What fixed fee agents offer investors

Speaking to Smart Property Investment, James Kirkland, director of sales at fixed fee agency Upside Realty, explained the difference between a traditional agent and a fixed fee is the unknown.

“With a commission-based fee, what a vendor will be paying at the end of settlement is really quite unknown, and the variation between different agencies are quite large. In our research, it can vary across Australia from 1 per cent, right up to 3 per cent,” Mr Kirkland said.

“In a fixed fee model, at the very beginning, you know, and you can do a lot of planning around exactly what you're going to pay, regardless of what the sale price will be.

“It gives a lot of security in knowing, and particularly for investors, they can plan budgets, etcetera, and what their next move is, knowing what their exit cost will be.”

Buyers may also wish to consider a fixed fee agent, although for a different reason.

Simon Pressley, managing director of Propertyology, said to Smart Property Investment that there was nothing wrong with the model itself, but it all comes down to sellers and if they get the most talented salesperson.

If you're selling a house or apartment that's worth hundreds of thousands of dollars, and the difference between he fixed-fee model of, say, $10,000 commission, [versus] a variable commission which might equate to $20,000 commission, it's actually not a lot of money if you've got a really good salesperson working for you, and they can negotiate an extra $50,000 to $100,000 sales price for you,” Mr Pressley said.

“That's the problem with it, it's not so much that it's fixed, it's where it's fixed at.”

Mr Pressley said when buying through Propertyology he prefers to buy from fixed fee agents because, in his experience, he sees them as a “walk-over”.

“All they want is just, 'Let's just get this thing off my books,' ... they’re chasing the high volume and low margin,” he said.

“We see a property listed for sale by one of these guys and think, great! There's a bargain! That's the problem with the model.”