Agent sale vs private sale: Which gets the better deal?


Home-owners who use a real estate agent to sell their home can expect to get 10 percent more for the property than they would by selling it privately, new research shows.

Analysis of agent and private sales by the Real Estate Institute of New Zealand and shows there has been a huge decrease in the number of people choosing to sell their home without an agent in the last five years.

REINZ defined private sales as those not sold by a REINZ member i.e. a member of the public selling privately or a real estate agent who isn’t a REINZ member.

In 2014, private sales made up 17 percent of all residential real estate sales in New Zealand. That figure dropped to 13 percent in 2017 and to just 10 percent in the year to July 2018.

The REINZ data showed that the median sale price achieved through an agent sale was 10.9 percent above that achieved by a private sale.

REINZ CEO Bindi Norwell said: “Although this does not take into account the state of the house or off-plan developer sales, it is still a significant difference.

“Even when commissions and fees are taken into account, the sale price shows a better return for the vendor when using an agent.”

The region with the biggest gap between agent and private sale prices in the year to July 2018 was Marlborough, where the median agent sale price was $425,000 – 28 percent above that collected by private sales.

Wellington recorded the next highest premium, with the median agent sale price 20 percent higher than the median private sale price – in dollar terms almost $100,000 higher.

The premium in Auckland was 6 percent for the year to July 2018, and 7 percent in Christchurch. Just two regions saw agent sales lag behind private sales: in Southland, the median private sale price was 5 percent above the median industry price, while in Taranaki the premium for private sales was 10 percent.

Bayleys national residential manager Daniel Coulson says sellers are more inclined to hire agents in a less than buoyant market.

“When there is less urgency for people to purchase, would-be sellers realise the importance of having an agent who will work to secure the sale rather than waiting for the buyer to turn up,” Mr Coulson says.

Higher premiums on sales could also be behind the rising popularity for home owners to partner with agencies.

Mr Coulson believes regional markets have done particularly well because many homes are sold through auction, an option typically only available to agencies.

“And when you talk about marketing a property, there are certain avenues that only agents have access to whether that be online or in print,” he adds.

Ms Norwell says the negotiating process is also something that home-owners may not feel comfortable with. “Selling privately works perfectly for those who have the time, inclination, expertise, understanding of the regulations and patience to do so, however, for busy families, those without strong sales and negotiation skills or those who just don’t understand the regulatory environment, then it might be better to utilise the skills an agent has.

“Selling via an agent also enables vendors to leverage the breadth and depth of an agency’s expertise, technological capabilities and presence across a number of markets.” editor Owen Vaughan added: “Selling a home can be one of the most stressful and emotional things a person can do, even with an agent doing the hard part of marketing and negotiating with potential buyers.”

Mr Coulson says that those who think selling privately will result in savings because they no longer have to pay commission to an agent, fail to take into account that their buyers will be thinking the same thing.

“The seller thinks they are saving money by not having to pay commission whereas buyers immediately take off that price before they make an offer,” he says.


Source: One Roof

Shaan Joshi – Real Estate Agent Auckland
Ray White
Licensed REAA 2008


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