Estate agents invest money and time in marketing a property, with no certainty of earning an income.
How often have we heard people grumble about having to pay an agent’s commission when selling their home, and sometimes trying to get agents to cut their fees?
Owen Dormehl, co-owner of the countrywide Dormehl and Phalane Property Group, discusses the issue with Billy Suter.
Estate agents invest money and time in marketing a property, with no certainty of earning an income. It’s a high-risk job so a fair return is expected, Dormehl says.
“Estate agents in South Africa do not earn a fixed income and work only for commission. All work is done at their own risk, and they secure their income only on concluding a successful sale.”
He says there is no fixed or prescribed rate, so clients must consider the amount of work done by an agent regarding the amount of commission payable. Sellers should look at the marketing strategy and plan to determine the value in lieu of the commission.
“If an agent can’t successfully negotiate a normal commission and has to cut the rate to secure business, how confident can the seller, be that he or she can negotiate the best price for your property?
“Low commission could reflect that your property is overpriced to a potential purchaser. Also, when commission is lower, the agent could consider spending less on marketing and get you to accept a lower offer than the true value of your property.”
Dormehl believes commission must not be seen as a cost, but rather as a value: “It’s not what you pay but what you get in return that ultimately counts”.
The seller must be aware of an agent’s expenses to obtain a purchase price. This could assist the seller in making a decision on a fair commission amount.
The seller should want to motivate and encourage the agent to sell the property by offering a fair commission, says Dormehl.
“Unless an estate agent can bring an offer to the negotiating table, at the price and on terms acceptable to the seller, he does not get paid. He only gets paid when the house is sold and transfer is effected.”