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Do you need a real estate agent?

Jason Clout

The case for real estate agents

Trust a professional

You wouldn‘t trust anyone else to check your teeth other than a dentist. So there does not seem to be any reason not to trust what’s probably your largest single purchase to anyone other than a real estate agent. Without their guidance you might make a mistake that you will spend years recovering from – a lot like not getting your teeth fixed properly, really.

Less pain

Renting out a property to tenants can be a good way to build your wealth. But spending too much time listening to their complaints or fixing what you think are their minor complaints can strain that landlord/tenant relationship. Trained property managers can take the pain out of letting one or more investment properties, enabling you to spend more time with your family or on other investments. It can be tricky if your tenants fall behind on their rent, so that again is where your property manager can come in and sort out the problem.

Local knowledge

Off-market properties are not just a myth. Many people only ever hear about their dream home after they learn it has been sold to someone else. The person who is likely to know about all the properties on the market in your desired area is the local real estate agent. They are not only working on the properties they have on their website or shop window but a raft of other properties as well.

Total cost

It’s hard not to get excited when buying a home or investment property. A good agent will not only tell you what’s a realistic price for that property but also what you’ll be up for in additional costs. Depending on the state or territory, you will be paying stamp duty, registration of land transfer and related fees. You should also be able to get a good handle on what it will cost you for things like land tax, council rates and so on from an agent .

Focus

It’s possible to spend too much doing up your home. If you want to live in it for the rest of your days and then leave it to the kids, that may be sensible. But if the plan is to sell soon and move elsewhere, then massive renovations on your home may be just a waste of money. It’s sometimes called overcapitalisation. It’s the same with rental properties. A good agent can keep you thinking straight.

The case against real estate agents

Relentless optimism

It always seems to be a good time to be in the property market, according to many agents. If the market is rising, they say “buy now before it goes any higher”. If it’s falling, they argue you should snap up the bargains to be had. Taking those agents seriously is hard. The best approach for investors often is to just sit back and watch the market.

An extra 7pc

Many successful investors handle their own property portfolio. They interview and select tenants, collect the rent and deal with any issues that arise. By doing so they save themselves the management fee charged by the letting agent, which can be around 7 per cent , depending on agency. If you’re handy around the house you may even be able to perform some of the minor repairs (although you need qualified tradesmen for the more difficult tasks). But anything you can do to cut costs can boost your yield on the property.

An alternative

They are still not widely known but there are agents who work for buyers rather than sellers. These buyer’s agents or advocates claim to know the way other agents behave . They mainly work under a fee structure at the top end of the residential and investment property market, so they are not for every buyer. But it’s an interesting development that a profession has arisen which is designed to help buyers understand what is happening on the property they are pursuing and the overall market.

Mounting costs

Costs can be high when selling a property. Not only is there the agent’s fee but there can be a substantial – and expensive – marketing campaign that goes along with it. Buyers can get swept up by the campaign themselves, thinking how wonderful their house will look displayed in a colour ad. Or they are convinced that an auction is the way to go. Agents need to explain they do not guarantee the house will be sold for the price sought.

The research is out there

There is more research available on the property market than ever before. Suburbs, streets and real estate can be explored on the net, watching the media, paying for research and asking around. That doesn’t mean you have to abandon agents, if you prefer them. Agents tend to treat people differently when they’re armed with research.

Si verdict: We know agents can be costly and a nuisance at times but, for all but the most sophisticated home buyers and investors, they are still the way to go.

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Market Summary

Price % Chg
TSE TFIELDSERV $ 1.750 + 24.11%
HVN HARVEY $ 3.550 + 7.90%
PPT PERPETUAL $ 49.530 + 6.75%
QAN QANTAS $ 1.470 + 6.14%
PDN PALADIN $ 0.425 + 4.94%
IGO IND GROUP $ 4.670 + 4.47%
MMS MCMILLAN $ 11.660 + 4.01%
TOL TOLLHOLDGS $ 5.970 + 3.83%
WOR WORLEYPARS $ 16.440 - 3.75%
JHC JAPARA $ 2.260 + 3.67%

Commodities

Price Change % Chg
BRENT SPOT (USD/BBL) 100.600 0.000 0.00%
LIGHT CRUDE OCT4 (USD/BBL) 95.680 + 1.130 + 1.20%
NAT GAS OCT14 (USD/MMBTU) 4.043 - 0.001 - 0.02%
Bid Ask Bid Chg Bid % Chg
GOLD (USD/OZ) 1286.38 1287.09 - 3.36 - 0.26%
SILVER (USD/OZ) 19.42 19.48 - 0.13 - 0.66%
PLATINUM (USD/OZ) 1418.99 1426.50 - 1.01 - 0.07%
PALLADIUM (USD/OZ) 901.97 907.52 + 8.97 + 1.00%

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Currencies

AUD USD EUR JPY GBP
AUD AUD 0.9333 0.7103 97.15 0.5631
USD 1.071 USD 0.7609 104.07 0.6032
EUR 1.4078 1.3142 EUR 136.76 0.7927
JPY 0.0103 0.0096 0.0073 JPY 0.0058
GBP 1.7752 1.6575 1.2611 172.49 GBP

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