I made a career spotting dodgy real estate agents… here are five ‘red flags’ every Aussie needs to know
A vendor’s advocate has shared the biggest ‘red flags’ to look out for when engaging a real estate agent to sell your home.
Australia has long been among the world’s most expensive countries for buying a home, but Aussies are also paying an exorbitant amount of money to sell them.
Many costs go into selling a home, from conveyancing to mortgage discharge fees, but agents fees tend to make up the single biggest cost.
Finding the right agent can mean the difference between a profitable sale or a bust, making it crucial to invest time in finding the right salesperson.
Alec Jenman from vendor advocacy service Jenman Support told the Daily Mail there are five key signs to watch out for when deciding whether an agent is right for you.
Discounted commissions
As appealing as it may seem, Mr Jenman said to be wary of real estate agents who offer to drop their commission without good reason.
‘Interviewing an agent is your first opportunity to see how they negotiate,’ Mr Jenman said.
Homeowners should be wary of real estate agents who are too willing to compromise on their commission (stock)
‘When you question them on their fee or ask them for a discount, many agents drop their fee instantly.’
Most estate agents charge between two and three per cent of the final sale price in commission. This works out to about $20,000 to $30,000 for a $1million home.
Given a single percentage point difference can mean tens of thousands in savings, it’s natural most homeowners would want to press for a discount.
But the way an agent negotiates over their fees can say a lot about their ability to secure a competitive offer on your home.
‘If they give their money away under just a moment of pressure, what do you think they’ll do when it comes to your money?’ he said.
Hidden marketing fees
Australian homeowners pay the most expensive advertising fees in the world to list their properties online – often costing thousands for a single ad.
However, less attention is given to the countless additional costs agents include in their marketing bills – costs that can add up fast.
Among the more troubling examples he has seen recently are a $300 administrative fee, $200 translation fee, $150 copywriting fee and a $300 floor plan fees.
Agents fees make up the single biggest average cost when selling a home (stock)
Asked for the most egregious example, Mr Jenman cited a $900 auctioneer fee he said a homeowner was on the hook for regardless of whether an auction took place.
‘Knowing that the owner is only concerned with the overwhelming (and highly unnecessary) costs of online marketing, many agents sneak countless costs into their bills that stack up fast,’ he said.
Unreliable reviews
Reviews are a valuable way to gauge whether an agent is right for you – but not all endorsements should be treated equally.
While there is no substitute for word-of-mouth, Mr Jenman said Google reviews are better than alternative sites made ‘by and for’ agents.
Some sites make it ‘nearly impossible to leave a negative review’, he added.
Third party marketing financing
Any real estate agent who offers to engage a third-party to help a homeowner pay marketing costs should be treated with suspicion, Mr Jenman said.
Australian homeowners pay among the highest advertising costs in the world
He said agents typically offer to engage a third-party lender after a seller takes issue with the costs of an agent’s marketing plan.
The lender will pay the agent’s marketing bill and later charge the homeowner the entire cost plus interest – typically around seven per cent per annum, he said.
While there’s nothing wrong the practice in theory, Mr Jenman said agents will often give the impression an owner will only have to pay the lender at the point of sale.
‘They pitch it as a “pay later” option, giving the impression that you only need to pay at the time of sale, which is not true.’
Upfront marketing fees
Agents will typically require homeowners to pay the full costs of marketing their home regardless of whether a sale is achieved.
While this is common practice in the industry, Mr Jenman said it creates an imbalance in the agent relationship – one that means they can never entirely lose out.
‘As a home seller, you go to an agent to sell your home. If your home doesn’t sell, you gain nothing,’ Mr Jenman said.
‘Yet, if your home doesn’t sell, the agent still has plenty to gain.
‘They gain lots of buyer leads, seller leads and, of course, publicity. All leading to potential sales and money in their pocket.’
