All Topics / General Property / should i buy directly from a developer?

Viewing 12 posts - 1 through 12 (of 12 total)
  • Profile photo of aoao
    Participant
    @ao
    Join Date: 2006
    Post Count: 49

    Hi all
    Just wondering if i could save some money by purchasing directly from a developer instead of through an agent…

    the developer said so cos they “can pass on saved commission” to me while on the other hand an agent told me exactly the opposite story: they can save me some money if i buy using an agent.

    who is telling the truth and who is lying? generally speaking how much commission can an agent make from selling a property?

    any comments greatly appreciated
    have a safe and happy new year!
    ao

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Both are correct. Sometimes you can save, sometimes you can be paying more. I think it depends on the project and the developer.

    Terryw
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    Profile photo of myabodemyabode
    Member
    @myabode
    Join Date: 2006
    Post Count: 10

    Hi there AO.

    I own a realestate agency in Springfield Lakes in Brisbane,

    And i have worked one of the biggest devolopers in the country before i started my company..

    NOW, both the agent and devoloper can sell you the same property then the devoloper has allready made allowance fot the agents comms in the price, so this means the devoloper would make more profit….

    The commission payable to an agent on a $350,000 would be $10,120.00 inc GST in QLD, remember the agent has to give half of that to the office and then looses half in tax, still not a bad income tho.

    I hope that was helpfull, if i can help any further please drop me a line.

    Cheers

    Profile photo of AUSPROPAUSPROP
    Participant
    @ausprop
    Join Date: 2003
    Post Count: 953

    “an agent told me exactly the opposite story: they can save me some money if i buy using an agent”

    they are either lying or misrepresenting the developer… remember that an agent works for the seller, not the buyer. They are obligated to seek the highest possible price for the property and have no interest in saving you money.

    similarly, a developer has no interest in saving you money. if they can shift a unit of stock and pass ont he saved agents fees they might, or they might split it with you, or they may try and pocket the full amount. it is really up to you to determine what is best for you.

    Profile photo of L.A AussieL.A Aussie
    Member
    @l.a-aussie
    Join Date: 2006
    Post Count: 1,488

    Before taking any of the statements made by the agent or developer as the gospel truth (which it most likely is not), do your own research to find the truth.

    Check out the prices of similar EXISTING properties which are for sale in the area – the newer the better, but they must be ones that have been bought and are for sale, or sold, already. This is the only way to establish true consumer demand, not developer profit.

    Once you have done this then go back to the developer with your findings and negotiate as hard as you can. They have to sell their product so they can move on to the next project.
    If they won’t budge on price, just wait a month or two ( I waited 4 months once and saved $50k on a townhouse), then go back again. Odds are there will be a couple of properties still left for sale in the project.

    You might miss out, but the deal of the century comes along every day.

    By the way, another developer trick is to offer you a rental guarantee for a set period. You can ‘guarantee’ that the cost of that rent is built into the purchase price.

    Cheers,
    Marc.
    [email protected]

    Profile photo of bridgebuffbridgebuff
    Participant
    @bridgebuff
    Join Date: 2006
    Post Count: 189

    Are you trying to buy a PPoR or an IP?

    Because I think it is very hard to make money from land packages. Somebody else is getting the profit for their work. If you want to make money, look for deals that you can improve. Remember Problem + Solution = Profit

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Think you made the right move myabode.

    I am not a great fan of our friend Maha even if he is my neighbour.

    Cheers

    Richard Taylor
    Residential & Commercial Finance Broker.
    Licensed Financial Planner. Ph: 07 3720 1888
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    Looking for life cover – We Guarantee to beat any quote you have in writing.

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of PosEnterprisesPosEnterprises
    Member
    @posenterprises
    Join Date: 2006
    Post Count: 290

    List of 6 or more suburbs that i can research!

    Hi can anyone advise which areas are good to invest in South East Qld area?

    being from WA got no idea!

    thanks

    [biggrin]

    Profile photo of AUSPROPAUSPROP
    Participant
    @ausprop
    Join Date: 2003
    Post Count: 953

    do you really want to invest in an area that you have no idea about? intimate knowledge of a market allows you to buy well and make a profit regardless of what the newspapers say the median has done or will do

    Profile photo of aoao
    Participant
    @ao
    Join Date: 2006
    Post Count: 49

    Hi
    thanks a lot for all your feedbacks.
    actually the situation is this: the agent wants my business so badly that he says he’s willing to give me discounts from his own commissions(his logic is some commissions are better than nothing). my logic is like this: since the agent gets paid from the developer, the developer should be able to give me a bigger discount but i’m just not sure if i can get that…

    cheers
    ao

    Profile photo of myabodemyabode
    Member
    @myabode
    Join Date: 2006
    Post Count: 10

    What u say is true,
    BUT In most cases the devoloper and the agent has a reasonable relationship, the devoloper may not want to steal the sale for fear of pissing of the agent, after all its the agent who sells the product for him!!!! Take the agents willingness to give away his income,

    Profile photo of condogcondog
    Participant
    @condog
    Join Date: 2006
    Post Count: 56

    Sounds to me the very fact that this conversation has taken place should ring alarm bells for 2 reasons
    1. The developer is ruthless and not supporting his team or system, which may indicate hes not trustworthy or
    2. The develper has too much time on his hands and may indicate he is havig trouble moving stock or is unhappy with his agent because his agent hasnt sold much lately.

    Ether way remember do all your sums and base your purchase price on what the sums tell you, not what the developer and agent tell you. Negotiate hard as the hourly rate is the highest hourly rate you will ever get.

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