Real Estate Agencies – Making the Relationship Work

Real Estate Agencies – An Important Partnership

Superior real estate agencies can help you secure the best return on the sale of your property. And in the same way that your property is one of your most important financial assets, your relationship with the real estate agency is one of your most important business partnerships. In this short note we step through the keys to getting the most out of your relationships with real estate agencies.

It started when you sought to understand Why You Need To Use A Real Estate Agent. From there, you followed our Guide to Finding a Real Estate Agent, and most importantly, you stopped by whichrealestateagent.com.au to compare the performance of real estate agencies in your area. Now that you know you’ve got the best real estate agency in your area, how do you get the most out of your relationship with them?

Prepare the Contract

Your real estate agency will need a copy of the proposed contract for sale before they can market a residential property. You might need to engage a solicitor or conveyancer to prepare this, and forward a copy to your agent. A planning certificate from the local council must also be attached to the contract. Your solicitor or your real estate agency will be able to tell you everything you need. Note that it can differ from state to state.

The Agency Agreement

The Agency Agreement is an agreement between you and the real estate agency that sets out the methodology for selling your home. This is the first step in engaging the services of a real estate agency.

There are a number of factors to consider when deciding on the your method of sale – local conditions, general market trends, the details of your own property etc. The key decision here at this early stage is in the type of Agency Agreement.

Typically, the agency agreement includes:

  • the agent’s authority to act for you and its scope e.g. can the agent exchange a sale contract on your behalf?;
  • what types of services you will receive from the agent;
  • the sums of fees or commission you agree to pay
  • the timing and rights of the agent to receive payments of fees and commissions;
  • when payment can be received e.g. can the agent deduct their commission from the deposit money paid by the buyer?;
  • an estimated selling price or price range.

Generally the agreement will be for a fixed term, or if not, will explain how it can be terminated.

There are a of number available options:

Exclusive Agency Agreement

An exclusive agency agreement appoints a single real estate agency to conduct the sale of your property. The main advantage of this route is that you’re able to build a close relationship with your agent, and you only have to deal with one person. In return, your agency is concentrating their efforts on selling your home. This type of agreement can cover both the auction and private treaty methods of sale.

Sole Agreement

As per an exclusive agreement, but you retain the right to sell the home privately yourself.

General Listing / Open Agency Agreement

Though open agency agreements, your property is listed with a number of agencies, but you only pay the commission to the agent who finds the buyer and secures the deposit. It is possible via this route to extend the coverage your property receives for the same price. However in practice, open listings do not typically attract the same levels of service, and there is the possibility of duplicating advertising costs. What’s more, having multiple “For Sale” signs out the front of your property can suggest to buyers that you are desperate to sell, weakening your bargaining position.

Multiple Listing

In practice this works like an exclusive agreement, but rather than a single agency, you are engaging the services of a ‘network’ of agencies. This can be a good way to increase your exposure, but check with your agency first to be sure of the benefits. An office in Darwin might not be much good to you if you’re selling in Melbourne.

Negotiating and Accepting an Offer

The agency agreement will determine your and the real estate agency’s obligations regarding negotiations. Generally, your agent should handle all negotiations and if you’re approached directly you should direct the purchaser to your agency. Offers will then be presented to you by your real estate agency. You can either accept the offer or make a counter offer more favourable to you. Seek your real estate agency’s advice regarding the price, suitability of the deposit, ability of the buyer to pay, terms of finance and the settlement date.

Settlement

Once you and the buyer have agreed on a price, a 10% deposit can be paid and held in trust by your real estate agency. Until signed copies of the contract are exchanged, neither you nor the buyer are legally bound to the transaction. There may be a cooling off period in you live in particular states (about 5 working days.)

The buyer also has a right to carry out professional inspections such as pest or building inspections. It is typically your solicitor or conveyancer, not your real estate agency that will handle the transfer once the contract is signed. Transfer includes the arrangements for the balance of the purchase price to be paid either directly to you or into your bank account. Real estate agencies typically deduct their commission fee from the deposit after settlement and forward the balance to you. Remember, the property remains legally your responsibility until settlement day when the keys are handed over and the purchaser takes ownership.

Knowledge is Power

Hopefully this has helped you get a clearer ideas of what the relationships between sellers and real estate agencies are. It is one of the most important business partnerships you will enter into.

There are a number of resources here on whichrealestateagent.com.au to help you get the most out of your engagement with real estate agencies.