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.
This is probably one of the first questions you ask yourself when you make the decision to sell. You want to know how long it can be until you make the sale to have the money to do what you need to do.
In this quick video, find out what the average rate is for selling freehold, leasehold, and high-end apartments.
On average freehold apartments take 30 days to sell and 3 weeks to settle. Leasehold usually takes double that time.
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. If you sell during this time, it can cost you anywhere from $20,000-$50,000.
In this quick video, Andrew Murray at Apartment Specialists tells us exactly when to avoid a campaign to sell your apartment and why! Listen in to find out when the sweet spot is to get your apartment on the market. Apartment Specialists knows… that’s why we’re the specialists.
Apartments are different to houses and can be sold most times of the year, we recommend the only time you avoid is December through to early January.
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.
What do you need to know in order to get the best deals when buying apartments off the plans? In this podcast, Andrew Murray will explain the intricacies of buying and selling off the plan, how units are priced and the steps you need to take to get the best deals. Watch this video to know all the details.
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?
This is the third part of my podcast regarding auction and I will go in-depth on the Auckland Apartment market. Get all the details on this podcast.
Andrew Murray, Apartment Specialists. Today we’re talking about why auction isn’t having the same success in the Auckland Apartment CBD market as in the housing market and it’s due to emotions.
Now, buying a house is so much more emotional than buying an apartment. Now for starters, around 70% of all apartment owners don’t live in their apartments. Hence, a huge proportion, probably 50%, 60% of purchasers are investors. So they’re not emotional purchases. What happens is it’s harder to find emotional purchasers and we all know at an auction – we’ve all paid too much for something and why did we? It was because the emotions kicked in, not the logic. And that’s what you need to happen at an auction. So trying to find emotional buyers, as I see it, is more difficult. And for an auction to work, you need two or three, preferably three emotional buyers. And it’s difficult, and it’s why auctions don’t have the same effect.
Look at it this way, an apartment – also on top of that – is more often a stepping stone as housing prices are increasingly so far beyond this generation’s means. That if they do have a house and they are looking to invest, they’re going to apartments because they’re lower in price than a house.
So that’s a few indicators. An auction needs emotion to really work. And when you’re selling apartments, it’s easy to find one emotional buyer and get the maximum you can from him, than find two or three. That’s why so many auctions get passed up, that’s why so many auctions are left with one purchaser who would have paid a lot more but got a bargain because the other purchaser was an investor. And this was all about the numbers. I hope this helps.
Next time were going to be talking about some myths. Basically about things that I find the general public just don’t know about the real estate industry. I think you’ll find this really really intriguing.
This is the second part of my podcast and we will discuss more why auction in the Auckland apartment market is not achieving the same results as it is in the housing market.
Andrew Murray, Apartment Specialists. Today, we’re talking about why auction in the Auckland apartment market is not achieving the same results as it is in the housing market. And it’s quite simple. It’s supply and demand.
If you go to any suburb around Auckland and see how many listings are available, there will be 20, 30, 40, sometimes 10. Yet if you go to the apartment market, it’s always over 600. I think there was 611 this morning. We all know for auction to work, there has to be less supply than there is demand i.e., there has to be more buyers than there are sellers. That is the reason why auction is creating such frenzy around the Open City. I’ve got a good friend of mine. They’re a couple and they want to start their family. They’re panicking because there’s just so much competition. There’s so many emotional buyers wanting to purchase. That’s just a family home and there just aren’t enough listings out there.
Yet in the apartment market, it’s very different. Buyers aren’t as emotionally involved. Now, I’m not saying that auction doesn’t work. I’m saying that auction has its place. I’m saying it’s when there’s scarcity. So auction I think is a really good measure when you’ve got an apartment that’s very unique and obviously favourable. So you have a lot of people wanting it and they know that in a months’ time or two months’ time, there won’t be another one just popping up. That will create that emotional connection to the property, which will drive the prices up and that competition factor, which makes it work.
Now, I did have a few people from the last podcast that did go, Well, I did get a good price for mine, and that’s what I mean. It’s because your property was unique – and don’t get me wrong – sometimes you do achieve it – but I’m just saying, more likely than not, it’s not achieved through auction.
Look at the traders. These are people who buy apartments – most likely through real estate agents – and then sell them at a profit. Now, do they sell by auction? Nine times out of ten they don’t. That’s their business to get the highest price and they choose not to auction. I think that’s a pretty good indication of what’s working in the CBD because a trader in the housing market does sell by auction.
Anyway, What I want to leave you there is with – okay, let’s look at two scenarios. You’ve got a buyer who wants to buy your apartment. That is willing to pay 480,000. And you’ve got a buyer who’s willing to pay 420,000 for your apartment. Now, how much does the buyer have to pay – who would’ve paid up to 480,000. Only 421,000? 425,000? And that’s why in this market, I feel if you’re listing with a price and creating a multi-offer situation, it is far more effective. There is a lot of technique and skill that goes into how you list it with a price and how to achieve that maximum price. We can talk about that another time.
Anyway, next week we will talk about another reason why – giving you more education regarding why, auction isn’t as successful in the Auckland apartment market as it is in the housing market and hope you found this helpful.
Have you ever thought of a reason why an auction in the Auckland CBD is not achieving the price you’ve always wanted? I’ll discuss my points in this podcast.
Andrew Murray, Apartment Specialists. Why is an auction in the Auckland CBD in most cases, not achieving the highest price? Now, this is quite a big topic. So I’ll take it down to a couple of points and do a podcast for each one.
Now, the first one is: a bid at auction is unconditional. So that means there’s no conditions. You know that you bought it. Once that hammer goes down, you’ve bought it. So in this market buyers are very scared because of bad publicity because of the leaky building issues. And the amount of due diligence they want to do to make sure that they are making a safe purchase. This deters a lot of purchasers.
Also, the finance is very different. Unlike with a house, where you may get a pre-approval to a certain amount. A pre-approval with a bank will still require a valuation, every time, in most cases. And the big one is this, okay they may have given you a pre-approval but then when you find an apartment in a particular building, they may not give you finance because they’ve got too many – they’re linked to too many apartments in that building. So, they’re exposed to too much risk or they might just have problems with that building or just reasons that they won’t even tell you.
So, it’s a lot harder for someone to go and purchase at auction. You’ve got to be very, very confident. And if you look at it, I’ve heard of purchasers who wanted to do a building inspection, as well as a valuation.
So when you’re dealing with apartments that are not worth as much as houses and they’ve got to do all this due diligence, it’s very difficult for them to spend a thousand dollars on each one, looking into them. So that’s one of the reasons why auction is not achieving the same results as with houses.
Next week, I’m going to be talking about the supply issue and the difference between the apartment market and the housing market.