Selling a $1.2 million house could cost from $3000 to nearly $40,000 depending on whether you decide on a DIY strategy or pay a traditional real estate agent commission.
For $2871, local DIY outfit buyMyplace will provide online listings, professional photographs, alerts from interested parties, arrange "open for inspection" signs, and, for an additional fee, organise an auctioneer.
A real estate agent will typically charge about 2.2 per cent commission on the sale price for a package of services that includes valuation, listings, house inspections and customer support. There are additional fees for marketing and hiring an auctioneer.
A mid-range option is Purple Bricks, a UK cut-price estate agency opening in Australia, which offers a licensed real estate agent, online advertising and a website providing information on the property sale.
"Their role is the same as a full commission real estate agent involved in listings, arranging viewings and sale. They guide the seller through the entire process," a Purple Bricks spokesman says.
It charges a flat fee of about $4500 plus additional fees for an auctioneer, taking the total cost to just over $5000.
Property sellers need to balance the cost savings of going it alone with with using professionals who understand the sales process, know the local market and are experienced negotiators.
James Pratt, a director of Raine & Horne, says experienced agents earn their commissions by finding the right buyer and negotiating the highest price, which should cover costs and produces a bigger profit for the seller.
Their market knowledge and negotiating skills are particularly useful on more expensive properties (where a couple of per cent difference in the sales price can mean hundreds of thousands of dollars more) and property markets where demand is weak (such as Perth and Darwin).
In Sydney and Melbourne, where buyers are plentiful, simple sales strategies such as ensuring good quality online advertisements can generate lots of interest, according to vendors..
"It was a great experience because I was in complete control," says Andrew Hubbard, an electrical engineer from Tarren Point, which is about 20 kilometers south of Sydney, about by-passing real estate agents and selling two homes in the past four years.
Hubbard negotiated a private treaty sale of his Sydney townhouse in 2012 for $735,000, which was then a record price in his complex. It followed a five-week campaign and cost him $1000, plus conveyancing.
He recently sold his next Sydney house for $1.35 million, which was $150,000 higher than the "generous reserve". The five-week campaign cost $1200 and he paid $1800 for an auctioneer.
In both cases he used a buyMyplace DIY kit to design and place online advertising, prepare brochures and provide guidance on the sale process, such as arranging open days.
It also provides tips on how to present properties, such as spruicing up the garden and removing clutter.
"You need to trust yourself," Hubbard says.
He used publicly available information about local sale prices and independent appraisals to price the property and arranged the inspection days.
"It's not hard to collect contact names and answer questions about the property," he says. "Potential buyers loved it because they were talking to someone who knew the house and knew the area."
Paul Heath, chief executive of buyMyplace, which has increased revenue by 55 per cent since listing on the Australian Stock Exchange in March, says sellers "are no longer prepared to pay excessive commissions to traditional real estate agents".
Extra auction fee
His company offers packages ranging from $895 to $1295, depending on the support and marketing required.
There is an additional fee for auctioneer, viewings and management of the auction process.
Luke Pervan, who has worked for real estate agents for 17 years, is one of the 50 agents recruited by Purple Bricks to assist sellers. Another 200 are expected by the end of the year.
He says the cheaper prices are achieved by removing commissions and cutting traditional real estate agency costs, such as establishing and staffing local offices.
Kristin Kelly, 31, a photographer, and her husband, Dylan, 32, a stockbroking analyst, were unhappy about paying $20,000 commission to a real estate agent when they recently sold their Brisbane home.
The property sold within 72 hours of being posted on a real estate website.
"It seems a lot of money for a young couple working hard to save money and get promotions to buy a family home," she says.
Kelly says she has no complaints about the real estate agents who "met all our expectations".
"It just seems a huge amount of money when the property sold before the 'for sale' sign was put up outside the house," she says.
Pratt, from Raine & Horne, says DIY sales might "look good on paper" but that it is better to use a skilled agent who looks after the sale and is more likely to negotiate a price that covers any commission, particularly during market downturns.
Chris Foster-Ramsay, principal of Foster Ramsay Finance, adds: "Selling property is an emotional and intense experience. I've seen sellers who decided to go it alone come to grief. You need people that can deliver the best results."
Many vendors are also too busy to commit the time needed to fully research their sale and attend to requests from interested parties, he adds.
In addition, agents are willing to negotiate commission payments, particularly for properties valued at more than $1m.
That's not enough warning for Maz Hagemrad, who has bought and sold more than six properties by paying commission to estate agents. Next time he plans to do it himself.
"I like the idea of being in control of costs and knowing where the process is going," he says.
"In some cases their value add is not that great. It's just another house to them. They can't see the intrinsic value," he says.
Those considering DIY strategies should shop around for best prices and the strategy that suits their needs.