You forgot the most important part.

REAL ESTATE AGENTS LOVE AUCTIONS.

They use them to find the market and to coerce their clients into selling as they can prove the most recent sale price.
\Auctions are great for sellers on a climbing market, great for buyers on a falling market.
Either way the agent wins so long as he gets a sale. That is why agents are talking sellers into Auctions to get a sale. "Never HAVE TO BE a buyer or a seller", is what I teach my children.

Quite right and the biggest sin of all ,there is no comeback on any of the parties if it has been found there are serious flaws in the building.Reasons being the purchasers do all the due diligence prior to the Auction,It becomes literally CAVEAT EMPTOR.

"He has proved at the auction that he is the one willing to pay the most yet on many occaisions I have seen them being coerced by the Agents into paying more, very strange behaviour."

Its to the benefit of the vendor / agent for the highest bidder to increase their bid. Allows the property to be passed in at the higher bid. Seen some patsies bid the property up another 50 - 75 K against their prior bid, only for the property to be passed in.

Then when people ring in the next day to check what happened at the auction, the agent is able to say "Property was passed in at x"... where x is the higher price... Good work by the agent on the vendors behalf. Stupid tactics on the buyers behalf.

Over the past year, my guess would be that over 2/3 of the increased bids in this scenario that I have seen, have resulted in the property being passed in. In this market I would suggest that increasing your bid if you are already the highest bidder, is not in your best interests.

And I like the bit where the auctioneer can keep increasing the vendors bid if there are NO BIDS from the floor, continuously, until it is at the "right price to pass it in". I urge no one to take much notice of the level at which a property is passed in.

When you discuss the CV of the houses that were sold at B&T's auctions are you referring to the 2005 or the 2008 one? Real estate agents nowadays use both, particularly when the house has been on the market for a while and the flyers haven't been updated.

Marketing is about IMPACT!
This form of selling lets the vendor know the true value of what the martket is prepared to pay. The cliche', "It is only worth what people are prepared to pay" is probably more relevant in this market than any other. The Agents job is to, through a properly vendor funded marketing campaign, attract potential buyers and get the best and fairest possible price on the day of Auction, and if need be, post Auction.

A couple of questions to the previous respondents to this subject is,

1> Have you ever been a vendor wanting the best price possible?

2> If you have, would you rather your agent not utilize all of the options available to them to facillitate a sale of your home?

Response to Andrewj comment, ""Never HAVE TO BE a buyer or a seller", is the sit on the fence attittude that will stop his children from growing in a world where buying and selling is a necessity.

Response to Roger Witherspoon, Regarding Barfoot and Thompson Auction policy is that there is no vendor bidding nor do they have any other "form",of bidders other than genuine qualified bidders.

To the others, stop knocking the Real Estae Agnts for doing their job. You make light of what they earn but don't know the time and energy involved, ask their famillies.

Something to ponder,
There are other proffesions out there that get paid whether they get a result or not, ie, Solicitors, Surgeons,Surveyors, Doctors, Plastic Surgeons etc etc.
A Real Estae agent can spend months on selling a property only to be cancelled out of his agency with not a cent to show for the late nights, weekends and countless hours on the phone and computer giving feed back to the vendor and following up potential buyers.

In the words of Stephen R Covey, "Seek first to understand, then be understood."

Yes I am a passionate Real Estate Agent Branch Manager from Whangarei.

Andrew; Ponder this. "Solicitors, Surgeons,Surveyors, Doctors, Plastic Surgeons etc etc." are fee based structures. Real Estate agents are commission based. Any industry that is commission based, whether it be car salesmen, insurance agents etc. have only the same, one product to sell. That being the sale itself. Your job is a necessary part of the real estate industry but the nature of your compensation will always be viewed with suspicion, as you will know, through good times and bad.

Andrew, your comment about andrewj's snippet >> Response to Andrewj comment, ""Never HAVE TO BE a buyer or a seller", is the sit on the fence attittude that will stop his children from growing in a world where buying and selling is a necessity.

You miss the point mate - he is saying buy when people need to sell and sell when people need to buy. There is nothing sit on the fence about that attitude.

No Lara we sold the cottage May 2007 at the top of the market without using an agent even though we were then in New Zealand!

I was trying to say the strongest man/woman is the one who can walk away. I dont like buying something that has never been so expensive, i like buying at prices lower than the peak. something that has fallen in Value then I have some safety. Im trying to teach my children to have the strength to turn their backs if the price is high,and never get into a position where you have to sell and cannot turn down the offer..Ive spent years at auctions, Id rather buy privately but in distressed times auctions are fine. In a falling market Auctions should peter out about the time the market has reached bottom, when real estate agents go off auctions then we should be close to ground zero.
Personally, apart from living in I suspect houses will be a bad investment for a very long time.
Time to move on try something new that requires less capital. Id still avoid debt. I dont like the colour of the storm clouds on the horizon. It may not be raining yet but the chance of it missing us is really really small.

