Being careful of digital imagery and the photos advertised are of the correct level and views and so on. The marketing companies often don’t put the correct photos of the apartment advertised.
Good day, Andrew Murray here from Apartment Specialist, talking about buying off the plans and how they price the units. As you can see here, you’ve got a building that just came up today on TradeMe and in the papers.
You can see you’ve got three arrows there. You have got 8,000 meters squared, you’ve got $10000 per meter squared, and you’ve got $12000 per meter squared.
Basically, when a development comes out, they have to do this and it is rough numbers, they are also changing it a bit. They have to consider everything because of the cost to build, but on average, a developer to make money has to average selling all their apartments on a development at 10,000 per meter squared. So, that means they sell ones up the top for a lot more and the ones down the bottom, which attract the buyers in. These units are not as favourable, and won’t have the views or are facing south for a lower price, or otherwise they couldn’t sell them.
We go to straight to TradeMe here, and this is a really good example that shows you how to do it.
What they do is they first introduce you by coming in. First of all, you can see that it is listed today. SKHY High Apartments and this is Newton. This is in the fringe. You can see here they come in and go, “Okay, it has spectacular views.” They will have the same pictures, every single one. This will be the penthouse, no doubt. If you divide 74 meters squared into 615,000, you are left with 7,600 dollars per square meter.
Now, that is extremely cheap. That seems very attractive, but if you go back to this picture, they are going to be the ones that nobody wants. Some of that attracts you to go and inquire and find out about it, because it looks like a fantastic deal. Which is very smart in my opinion. Just understand this, then if you go back to some of the high end listings.
I’ve actually priced it here, which is not normally what they do. If you go this one say, three bedrooms, two bathrooms, you’ve got 175 meters squared. It’s for $2 million and $65,000. If you divide 175 into the $2 million figure you get round it down to four. For $11,000, sorry – its for $11,800 per square meter, right?
You can see the per square meter value is creeping up. And in all of these, there are no car parks. You can see how they are doing it. Same here, this one is more and that has got a few square meters, it comes out as $11,600 per square meter. Obviously, close to that $12000 figure I was talking about.
Then we go down. We look at another three bedroom. But that is price by negotiation and one’s similar to before. Here, oh this one’s a lot cheaper. Okay, there’s a different square meterage rate, but if you divide 152 meters squared into $1.3 million, you get $8600 per square meter. Again, this will be a unit that’s not as favourable. It’s without the views. If you look, they still all have the same photos, as if it is the penthouse.
That is how they market, so be very aware of when you are looking at all these listings on Trade Me, Realestate.co.nz or in the newspaper. The prices they show are just a marketing tool. Otherwise, there is nothing wrong with buying off the plans.
I think if you look at these apartments, I actually think they are really good, and the reason why. I’ll just bring it up again and I think I deleted it. I can bring up one of these photo’s and make it larger and its because they’ve got, what it looks like here they have got views. The company built out, they are large sizes, which is the key.
A lot of these developers are coming up with very small apartments. You know, one bedroom around 40 square meters and things like that. Charging huge money for them, when really it’s just not there in the future, in my opinion.
But yeah, just be aware of when you are looking at all this stuff on Trade Me and realestate.co.nz. While you are actually looking at in most cases, you are looking at prices to attract you in and then up-sell you up.
Anyway, I hope this helped. Andrew Murray from Apartment Specialists and this is all about selling off the plan prices.
I go in-depth about auction in this particular podcast so you will know what to expect when you’re dealing with an agent. This is another myth that you know about.
Andrew Murray, Apartment Specialists. This is quite a big one. When auctioning your property, only you and the agent have an idea what your reserve is. Now, that is a myth and it shouldn’t be a myth.
Now, I’ll explain to you – I’ve been in two major offices in the open CBD Market for starting my own company. Basically, both did their auctions in the same way. So, what would happen was, you’d have a meeting – you’d have your sales meeting – and those who were auctioning the properties would introduce their property. They’ll ask everybody not what it’s worth, but what would the reserve need to be to guarantee it to sell. And then, the agents would set out the price. Say, that’s worth 200. Say, to guarantee it to sell, it would need to be 180,000. And if it was a 500,000 property, to guarantee it to sell, it needs to be $440,000. Then it would be the agent’s objective to go and try to get that reserve.
