Clarke warns against cut-throat commissions and limited-services arrangements

Sellers should also, he says, think very carefully before signing on with a
low-cost limited services agency.

“Seeing their sales price likely to be lower than they had hoped, sellers
often consider a non-traditional limited services agency – but they should
be warned that at Rawsons we regularly find ourselves called in by clients
who have tried this service and five or six months later found themselves
with an unsold property.”

The problems that confront a seller using a limited services agency, said
Clarke, are that often this amounts to little more than a website listing
(for which the seller pays upfront) even when the service is more
comprehensive, the seller can be left to handle the possible buyer all on
his own.

“This DIY type of operation is often disastrous because the seller usually
does not have the negotiation skills and the essential armoury of market
facts which help all parties to arrive at a fair price. Further, the
limited service leaves the seller floundering amidst a mass of legal and
financial matters, of which he has no experience. A good agent, by
contrast, will “keep it all together” and will nurse the seller and buyer
through what many find a difficult, distressing period.”

The willingness to try low-cost real estate agencies, said Clarke, is
particularly evident among overseas people who are accustomed to the low
commissions in many First World countries. However, he said, they are often
unaware of how comprehensive the service of SA agents is, particularly as
regards advertising.

“Major SA real estate agencies spend up to 30% or more of their total income
on advertising. If anyone believes that small-time operators can compete
with this they are misinformed. What is more, surveys have time and again
shown that buyers look first to the well branded big companies. There is a
justifiable view that such companies will have the most stock and that, with
a reputation to maintain, they offer an opportunity to appeal to the
management if the service down the line is not satisfactory.”

Clarke said that limited service agencies have had their successes but where
the seller has business skills, energy, time and resources “way above

“Only 20% of agents in these traditional companies survive more than two
years. If you are dealing with a big agency you will probably work with one
of those achievers – or a learner under his mentorship. Either way, you
will be looked after in return for the 5 or 6% commission you are paying.
If you go the economy route, this care and attention cannot be provided
because the commission simply does not cover it – and you may well find
yourself selling below the home’s true market value.”

Service from the established, branded agencies will be even better in
2008/2009, added Clarke, because the new professional examinations will
inevitably eliminate the less competent and reduce the number of agents in
the business.

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