Thanks expat.

Never forget all you pundits ,in Real estate employment ,there are always positions, you can come aboard and get the big bikkies ,bearing in mind the average salesperson earns the huge sum of $18000?per year. The rules of the game are NO SALE NO FEE.Its the only profession where its ok to work for nothing until a sale takes place,most salespeople get in the vicinity to list and sell approx 55% of 85% the company takes their cut of the top.A good lister is like gold,it takes a long time to be totally proficient.Yet out of the blue can come a new kid on the block, feed of the top lister and get the same cut,the new kid gets the kudos ,forgetting that all the hard work has already been done.So all you pundits before you knock an industry ,you all think you know alot about,come join us we need people like you,you too can get the silver medals ,that are easy to come by in the easy money industry.

Confirmation of the auction flop:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10545003

The general tone of most forums like this one often degenerates into seeking blame. Regarding agents (I am one) I would tend to agree that there are some rogues out there, but no more than any other profession, and possible less. I do know that because the vulnerability of the people involved in the sale and purchase of residential property, any miscomunication or mistakes are magnified and the agent generally gets the blame. In a rising market the agen is blamed for talking it up, which is absurd! In a falling market the agent is also blamed for extracting unrealistic prices.

The agent has NOTHING to do with the market in general, but a skillful agent may find the best price for a property. I dont think I have ever heard a vendor complain about getting too much, nor do I hear vendors willing to sell at socialist prices. Most of the complaints come from buyers who want to purchase remuera on a birkdale budget.

We have to deal with endless queues of greedy little people who come armed with clipboards and grandiose ideas of importance who try to steal houses! Dear me, they dont realise a professional is paid only by the vendor and has a fiduciary responsibility to get the best price.

Since its all a matter of perception there a huge possibilty for the aforementioned complaints.

As for the money, yes some agents earn stratospheric amounts, a few more earn good incomes but by far an away most earn doodly dick! There are no paid holidays, no healthcare or super schemes.... For those that sit back and knock the sales profession I suggest you try it. Lets see if you can make it on no security! The fact is that most professional agents who have been around a long time are good people who have been well and truly tested in a public arena. I wonder how many of you would stand up to the level of job scrutiny that a busy agent deals with daily?

I for one welcome this correction as it will purge the profession of the get rich quick types and allow us to get on with our job which it to get vendors the best price given their circumstances in any market.

Rant over!

Isn't New Zealand a wonderful place!
The fact that we all have our opinions and are able to air them without fear of retribution in an open forum like this is truly wonderful. We can go on for ever and a day splitting hairs.
November 2009 will see the introduction of the Real Estate Agents Act. This will weed out scurrolous operators. It will also stop people from coming into the industry and taking the cream in the good times. There will also be a strong emphasis on occupational education of which you must attain a certain amount of credits during the year. About time i say! Fines introduced are hefty as well as the need for companies and individuals to have personal indemnity insurance. This in effect means the cost of being a Real Estate Agent increases dramatically. Take time, if you will, to study the Act and consider the contents if they were governing your industry?
I would like to read your response.

Response to Paul G,
Hear hear! Ours seems to be a task of constantly having to defend our proffession. No more i say! Let us go about our daily chores with the enthusiasm and unwavering ethic that has made our vendors and purchasers proud to employ us!

To you that responded to my comment, whenever you have a house to sell,call me and I will show you how it's done.

Kia Kaha! From a warm and sunny Whangarei.
Snow

Andrew and Paul G: I don't mean to bag your whole profession, as I know there are some pleasant agents to deal with. I hope you don't take it personally.. Agents do work hard and I trust you get rewarded. Thanks for the info regarding the 2009 Act, Andrew. I'm glad to hear your industry is moving forward, and especially glad that you're positive about it. I wish all Agents were like youselves. I work in the health industry, which was governed by the medical act which is now the updated heatlh practitioners competency assurance act. A lot of people, especially older people with experience, don't like having to upskill and be told how to toe the line. It requires a lot of extra work and commitment and cost, but it betters the profession.

expat: I picked up a property press for the Eastern Auckland area the other day. Compared to a year ago, there are definite drops in prices, and more by negotiation. Central Auckland hasn't reached that point yet. Agents preferring auctions still? Money up front from the Vendors. I can see why. If houses don't sell, there's a lot of work and very little back. My partner saw a house the other week that was up for auction. We don't go to auctions, but we rang to find out what it went for - but it was passed in (really? apparently for a price over 700 - yeah right). Auctions, still are a successful way of finding a serious buyer who has done their homework.. if they don't bid high enough, the vendor can then talk tough and negotiate. It's a very passive way of doing work though. Perhaps the Vendors (and agents) can do more? should they offer to do more of the homework at a cost to them if there is a serious buyer with an offer? eg building report, LIM etc.