The next week in another sales meeting, the agent will report back – different sales meetings or in different agencies at different trends are the ones that I saw – some would go, “What’s reserved?” or “It’s A plus-plus”, which means it’s better than you want it. Or, A-plus means it’s on the money or A, it’s pretty close. B-plus, it’s a little bit far away and B, yes there’s a bit of distance there. Other ones would be going like, “Yes, that’s exactly where you wanted it guys. Go get your buyers” and it’s going to the auction.
Now, it didn’t really sit right with me but that’s sort of how it’s done in the Auckland apartment market when it comes to auction. And what would happen was a whole mentality: that by telling an owner that everybody knows your reserve and knows it’s a low reserve, that’s going to bring in more buyers – it’s going to bring in more competition. Now I disagree with that because it’s bringing in buyers that want a bargain. They’re bringing in buyers who don’t want to pay retail. And so, that’s not the kind of competition you want. Yes, there is an argument that it does make the base of the auction and it can help in that way. But what it does is – it means that your apartment could sell for less than you really want to or what it should be selling for.
So, how to stop this or make sure this doesn’t occur is, why even get the reserves prior to the auction? Why not keep it in your head and you and your partners head? And if the auction gets to the price you wanted to, well then let it sell. If it doesn’t then go from there. Because if you think – put your mind in a bidder or in a buyers mind – you’re bidding for an Auckland apartment – and they already got in mind what they want to pay. If it is a good auction and the other buyer is also emotional – you got two emotional buyers and they’re pushing the prices up. You will at least know that it’s met the reserve. If anything is going to make the buyer say, “Oh, that must be market value” or “That must be what owner wants. I don’t want to go too much higher.” So how is actually giving the reserve to the buyers an advantage to the vendor? I don’t see the logic – maybe there’s a side that sees it, but if they do please write in a comment or tell me.
That’s a myth. So, when you’re auctioning your property, if you do choose to auction it as a property that is suitable, i.e. not an investor apartment where emotions involved, don’t disclose it. You don’t have to; keep it in in your head. Then, you can make the best decision for you.
I hope that’s helpful. Next month – I’m sorry next week – I’m going to talk about an interesting question. One that you probably wouldn’t expect from me. What’s my opinion on private sales? If you don’t want to use a real estate agent – because a lot of people have had bad experiences with them- how do you sell it privately? And I’ll just do a quick podcast on that.
We will tackle why owners of agencies incentivise auctions and why they do this sort of thing. Get the facts straight from this podcast.
Andrew Murray, Apartment Specialists. Myth number two. Agencies incentivise auctions because it is in the best interest of the owners.
In my own opinion, that is a complete myth and from my experience it has been a complete myth. Owners of agencies incentivise auctions because it’s in the best interest of the agency.
They do that for three reasons.
Because an agency is like any company, it needs to predict next month’s income. And the best way of doing that is through auction – because auctions are more likely to sell. The reason is because of the pressure of an auction – the amount of money spent on the advertising. The owners go all in. They’re not going to that point and go “Oh, we’re going to spend that $4-5,000 again”. So for an owner, they can predict and look okay we’ve got 10 options next month, that means on average we sell 90% of all our options. So that means there’s nine sales right there.
Now at the moment, in the housing market, they’re in line. In my opinion, in the housing market, if I had a house, I’ll sell it by auction because that is the best way to sell at the moment. Currently, because there is a lack of supply of listings and there are more buyers. They’re emotional buyers so there are more. But if you looked at it three years ago, it would be the worst way to sell your house because we all know what was happening. There was nobody around to buy. It was a crash – it was a financial crisis.
Now if you look at apartments, where there is a huge amount of supply – over 611 apartments currently. Well, why are auctions being used if they aren’t having the same result in the housing market? Why are they being used to sell lease-hold property when there aren’t any buyers? It’s because the owners incentivise them. They’re giving their agents more commission or more commission goes to a listing agent. Then the agent finds a buyer because it’s selling by auction. The other reason why agencies want auctions is because all the advertising of the publicity, that’s half ego and it’s half because it kind of works. The more publicity you have, the more market share it appears you have. And so other owners are more likely to go to that agent or agency because of the advertising.
So I hope that’s really given you a different point of view of how auctions are being used. In my opinion, why there are so many auctions in the apartment market, where especially in buildings where they are lease-hold buildings. You don’t have owner-occupiers purchasing them. It’s all about the numbers – there isn’t the emotion and continually- again and again -I’m not getting the best prices, listening to the prices, yet auction is chosen again and again.
