The role of an agent
An agency is generally employed for either one of two basic roles:
An agent will attempt to sell or lease your property for the best price possible, as quickly as possible. Agents act in your interests, delivering a range of crucial services from the early stages to the final settlement. These services include:
- Advising you on how much you can expect to receive for your property, and what method of sale/lease you should pursue.
- Providing you with an effective marketing plan.
- Bringing your property before potential purchasers and tenants.
- Negotiating the selling/leasing price between you and the potential purchasers and tenants.
- Facilitating the actual sale/lease of your property and the final exchange of contracts.
An agent will assist you in finding the most appropriate property for your needs. Agents will ensure the property fulfils your business requirements whilst considering your budget constraints. Services associated with this role include:
- Taking the time to understand your property requirements including location, area, intended use, access, infrastructure, amenity etc.
- Sourcing a number of potential properties.
- Conducting inspections.
- Negotiating the purchase/lease price between you and the owner.
- Facilitating the actual purchase/lease and the final exchange of contracts.
Choosing an agent
It is important to deal with an agent you know you can trust. It may be worth your while to:
- Ask your agent to discuss the ethical standards they practice.
- Check they have a sound knowledge of the local property market, and find out what properties/clients they have dealt with over the past year, and at what price.
- Ask them to explain their proposed marketing strategy and how they intend to keep you updated on their progress.
- Check that they have a good reputation both with past clients, and within the real estate industry.
- When choosing an agent, remember to check whether they are a member of the relevant Real Estate Institute (REI) in your State or Territory. REI members have a commitment to service and professional standards, and are bound by strict codes of conduct. In addition, REI members have access to a wide range of professional development opportunities enabling them to enhance their skills and offer quality customer service.
You will receive varying recommended prices from agents that you invite to make appraisals.
Be careful: Don't immediately take on the agent who claims that they will achieve the highest price; check their method of calculation and be sure that they are capable of realising this price. Some agents provide over-valued prices as a tactic to attract more business, however if you list your property at this price, you may lose valuable time in making the sale. In the meantime, you may get desperate enough to drop your price, giving the dishonest agent the fee for a sale that could have been made months ago by the fair practicing agent.
Every agent you approach should provide you with a quote to sell/lease your property, setting out a predicted selling price and the agent's fee. Remember to ask for exactly what the commission buys you; some agents will offer newspaper advertising alone, while others may organise letterbox drops, online listings and other effective forms of promotion. In other cases, marketing costs will be in addition to the selling/leasing fee. For this reason, the agent with the lowest commission fee is not necessarily the wisest financial choice.
One decision you will need to make is the type of agreement between you and the agency selling/leasing your property. There are several possible options including:
- Exclusive agency agreement, where you deal only with one real estate agent. This agent is responsible for coordinating the lease/sale and will save you time and stress. Under this agreement the exclusive agent will manage the lease/sale of your property through arranging inspections, updating other agents on the availability of your property, and may organise agent’s functions to promote your property.
- Open agency agreement, where you coordinate the lease/sale yourself and engage a number of real estate agents. Only the agent who sells your property receives the commission. Under this agreement you may pay a lower fee, but could find that the sale of your property becomes a much lower priority than if you had engaged an exclusive agent.
- Sole agency agreement, the same as an exclusive agency agreement, except that the owner may sell his or her property privately without paying the agent's fee.
- Auction Agreement, is also governed by an Exclusive Agency agreement. The auction process requires the vendor to pay the agent to arrange effective marketing and advertising plans to maximise exposure of the property and the auction date to potential buyers/lessees. Under the auction system, the vendor agrees to pay commission to the listing agent if the property is sold/leased before the date of the auction, at the auction or in an agreed period after the auction. The same conditions that apply to the auction process will also apply to the tender process.