I suspect that there will be those who will say,"You will never stop vendor bids, one way or another. Isn't it better to know about them, openly, from the floor?". But are they all open,from the floor? And to those who would thus remain sceptical of the process, I guess it's quod erat demonstardum.

To clear up another misconception - as far as I am aware here is how most real estate companies operate their commission structure:

Say $12,000 commission excl GST
Less $ 960 - 8% franchise fee to corporate group
$11,040 Balance split:

$5,520 to the real estate office/licensee
$2,760 to the salesperson who listed the property
$2,760 to the salesperson who sells the property

On average a salesperson in the current climate would make 8 sales per year and earn $44,160 if they are the lister and seller of those 8 properties.

From that deduct mobile phone, petrol, personal marketing, ACC levies etc, licensing, accountant fees, training etc and it just shows that it's not that lucrative for the hours put in at nights and weekends.

So there is not enough margin there for the company or the individual to personally spend $2,000 or $3,000 per property on advertising or marketing in high profile expensive publications.

IMHO.. CV values too have been vastly overinflated as property prices have rocketed past what they are *actually* worth. The RV/CV/QV/GV on a place is no better indication of what its worth than the Christmas fairy or real estate agent could tell you.

Try this next time you go to an auction / open home.

1. Take the land price from 1999 + 5% year on year increase to allow for inflation.
2. Add the cost to build an equivalent house *Brand New*.
3. Then minus 5-10% from that building cost for *every year in age of the house*, depending on its condition, to allow for wear and tear, devaluation, cost of updating and modernising, maintenance, etc.

Now you have your **actual** value of the property. The difference between that price and what the agent is telling you / reserve price is, now that is how much that property price is being over-inflated.

"Are you aware of any hidden discounts/kickbacks taken by unscrupulous agents for advertising/marketing costs?"

I have never heard of anything like this. Marketing companies are very competitive and there isnt room for kickbacks. Remember the vendor only pays for marketing in commercial print publications which unfortunately seem high, but are actually very sharp pricewise.

The marketing of a property is to attract buyers, and the if the agent is getting a margin it would be tiny. There would be no advantage to an agent who did this. Some companies own share in property magazines but there is no profit in it as such. If fact I am surprised to hear of this at all. In other professions such as building the builder buys at trade and passes it on to you at retail. In real estate the agent carries all the in house costs and only gets paid if a sale is made. Its a great system, just ask anyone form the UK about levels of service.

Another factor to consider in NZ is that it is so damn easy to buy & sell property and there is no stamp duty, capital gains tax etc. Moreover you can simply plaster a sign on your fence if you really felt that bad about using the profession, no one signs a listing or sale and purchase agreement with a gun to their head!

AREINZ - I see ANZ/National have now virtually ruled out loans with < 20% deposit. As I said before, the tightening of credit will have far greater impact than lowering of interest rates. I must say I am a little worried about what is in the fiscal stimulus package given govtal bias towards high house prices.

Excellent comments and honest advice and opinions. Thank you all.

James - can I ask where you have seen ANZ/National loan policy re: deposit stipulations?
Thanks in advance.

ahhh James, I see it now. From tomorrow ANZ/National is bringing in 20% deposit cap:

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1054...

Credit rationing, bang goes the first time buyer.

Jill

no one hires 6 tradesman on commission to build a wall . When you need 6 tradesmen to build a wall the head tradesman offers the job at a fixed price and pays his staff or subcontractors piece rates or hourly rates. If he places a sign next to the wall saying he's for hire he doesn't charge the wall owner an advertising fee.

If you are selling a house in a suburb and there are say six agents in the suburb they may have one really actively searching buyer each. Why would you sign an exclusive listing and cut yourself off from the other five active buyers in the market? Why would you give one agent a monopoly over the sale of your house?

When sellers do give an agent an exclusive listing and the agent doesn't get the job done in three months then the sellers invariably go with a general listing anyway. May as well go with the general listing in the first place and make sure the house is seen by all active buyers in the market.

Encouraging real estate agents to compete to sell your house to the highest bidder in the market rather than just compete for your listing is not as you suggest SHIFTY, its capitalism. Ive seen real estate agents on exclusive listing charge $18k for less than ten hours work, now that might be SHIFTY.

Here is another way to save thousands off the price if you are the buyer or thousands on the agents commission if you are the seller. When buyer and seller are negotiating and reach a mexican standoff say they are $15,000 apart get all parties including the agent to give a little to get the deal done. The agents don't like it but they always go for it so they can move onto the next sale.

I read (and this makes sense to me) that an auction will only ever get the second best price. i.e. the top bidder never has to disclose what their very top bid would have been, they only need to get above the second biggest bid to win. So should be good for buyers (although would need to be firm if you top bid below reserve and are then being pressured upwards in negotiations), not so great for sellers though. At the end of the day, the one person really wanting a sale is the agent. Sometimes the seller and/or buyer will also walk away feeling they got a good result, but only the agent is guaranteed to be happy with the sale.