Okay, next week we are going to talk about something completely different – rental companies. Being that 70% of the Auckland apartment market is rented, it’s a pretty big topic. The myth is that all rental companies are equal.
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.
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?
In this podcast, I’ll be discussing the reasons why most apartment owners lose thousands of dollars when they sell their apartment. Find out how you can avoid this situation and get the value you deserve. Learn all the essential strategies for any Auckland apartment sales.
TRANSCRIPTION: Andrew Murray, Apartment Specialists, Number Ten from the reasons why apartment owners lose thousands of dollars when selling their Auckland apartment. Is it the agent or the agency (Who Gets the Highest Price for Your Auckland Apartment)? Now, as an agent myself, I clearly know the answer to this one. I wanted to find out what apartment owners think. So I rang about 20 owners and talked to them about their apartments – all that kinds of things – and their plans for the future. And to each one, I asked them one question: In dealing with or when selling your apartment, what’s the most important? Is it the agent or is it the agency? And every single one said the agent. Which is interesting because there’s so much branding, so much advertising out there, for what? An agency. Yet every owner I spoke to said, it’s the agent that is most important.
And there’s quite a few reasons for that. Because, if you know the statistics, the same agents more often get the highest prices. Yes, an agent can be lucky here and there, but it seems to repeat itself. Also, if you look at the average wage of a real-estate agent being under $35-40,000 a year – realistically – I’d say it’s more like 50 or 60, but those are official statistics – that means probably about 5 to 10% of all the agents are selling all the properties. It actually says again that’s why – or it says it quite simply that the agent is more important than the agency when looking to get the the most value for your apartment.
So, that’s really important. So how do you find out if an agent is the best to represent you, or which one it is? It’s not “are they the top agent” because the top agent in this industry is judged by how much commission they’re bring in, not by the prices they get. In the housing market it’s very difficult to tell, because houses aren’t comparable. You can have houses in the same street, but how are you supposed to know the values, because they’re different. This one’s got a porch, this one doesn’t. This one’s got a pool, etc, etc. But in an apartment complex – you’ve got so many different apartments in CBD, over 18,000 apartments – they’re very comparable. So you can quite easily tell who is getting the highest prices.
So when you’re dealing with your Auckland Apartment agent, you want to ask them, can I see your last sales and how they make in the building that you sold them in? And that will give you a very clear indication of how good that agent is. And how focused they are in getting the best result for the vendor or commission in their pocket.
That is probably the final one, but the biggest and the simplest and the most unnoticed in this type of industry. I’ll say it again, the best agents are judged in this market by how much commission they bring in, not by the prices they get. So you as an owner really need to be aware of that when choosing your agent, and ask for evidence showing that it’s the values they achieve, and that’s the most important to you. I hope that helps and I hope these ten mistakes have been really, really helpful. I know we got a lot of good feedback for them, and a lot of people are listening, so thanks a lot. Cheers!
As agents we get to know the different types of buyers and building as well. This means we understand our target audiences. Every single building has a slightly different market and what makes us experts at Apartment Specialists is being in the know.
An example would be if we were selling in a building with high percentage of Chinese owner/occupiers. I would then to market the audience as well as dealing with local Chinese agents and buyers.
Andrew Murray, Apartment Specialists, number nine – Knowing your buyer.
Now, what do I mean by that? Well, it’s what we’re here to do. As real estate agents, what do we do? We sell and we market. And to sell or to get those people to sell to, we’ve got to attract them – which means we need to know the type of audience.
For example, if your apartment is going to be most likely sold to an investor – we’ve got to target investors, and vice-versa with owner occupiers. Otherwise, you’re most likely not going to get the best result. Yes, you could get lucky, but we’re talking about most likely. Because again and again and again, we’ve got to be getting the best result for our vendors – which means we’ve got to know our market. Every single building has a slightly different target market.
For example, I may be selling a building which is 40% Chinese. Well, I’m European. So, how am I going to market to the Chinese? Well, what I do is, I deal with about 20 different Chinese agents. I deal with Chinese buyers’ agents, and that’s just to give an example. Also, what if a building is popular with the French? Well, I’ll deal with the French buyers’ agents, and vice-versa. There’s a lot of different ways that we can market in this industry. And it’s about knowing the right one for our vendor’s apartment.
So ask your agent, what is the target market? How are you going to reach them? And how is that going to maximise the amount of enquiries and leads created? That is a huge, huge point that determinants how much will you get for your apartment.
Anyway, hope this helps and I will talk to you soon with the other theme.