The true cost of cutting real estate commissions

From the risks of low commissions to the benefits of expert negotiation, learn how the right real estate commission strategy can lead to better sale outcomes
Despite the whirlwind of tech advancements, it's the traditional Property Practitioners who remain the heart and soul of property sales, consistently fetching the best prices for sellers in South Africa. Yet, in the twists and turns of a challenging market, it's not uncommon for Property Practitioners to offer lower real estate commissions - simply to secure a selling mandate.

Seeff's own James Lewis has good news: in areas like the Southern Suburbs, Hout Bay, and Llandudno, traditional Property Practitioners account for over 70% of sales. This is a reminder of the unmatched value and trust that sellers place in these seasoned pros, despite the lower commission trend.

What Is The Average Real Estate Commission? 
Typically, you might see a real estate commission average of 5% plus VAT, though this can climb to 7% or higher in areas where selling properties proves more challenging.

However, James Lewis reports that desperate Property Practitioners will often slash their commissions, ranging from as low as 1.5% to 3% plus VAT. The problem with this approach is that it's not sustainable for a successful real estate business, nor does it account for compliance with the myriad of legal standards set by the Property Practitioners Act, Consumer Protection, Rental Housing Acts, and more.

For the seller, opting for a Property Practitioner who cuts their commission may seem like a smart move, but it could actually backfire. These Property Practitioners, eager to close deals swiftly, may not invest in the necessary negotiations to secure the best sale price and could leave sellers financially worse off in the long run.

The Role of Expert Negotiation and Strategic Marketing
Sharyn Dabbs, a Seeff Property Practitioner with 20 years of experience in Bergvliet, proves the positive impact of expertise on property sales. Consider these examples:

A Balmoral Road property, listed at R6.495 million, received two offers within three weeks. Through negotiation, the sale price increased from an initial offer of R5.9 million to R6.35 million, earning the seller an extra R450,000.

Another example is a Fountain Road property listed at R5.495 million, which also attracted two offers quickly. Negotiations raised the selling price from R5.25 million to R5.5 million, exceeding the asking price by R5,000 and giving the seller an additional R250,000.
These sales demonstrate the value of a skilled Property Practitioner. They achieve higher final prices and complete sales much faster than the market average of six to nine weeks.

James Lewis adds that effective property selling involves more than just listing online. It requires a strategic marketing approach, extensive networking, and presenting the property in the best light. A crucial part of this process is vetting buyers carefully to ensure a smooth sale from start to finish. All of these aspects, coupled with sharp negotiation skills, accompany an experienced Property Practitioner. 

We know that every seller wants to achieve the highest possible sale price. However, succumbing to the lure of reduced commission rates might not be the financial win it seems.

A reputable Property Practitioner, someone with a wealth of experience and a deep understanding of the local market like Sharyn Dabbs, values their integrity far too much to compromise on quality for the sake of their commission. As Lewis aptly points out, a trustworthy Property Practitioner is committed to securing the best outcome for their client, not just closing a sale at any cost.

To learn more: read Seeff's blog on selling privately vs. with a Property Practitioner, or explore our tips on selling a house for the first time.