03
January

Private House Sales

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The growing For Sale By Owner sector in the Australian Real Estate industry has many real estate agents worried, and for good reason. Although commission rates can vary depending on such things as the location of the property, and are open to negotiation, most real estate commissions would lie between around the 2.5% mark, based on the total sale price. Costs to the vendor on the sale of say a $500,000 property would be $12,500. Over and above this commission, vendors can often have additional advertising costs which on average would be a few thousand dollars.

Whereas private house sales were previously not seen as a real alternative to most people, this is now changing. This shift is in large part due to the fact that vendors now have access to many of the largest real estate portals in Australia, can more easily access statistical information about sales in their area (an important research tool in determining the right selling price), and can more easily and conveniently order other marketing materials such as ‘For Sale’ signs, floor plans, and professionally printed brochures. Real estate agents are no longer the only ones who can provide this service, and more and more people are realizing this as the ‘For Sale By Owner’ makes it mark on the Australian real estate industry.

In the USA, For Sale By Owner sales now represent approximately 20% of real estate transactions. In many cases these vendors are paying a few hundred dollars to sell their properties, instead of thousands of dollars in commission payments. Private house sales in Australia are also set to follow the American trend, as more and more people come to the realisation that the use of a real estate agent is not a legal requirement, and that they themselves now have access to many of the resources which were previously only available to real estate agents.

As private house sales grow and more vendors are coming to the realisation that they are perfectly capable of selling their properties themselves, this must surely have an influence on the real estate sector throughout the coming years. Either commissions will have to come down, or more and more agents will start to offer ‘agency assisted’ sales, where vendors can be more active in the sale of their own property.