Zero fees offer as real estate agents vie for customers

Leon Laugalis, who is selling his house in Henderson privately to avoid the high fees charged by estate agents, is confident in marketing the property himself. Photo / Chris Loufte

Flat fees, low rates and "zero commission" deals are being offered by real estate firms to lure customers, as the rampant property market breaks new ground.

The commission wars come as fixed mortgage interest rates dip below 5 per cent, gifting anyone buying or selling tens of thousands of dollars in potential savings.

The deals will come as welcome relief to Auckland homeowners who pay the country's highest commissions based on property prices and stand to benefit most by shopping around.

But the industry has hit back, saying commission fees help provide sellers with a range of services including marketing of their property.

Professionals agent Ross Brader launched a "zero commission" deal this week to promote the agency's new Grey Lynn office.

Anyone signing up to sell their home before August 17 would pay "zip, zero, zilch" in commission fees - saving them more than $40,000 on a $1.5 million villa, he said.

Vendors would still have to pay marketing and advertising costs.

Mr Brader said houses were attracting "dream prices" but homeowners often didn't factor in commission costs.

"People don't usually think about it at the outset because they're not writing a cheque. It just comes out of the sale price later on."

Start-up firm The Property Market offers a stripped down model and cheaper commission fees.

Director Antonia Baker said the company had flagged expensive high street offices and extra staff for a more efficient service and flat 2 per cent fee.

"If your place is worth say $1.5 million, why should you be paying anything on the bulk of that sale price?

"Genuinely, I cannot understand how [traditional] fees come to be and how they can be warranted."

The industry has hit back, warning that straight commission fees don't factor in an agency's unique services or sweeteners like discounted marketing campaigns and free air points.

Ray White chief executive Carey Smith said: "We have a fundamental belief in offering value and while commission is an important part of that value, also is the value [that] each of the stakeholders offers to the client, particularly in the areas of marketing, follow up, database, resources and infrastructure."

Real Estate Institute chief executive Colleen Milne said vendors going it alone might be selling themselves short without an agent's expert knowledge, which helped ensure a house was properly marketed to attract top dollar.

Buying or selling through a licensed agent also provided legal redress if things went wrong, with agents subject to consumer protection provisions under the Fair Trading and Real Estate Agents acts.

"Selling privately leaves the buyer only civil avenues to address any misrepresentations or lack of disclosures about the property by the private seller."

While agents were enjoying higher commissions thanks to soaring house prices, the market could easily plateau.

Also, the supply of available properties was badly constrained, meaning most agents were making fewer sales. "You have your good times and your bad."

The standard commission on an average Auckland home has jumped by around $6000 in the past three years on the back of soaring house price inflation.

The median Auckland house price is now $749,000, incurring a standard fee of about $26,000.

But owners of many higher end properties are paying double that after realty firms take their cut.

The figures include GST but exclude marketing costs which can lump an additional $4000 to $10,000 on a vendor's final bill.

While most homeowners will fork out for licensed agents, thousands of others are opting for private sales to cut out the middle man.

Trade Me Property head Nigel Jeffries said 8500 properties were currently listed for private sale - around 10 per cent of total listings.

But vendors needed to weigh the complexities and legal considerations of selling their home.

"People unaccustomed to the process are often surprised by the extent of facilitation, hand holding and subtle persuasion that is required to bring interested buyers to the table to make an offer or to attend an auction."

DIY house sale saves pensioner $50k

Pensioner Leon Laugalis estimates he could save up to $50,000 in commission fees through the private sale of his West Auckland home.

He just needs to find a buyer.

"I've owned a lot of houses in my life and I've always sold them myself," the 70-year-old retiree told the Weekend Herald.

Mr Laugalis has listed his six-bedroom "exquisite French Riviera-style" house on Trade Me for private sale by negotiation.

The house would suit "a passionate flamboyant purchaser who has an eye for the good life." Photo / Supplied

Located at 5 Swanson Rd, the sprawling 397sq m concrete home has a CV of $1.225 million and sits on a 1200sq m section. It features three bathrooms, three living areas, a private courtyard and its own 55,000-litre pool.

The property also boasts parking for five vehicles, nine mature palms and would suit "a passionate flamboyant purchaser who has an eye for the good life".

Mr Laugalis paid $525,000 for the house in 2004 but has decided to downsize and go mortgage-free.

The former investment broker worked as a real estate agent briefly in his 20s.

Mr Laugalis listed his house on Trade Me last week at a cost of about $500. And despite rampant demand for Auckland real estate, the property had just two inquiries.

He had a friend take photos for the advertisement and said he was comfortable marketing the property himself. Asked if he was confident of finding a buyer, Mr Laugalis said: "I can't say till I've sold it - probably a bit too soon." Lane Nichols