Time to read : 3 Minutes
Do You Really Need A Real Estate Agent?
Did you know there's no legal requirement to use a real estate agent to buy or sell property?
If you’re buying, the only person you need is a conveyancer (or property lawyer) to manage the legal transfer of title and, unless you have the available cash, a lender to help fund your purchase.
If you’re selling a property, using a real estate agent to help list, market and sell is considered ‘typical’. But it doesn’t have to be that way.
Before you consider other options, it’s important to understand what’s involved.
How much can you save without a real estate agent?
Real estate agents know the market and have an impressive contact list of prospective buyers.
They pitch your property at a great price and encourage competition between interested buyers that could see your sale price inflate – especially if you auction your property.
But … they do charge a commission. So weigh up the extra money you might get from the sale of your property against an agent's commission and other related fees (property styling, marketing, etc).
Tip: Use this online commission calculator to get a sense of what you might pay a real estate agent who helps sell your property.
Case study: The cost of commissions and marketing
If your suburb has an average fixed commission rate of 1.89% (the current average rate in Melbourne’s St Kilda, according to Open Finder), a selling price of $800,000 adds up to giving the agent who managed your sale a commission of $14,720. If your area’s typical commission is closer to the national average of around 2.5% of the selling price, then selling your home for $800,000 will mean handing over $20,000 (plus additional agreed payments that might have been involved in the marketing and advertising campaign, as well as any property styling needed for open inspections).
Real estate marketing expenses vary wildly depending on where you live. As a benchmark, expect to fork out between 1%–3%.
How much it costs to have your property professionally styled depends on the size and desired look of the property. For an average, more humble home, this could cost between $2000-$8000. With lots of rooms to fill and a luxe look to create, though, the sky really is the limit.
Checklist: How to sell your property without a real estate agent
advertise the property
negotiate the price
obtain a deposit
provide the contract of sale (with the support of professional conveyancing) and arrange for signing
handle settlement (again, with the support of a lawyer/conveyancer).
There are multiple brands that help sellers list their properties and look after the basics needed for a property sale.
A few worthy mentions are forsalebyowner, buymyplace and PropertyNow.
These sites enable you to list your property for under $1000, including photography, copywriting and a display board.
And there’s no commission paid on sale. All you’re really paying for is the basic marketing and online property listing on key real estate portals. The rest of the 'sell' is up to you.
The bottom line for sellers
Agents are obliged to act responsibly and ethically when dealing with buyers and sellers, with strict laws governing their licensing, authorisation and conduct.
When you sell without one, the responsibility is on you to present your property, meet people, negotiate, take calls and close the sale.
Yes, you may save tens of thousands in commissions but you may also spend hours (and perhaps weeks or even months) trying to find a buyer.
The bottom line for buyers
Simply letterbox dropping or door knocking at houses you have an eye on can return some positive results.
If the owner is ready to sell, and you feel comfortable with the price you want to offer, they may be keen to accept your offer and avoid their own real estate agent commission payment. And that might mean you get your hands on a bargain.
Go deeper: Is buying a block of land a good investment?
Financial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
