Despite the 'cooler' more competitive property market now prevailing, sellers should resist the temptation to go for a cut-throat commission, says Tony Clarke, MD of Rawson Properties.
Sellers should also, he says, think very carefully before signing on with a low-cost limited services agency.
'Seeing their sales price likely to be lower than they had hoped, sellers often consider a non-traditional limited services agency '“ but they should be warned that at Rawsons we regularly find ourselves called in by clients who have tried this service and five or six months later found themselves with an unsold property'
The problems that confront a seller using a limited services agency, said Clarke, are that often this amounts to little more than a website listing (for which the seller pays upfront) even when the service is more comprehensive, the seller can be left to handle the possible buyer all on his own.
'This DIY type of operation is often disastrous because the seller usually does not have the negotiation skills and the essential armoury of market facts which help all parties to arrive at a fair price. Further, the limited service leaves the seller floundering amidst a mass of legal and financial matters, of which he has no experience. A good agent, by contrast, will 'keep it all together' and will nurse the seller and buyer through what many find a difficult, distressing period'
The willingness to try low-cost real estate agencies, said Clarke, is particularly evident among overseas people who are accustomed to the low commissions in many First World countries. However, he said, they are often unaware of how comprehensive the service of SA agents is, particularly as regards advertising.
'Major SA real estate agencies spend up to 30% or more of their total income on advertising. If anyone believes that small-time operators can compete with this they are misinformed. What is more, surveys have time and again shown that buyers look first to the well branded big companies. There is a justifiable view that such companies will have the most stock and that, with a reputation to maintain, they offer an opportunity to appeal to the management if the service down the line is not satisfactory'
Clarke said that limited service agencies have had their successes but where the seller has business skills, energy, time and resources 'way above average'.
'Only 20% of agents in these traditional companies survive more than two years. If you are dealing with a big agency you will probably work with one of those achievers '“ or a learner under his mentorship. Either way, you will be looked after in return for the 5 or 6% commission you are paying. If you go the economy route, this care and attention cannot be provided because the commission simply does not cover it '“ and you may well find yourself selling below the homes true market value'
Service from the established, branded agencies will be even better in 2008/2009, added Clarke, because the new professional examinations will inevitably eliminate the less competent and reduce the number of agents in the business.
