Cutting out the middle men: Real estate agents pros and cons


Employing a real estate agent to market your property can be a costly business, so why not just do it yourself? We look at the risks and rewards of both methods


When it comes to selling your property, the last thing you want to do is hand over a juicy percentage of your potential profit to a real estate agent.


But while many homeowners may be tempted to self-market instead of splash out on an agent, others argue that this is false economy.


“Fundamentally, [by hiring an agent] you’re retaining a professional,” says Grant Dearlove, managing director – residential, Colliers International. “Real

estate agents are trained in selling techniques, so you’re employing an advocate to sell your biggest investment.


“You want the best person, someone who’s trained and educated, and that education also extends to knowledge of the market. Agents are constantly assessing what’s happening in the market, what type of houses are selling, what the buyers are looking for.


“It’s a knowledge-based person that you’re retaining and a skilled, professional person.”


Agents also have an extensive database of potential buyers, giving them an instant captive market – and captive markets tend to pay more.


In addition, many agents also bring a brand, which can carry a lot of equity in terms of its integrity in the market – and this in turn attracts buyers. “Buyers know that if they deal with that brand or agent, they’re dealing with someone credible and reputable,” says Dearlove.


However, buyers who choose to blindly follow a brand could be making a mistake, according to Mark Leith from Global Buyers Agent. “Find the best agent, not the best agency,” he advises.

Money, money, money

The most painful aspect of selling a home is the additional fees involved. And, after stamp duty, agents’ fees can be the next most expensive outlay.


The amount real estate agents charge varies from agent to agent and state to state, as Dearlove explains: “In Queensland there’s a standard fee which works out to be about 2.5%, but in other states it’s negotiable, it’s a free market.


“The average fee, I’d say, across the board is about 2.5%, but it can get as high in certain areas as 5% and as low as 0.5%.


“It depends very much on the value of the house that’s being sold. If it’s a $10m house, 0.5% of $10m as a commission is probably a lot more than 2.5% of $300,000.


“It depends on a whole series of factors,” Dearlove adds.


However, Leith says, not all agents choose this method. “Some charge a flat fee of around $5,000, regardless of the sale price,” he says. “Additional costs [can] include picture boards, advertising and extra marketing.


”Search fees are another additional expense, though the cost of all of this depends on the package and the extent to which the owner wishes

to advertise in the major papers, on the web, and so on. Fees can range from $200 to $25,000, according to Dearlove.


He adds that agents have the edge here because of the deals they strike with the press, and it’s likely that DIY sellers will pay more.


“Real estate agents, because of the volume of advertising they place with the media, get discounts. If a person was doing it themselves, it would be a one-off transaction so they wouldn’t get that bulk discount,” Dearlove says.


Miserly approach

However, for some sellers, no amount of discount would be enough to convince them that the average 2.5% commission is worth it. Dearlove considers this a “miserly” approach to dealing with such a valuable asset.


“DIY is the wrong approach,” he says. “You really want to put a very important asset in the hands of a professional who has all the tools to make sure that the result is achieved. Don’t gamble with your most important asset.


”For people choosing to sell their property through an agent, the trust factor comes into play. Sometimes sellers are concerned that the agent hasn’t put the correct price on the property. “This is now regulated,” stresses Dearlove. “When an agent puts a price on a property they must do a comparable market price (CMP). They must give the person who’s selling at least three examples of properties in the same area of a similar quality and what they sold for – that’s absolute law now. “If the agent’s a good agent they’ll also use market research. As well as price increases and what properties have sold for in the area, they’ll talk about what’s happening from a micro- and macro-economic perspective,” Dearlove adds.


As for the issue of kickbacks, Leith stresses that this is illegal. “Agents aren’t allowed by law to get kickbacks, but from time to time you do hear about agents buying properties they’ve listed below market value.


”For sellers who are intent on going it alone, there are ways of calculating a fair asking price for your property. Leith recommends obtaining recent sale prices for the area and street from the website or similar. “For those on a budget, limited information is available through your local government department (eg for Tasmania visit It’s also a good idea to inspect other properties on the market that are comparable; this will give you further guidance to the value of the property,” he says.


Up for auction

Traditionally it was the case that only unique properties were auctioned,

but now people are beginning to choose an auction as their first preference, irrespective of the type of property.


Dearlove says that the reason for this increasing trend is that “there’s a much better chance of getting a quicker result at auction than by standard negotiation”.


“To leave your house on the market for three months may not be palatable, but to have an auction and it sell under the hammer inside of 30 days is a much better result,” he says.


An auction is a strategic selling tool to build demand and pressure – pressure on buyers to bid against each other in an open environment to drive the price up.


“A good agent will attract bidders and then work those bidders to pay as much as they can – sometimes more than they can afford – for the vendor’s interests,” he adds.


Going it alone is inevitably more complex, as you’ll need to organise an auctioneer (who has to be registered), have a significant marketing campaign and register the buyers.


“There’s quite a formal legal process as to how it’s conducted in terms of the disclosures that are made about the property,” says Dearlove. “It’s a technical process that really only an experienced agent knows how to do.


”As for the real estate agent stereotype of the slimy chancer who’s only interested in lining the pockets of his cheap suit, Dearlove couldn’t disagree more.


“I think there’s a perception out there, and it’s an ill-conceived perception. Now with the law the way it is and the continual training that the institutes provide, the quality of the agents is better than it’s ever been,” he says.

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  • JonasSmith says on 28/05/2014 04:19:59 PM

    A reliable blog always comes-up with new and exciting information and while reading I have feel that this blog is really have all those quality that characterize a blog to be a best one.

  • Jonas Smith says on 31/05/2014 05:35:47 PM

    You can also cut out lawyers as middle men when you need to defend yourself. However, I do not think that would be a wise decision..

  • Ricey says on 03/06/2014 01:40:25 PM

    Real estate has changed as a profession in terms of the professionalism and knowledge required to find buyers. In nearly all cases, my agents have told me 95% of their buyers come via the web. They do not front up to offices going on tours of like properties, and often arrange one-off inspections. Many have a relaxed hands-off approach at inspection time, which is desired by buyers, and so the window for them inserting their value over that of a property owner selling themselves, is very minor and not worth the fee charged. A lawyer is not a salesperson. A lawyer cannot step back from the process and let things progress. An agent, however, can have someone see an internet advert, arrange an inspection, and negotiate an offer. For some people, the negotiation is daunting. For others it is not, and it is the main area where an agent can show their skill. If you are a confident negotiator and not aggressive/emotional, you will be able to sell your house yourself. Personality traits will not be enough to allow you to replace your lawyer!

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