The boom in Auckland house prices is great for the half a million homeowners in the city. They are sitting on tax-free capital gains. Some are following Bernard Hickey's example and cashing up.
Selling in an overheated market is a smart move; paying 3 per cent of the asset's value to a real estate agent isn't.
Kiwis have an obsessive DIY fascination yet we persist with using real estate agents to complete a fairly simple transaction. Homeowners pour sweat and labour into renovations then 95 per cent of sellers hand over most of the profit to a salesperson.
Selling real estate is not dentistry. If your agent makes a mess of their job, unlike bad dental work, you will never know.
There is little difference in selling a $300,000 property from a $2 million one, yet based on the universal commission structure of 4 per cent for the first $300,000 and 2 per cent thereafter, you will pay $12,000 commission on the former and $26,000 on the latter.
Why? Selling your own house is straightforward, if a bit of a hassle. Hire a competent lawyer, maybe $3000 to $5000 for conveyancing and general advice, and list the property on Trade Me.
You cannot list your property on realestate.co.nz, this is only for licensed real estate agents, but anyone looking for property looks on both websites anyway.
Banks can be pickier about private transactions but in an overheated market the buyers will come to you.
Real estate agents want to list your property in their glossy magazines and in expensive ads.
This is good for their branding but according to Antonia Baker from The Property Market, a firm offering 2 per cent flat commissions and internet advertising only, these campaigns sometimes bring in few extra punters.
There are two things to remember about a real estate agent. First, it is almost impossible to tell a good one from a bad one because you can't objectively assess their performance.
Second, agents earn money on the number of deals they make in a month. They are unlikely to care if your house sells for an extra $20,000 - this represents $400 in commission. They are better off encouraging you to take the best offer and move to the next commission.
If you try to do it yourself and it goes pear shaped, you can always run to Bayleys. They will not mind.