Appraisal vs Valuation
A real estate agent can provide a seller or a curious owner with an appraisal of their property. An appriasal by an agent will be based on the real estate agent’s local knowledge and expertise, market research and analysis of comparable past sales and current market trends. Whilst an appraisal provided by an agent can be used as a price guide, it has no formal standing.
A formal property valuation, can only be carried out by a licensed valuer, who will charge the property owner a fee. The valuer will provide the seller or property owner with a detailed property report. This report can then be used to support any formal finance applications made by a buyer or seller.
The importance of decluttering a home
First and foremost, a seller (vendor) wants any potential buyer to picture themselves living in the property. If the vendors home is scattered with personal items such as family photos, Christmas decorations, children’s toys or cluttered with oversized or excess furniture, this can negatively impact a buyer’s first impression.
A buyer will want to know that their furniture will fit into the home they buy. Many people cannot visualise a space, so decluttering will open up each room and help the home appear larger and lighter. If a vendor is unsure about what they need to do, a chat with PRESCOTT real estate will guide vendors on presenting the home for sale in the best possible way.
What is the role of real estate agent?
If a vendor lists a property for sale with a professional agent, they are engaging that qualified and licenced agent to help sell their property.
The agent must act in a vendors best interests, including following their lawful instructions and engaging in good estate agency practice.
The agent will charge the vendor a fee for this service, usually in the form of a commission. The commission is negotiable and can either be a percentage of the sale price, a fixed fee or a combination of both. A vendor can also expect to pay an additional cost for advertising associated with marketing your property.
A vendor can expect the agent to:
advise about a method of sale
provide a marketing plan and market the property
give an estimated selling price or price range
advertise an up-to-date price for the property reflecting rejected offers or changed market conditions (although it is not compulsory for a price to be advertised eg. Auctions, Expressions of Interest)
communicate all verbal and written offers from prospective buyers
organise and attend open house and other inspections
organise and conduct an auction, if applicable
arrange the signing of the contract
receive and hold the full deposit.
Laws govern the licensing and conduct of agents. These laws prohibit unethical practices such as misrepresentations about property including the price, location, size and bogus or false bidding at auctions.
What is a Residential Sales Agency Agreement?
Once a vendor chooses an agent, they will be asked to sign an agreement appointing that agent to sell the property. This is a legally binding contract, which fully sets out the details of the agreement with the agent, including:
whether the property is to be sold by private sale or auction (and the auction date)
the negotiated commission and marketing expenses with GST set out separately
the circumstances under which commission is payable; this will depend upon the type of authority signed, whether it is an ‘exclusive’ or ‘general’ authority
the agent’s estimation of the likely selling price or selling range
the authority period or amount of time given to the agency to sell the property.
Who really pays commission costs?
Commission is the professional fee a Real Estate Agent charges the vendor.
If an agent does not achieve a sale, commonly the vendor does not pay the professional fee. (Apart from the agreed marketing costs)
It is actually the buyer who provides the funding to the vendor to pay the agent’s professional fee/commission, as the transfer of the fee occurs at property settlement.
Many agents modify their commission, if the sale price is not achieved, or the sale price is not achieved within a nominated time period within the conditions of the sales agreement.
How much commission should a vendor expect to pay?
In South Australia, unlike other professionals there is no professional fee/commission amount set by law.
You are free to negotiate with the real estate agent regarding their sales commission, marketing fees or any other expenses that you may be required to pay.
As a guide, real estate commissions in South Australia generally range from 1.5% to 2.5% in metropolitan areas, and between 2.5% to 3% in regional and rural South Australia.
Just remember the old adage, you get what you pay for…..an experienced negotiator may charge a higher commission but they generally deliver a higher sale price for the vendor or an acceptable sale price for the vendor in a shorter period of time.
Media watch discusses one of the new companies claiming that vendors ‘pay no commission’
Click Media Watch
What is the budget for marketing costs?
There are many different methods a real estate agent can choose to raise the profile of a home they are selling. Marketing methods can include: advertising on the internet, using social media, property signage, letterbox drops, holding open for inspections, promotional flyers, newspaper advertising and more.
A marketing campaign will be agreed between the agent and the property owner. PRESCOTT real estate tailors the marketing specifically to meet vendor needs.
Any marketing costs are payable by the vendor and constitute a separate expense to any sales commission that is payable to the agent. Marketing costs are payable by the vendor irrespective of whether or not the property is sold.
Again, the old adage is relevant for vendors to consider…you get what you pay for… An old marketing rule of thumb is the marketing expenditure is about 1% of the total value of the advertised price. Therefore on a $500,000 home, the marketing expenditure would be $5000 using this rule of thumb. PRESCOTT real estate aims to keep marketing costs to those necessary to provide the best return on investment. Please ask about our set price base marketing package and the upgrade options available.