Are real estate agents worth it in a softening market?

Homeowners who use a real estate agent to sell their home walk away with more money than those who opt for the DIY approach, new figures suggest.

Data provided by the Real Estate Institute of New Zealand shows that residential properties sold by their members, who represent the bulk of the industry, fetched an average 9.3% more than those sold by non-members.

The data covered sales of houses, townhouses, units and apartments between July and December 2021. The time lag was due to the delay in waiting for private sales to be recorded after settlement.

In all regions – with the exception of Nelson – properties sold by REINZ agents garnered more than those that were sold privately or by non-REINZ members.

The areas that benefited the most from using REINZ members were Bay of Plenty (17% more), Taranaki (16% more) and Wellington (15% more).

While those regions who saw little to no benefit were Nelson (-7%), Marlborough (2%) and Gisborne (3%).

Sales not made by REINZ members in the data set covered those by licensed agents who are not members of REINZ, by companies selling their own developments and by private individuals. Non-member sales made up, on average, 15% of sales over the six-month period, up slightly from the 12 months to July 2018 when they represented just 10%.

REINZ chief executive Jen Baird said real agents brought a lot to the selling process, and that their local knowledge was important for sellers in a changing market. “It is essential to understand the nuances of the market right now and to adjust expectations accordingly. Real estate professionals are in the market 24/7, talking to a wide range of buyers and sellers – their broad connections and local knowledge make them indispensable when you’re selling your largest asset.”

CoreLogic head of research Nick Goodall said it was hard to put an exact figure on the actual dollar value increase an agent could get, but there was no doubt that sellers turned to agents in a struggling market. “I think when the market is going well there is more of a chance of people going, ‘Well, actually do I need an agent to get the best price, maybe not,’ so we tend to see a large proportion of properties sold privately.”

REINZ chief Jen Baird says the strength of an agent’s local knowledge can help sellers. Photo / Supplied

It was when the market turned that people looked to the expertise of an agent with good connections and who could find the most buyers to achieve the best price, he said.

Buyers then had to weigh up whether the real estate agent would be able to achieve a large enough sales price to validate the sales commission.

Auckland property lawyer Joanna Pidgeon believed a good agent added value to the sales process, especially in a softer property market as agents were more likely to be “pounding the pavement” to get the house sold.

While some people had great sales and negotiation skills and could do it themselves, she questioned whether the average homeowner would be ringing up and chasing potential buyers the same way an agent would or if they would just sit and wait for an offer.

“It’s easier for them (agents) to say well put an offer in. Even though they are representing a vendor, sometimes it’s easier for them to get people to put pen to paper to at least start the negotiation process.”

Agents were also more likely to make sure settlement dates for the sale matched up with the purchase and that the proper clauses were in place.

“A self-represented party isn’t going to maybe put in an escape clause for example.”

Houses in Nelson. The REINZ data suggests non-members are getting higher results. Photo / Getty Images

She had recently seen an example of where a seller had given into some of buyer’s requests and she didn’t think this would have happened to the same extent if an agent had been involved acting as a buffer.

Property Ventures managing director and owner of the NZ Property Podcast Mark Honeybone said people who didn’t want to use real estate agents, especially when the market was hot, were now reaching out to his agency over the past few months seeking help to sell.

In the current market, when lending rules were tough and property prices were softening, sellers needed all the help they could, he said.

Agents had the best idea of where the market was sitting at any given day and access to more marketing tools than the average person. Honeybone said good agencies also had a database of investors who wouldn’t know certain properties were on the market unless the agent told them.

A lot of buyers didn’t like dealing directly with the seller so agents were a useful go-between, he added.

“There are so many reasons why. In simple terms – supply and demand. You are going to get more money to pay for your real estate fees by a long shot.”