Selling is no laughing matter

  • by AICWA
  • 30 Jul, 2022

Ever wondered why there are so many differing opinions on what your property is worth? This mystery can best be explained in a short little story that goes a little like this…

A real estate agent, a banker and a valuer walk into a bar…
The bartender, having served a few agents in his time, instantly spots the woman with the Prada bag and sunglasses as a real estate agent.

The bartender, eager to seize the opportunity, asks the well healed agent how much she thinks his 2×1 unit on the river might be worth.

The agent, not pausing for a single moment, replies “honey, I’m on a winning streak, how else do you think I can afford that BMW M3 coupe parked out front, I can tell you we’ll get $50k over the current market value and better still, we’ll have that unit sold before you have a chance to wipe this bar down.”

Having narrowly missed out on entry to applied physics and astronautically science at Uni, the valuer, keen to show he had some skin in the game, interjects by saying “given these market conditions and the latest stats that I’ve been pouring over in conjunction with the north facing aspect of your unit and its proximity to a dual highway, I value your unit at $55k below that of my friend the real estate agent.”

Not to be outdone the banker, who having spent the last 20 years signing up clients to credit cards at one of the 4 major banks says, “why not access some of that equity you have and score yourself one of those amazing low interest rates? Don’t sell now, instead increase your loan? Based on my analysis your unit is worth $45k less than my bean counting friend the valuer, but I’m sure we can secure you some cash for a fresh lick of paint for this bar. You’ll have that 25-year loan paid off in no time with all the new customers you’ll attract”.

Just then in walks a settlement agent, after all it was 6:30pm and having notched up another 12 hour day on hold to various banks and government agencies they had earned themselves a drink.

The bartender keen for another opinion, asks “what do you think my 2×1 unit on the river is worth?” “Well” said the settlement agent, “you have to realise any money you might get from selling might not necessarily end up in your pocket, you see there are a bunch of people who need to get paid along the way. My good friend here the agent will want their commission which is going to set you back anywhere between 2% – 5%. My buddy the banker is going to want the remainder of the loan you still owe plus any fees for discharging the mortgage. And then there’s the question of whether you owe the government any back taxes or capital gains and I reckon the buyer will probably insist you fix that old water heater and replace the air conditioner that hasn’t worked since last summer. Then there’s the question of some unpaid strata levies, the local council rates that you have been putting off, not to mention that water bill, all of which will be coming out when we settle your property”.

Pausing for a moment while the bartender grappled with the enormity of it all, the settlement agent finally says, “so… you want to know how much your property is worth? well… it all comes down to how much someone is prepared to pay for it.”

So to wrap this little tale up, we know that a real estate agent will want your business, after all, there’s commission to be made and car repayments to be paid. The valuer will use a combination of sales evidence and proximity to amenity to either increase or decrease the valuation because, as he knows, the numbers don’t lie. The banker will always underestimate your property’s worth especially when it comes to calculating what you can borrow, after all no one wants another Royal Commission! The settlement agent on the other hand is impartial and realistic, knowing all the hidden costs of selling.

So before you think of selling chat with a settlement agent to understand all the costs before you start dreaming of your next property purchase.