The right commission rate when selling your property

What commission to pay our agents is often one of the most contentions decisions and part of the final decisions to make when selling your property. How much should I pay my agent? For most of us, the knee-jerk reaction is "as little as possible". But let's think about that: If you needed brain surgery, you wouldn't choose your brain surgeon based on price, would you? You would choose him or her on their technical expertise, and that's the way it should be with any service provider.

Remember, effectively marketing your property so that you get as many potential buyers as possible, and effectively negotiating the best possible selling price, is what this is all about. A saving in brokerage is meaningless if it is accompanied by an unsuccessful marketing campaign or a lower selling price.

Watch out for agents who are happy to work for too little! In service industries you almost always get what you pay for. Low commission rates more often than not, mean less marketing (to save money) or a less skilled or desperate agent. Neither of which is to your advantage.

Ask the tough questions. If an agent from a top agency is prepared to work for a low commission try to establish why. It may be that:

• Whilst the agency is strong, this agent may be weak.
• They may be doing it to regain lost market share but there may be a relevant reason, to do with their service and their results, as to why they lost market share in the first place.
• They may have ulterior motives, maybe they're hoping that other stock they are carrying will appear cheap compared to your property so that they can use your property to sell other stock.
• Maybe your property is prominently positioned so they are hoping to get good publicity from your property, which is good for their brand-building, even if they don't sell your property.

There is always a reason and it's almost never to your advantage.

• Finally, it may be that they are just bad negotiators and if that's the case, how are they ever going to defend your asking price to a buyer if they can't defend their commission rate to you?

So my advice to you is: Focus first and foremost on the quality of the service, not the price of the service.

Follow the methods as explained in our previous articles to evaluate the various agents and select the one that you think is best.

Once you know which agent you want, negotiate the best deal you can with him or her.

What is the best deal that you can do? Agents will generally want to earn as close to 7.5% plus VAT if they can. The more successful the agent, the more comprehensive the marketing reach and services of the agency, the less likely he or she will be to compromise.

The South African model is "No Sale - No Pay". If you followed my advice, you would have chosen your agent based on service, and you will have determined the price that you want to achieve for your property from a comparative market analysis (CMA).

So, here's my final advice: Motivate the top agent and agency that you have chosen by remunerating them appropriately if they achieve the price you want. If they don't achieve that price, you can always negotiate the commission rate downward (you may even want to incentivise them to exceed that price!).

Spend money to make money - it's demonstrably in your best interests. It's worth spending on success.

Good luck with the marketing of your property. It's easy and fun - as long as you do it right! We are at your disposal to advise and assist even if you choose not to appoint Seeff!