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Appointing a low-commission real estate agent or a discount agent to sell your property could spell disaster for those wishing to save money.

Saving on sales commission

It may end up costing your more in the process than what you had hoped to actually save on commission. 

Such agencies make so many claims and promises to homeowners, however most of them belong to inexperienced people who are not clued up on the real estate industry. 

Some of them may not even be qualified agents. 

Resellers who give mandates to such agencies expose themselves to different types of financial and legal risks. Along with this, sales transactions have a likelihood of defaulting or falling through. 
 
Things can even go wrong before the sales stage. Such unskilled or untrained agents will find it difficult to read the market and so will in turn struggle to determine the best price for the property in question. 

They could also have a hard time trying to bring a property to a potential buyer’s attention as they wouldn’t have access to the extensive marketing resources that a more experienced and qualified agent has.
 
This can lead to longer time on the market due to a too high price or as a result of the right target audience not being reached.  Even worse would be accepting the recommendation to go with a lower price to position to sell!

Low commission agents can cost you more

This means that the seller must pay the mortgage, including municipal taxes, water and electricity, insurance premiums, as well as security and maintenance costs for as long as the property does not sell. 

These ownership costs can easily overshadow any potential savings that could be made within a period of only a few months. 
 
If you take the average price that a house is sold for in South Africa (R1.1m) and subtract the generally charged commission of 3%, the maximum possible commission savings would be R44,000. 

However, if you consider the property cost of ownership, it will come to about R13,500 per month (this includes mortgage payment, utility account, municipal tax and homeowner's and mortgage insurance)  
 
The cost of ownership could therefore exceed the potential savings if the sale of the property takes three or four months longer than expected. 

Experience shows that it will most likely be the case when one uses the services of low commission agents.
 
It is not hard to see that discount agencies have less money to spend on marketing and advertising than experienced firms who have the ability to market their clients' properties to many potential buyers across the country through the many different resources available to them as experienced professionals. 

While a property may sit for several months without being sold by a discount agent, an experienced agent usually only needs 2 or 3 months to secure a sale.

Homeowners generally want an agency whom they can trust, but that doesn’t stop many from being mislead by empty promises and the prospect of saving money. 

Estate Agent Commission

Homeowners or buyers who wish to get the best out of a sale or purchase need to ensure that they use qualified agents, rather than using unknown agencies asking little commission. 

They should also be registered with The Estate Agent Council (EAAB) with the official EAAB PrivySeal. It is strongly recommended that sellers ask agents for their EAAB registration before allowing these agents to market their property. 

Also, they should request information about the agent's sales history in the area concerned, and ask for references and recommendations from recent customers who can be contacted. 

If the agent isn’t EAAB then they will not be eligible for commission in the first place.
 
While initially you may be tempted to choose a low-commission agency to help sell your property in order to save money, consider the facts and inform yourself on all the costs associated with it. 

You may find that it is cheaper to rather side with an experienced agent or agency who will ensure that your property won’t build up ownership costs. 

Van Deventers & Van Deventers Incorporated - Conveyancers Sandton

Van Deventers & Van Deventers Incorporated work with accredited property agents to help ensure the best result when buying or selling your property. Contact us with any questions you may have.