Why would you pay a real estate agent tens of thousands of dollars in commission to sell your property to the next-door neighbour? And why should agents who make such close-to-home sales pocket full fees?
Believe it or not, these sorts of sales happen all the time all over the country with sellers paying not only sales commissions and marketing/advertising expenses but also, in the case of sales by auction, the auctioneers’ fees and other not insignificant auction expenses.
BY TIM O’DWYER
This is the reason that, whenever I see clients putting their properties up for sale, I strongly suggest that the first thing to do is to approach the neighbours. Not just next door, of course, but for a block or two in all directions. You might be surprised to find, I say, that someone not too far away may be very interested in buying your property. And, if not your neighbours themselves, friends or family of theirs might turn out to be keen to buy your property. Trust me, this is not wishful or fanciful thinking on my part. You have only to read the weekend newspapers’ auction reports for occasional proof.
It never ceases to amaze me how unashamedly revealing these reports can sometimes be. Recently, I noticed a weekend paper running two stories on the same page about successful auction sales made (and commissions clearly collected) where the successful bidders had been very close at hand.
The first story began by explaining how a favour for a relative turned into a “real estate opportunity” for one unit buyer. According to the agent involved, the buyer was a brother of the owners of a unit next door to the one ultimately sold. They’d asked him to paint their unit on his day off as a favour. Apparently, once the painting was done, he took a quick look through the adjoining unit, which was open for inspection. On auction day, there were three other registered bidders, but the neighbour’s brother did the best bidding and bought the unit.
How much in selling expenses might have been saved if, before listing, the sellers had had a chat with those neighbours?
The second story was about a three-bedroom post-war home being auctioned as part of a deceased estate. The auctioneer opened the bidding with his own reportedly “ambitious” offer of $750,000. A “furious contest”, as the newspaper put it, followed as four bidders competed for the home until it was finally knocked down for $881,000. The marketing agent clearly had no qualms disclosing later that the successful bidder was a next-door neighbour.
“He’d wanted to buy the home for a number of years”, the agent boasted to the paper’s property reporter. If only the sellers had approached their neighbours before the agent and agreeing to an auction!
Tim O’Dwyer is a Queensland solicitor, email@example.com