Laywers and estate agents get REAL
An innovative pairing between lawyers and estate agents goes live next month, with proponents hoping it will give a good shake-up to the real estate industry.
Thursday, June 8th 2000, 12:00AM
National company REAL Ltd, MREINZ (the REAL bit stands for Real Estate Agents and Lawyers) will launch on July 1 with the opening of some 30 offices. REAL's national project coordinator Warwick Brown says a further six or seven offices should be open by August.
So what's the twist? Well, REAL won't be the average real estate company - and won't charge the average commission to homeowners either. The whole concept's been driven by a group of lawyers to get themselves back into the real estate loop and to trim costs for both buyers and sellers.
While some real estate agents are now charging as much as 4 per cent, REAL's selling commissions will be 2.95 per cent on the first $250,000, 2 per cent on next $300,000 and 1 per cent on the balance (plus $400 plus GST). REAL will also subsidise your REAL lawyer's conveyancing costs by 30 per cent up to a set limit (they claim that, in most cases you'll pay nothing).
About 400 law firms will have an association with REAL, although the firm itself will be owned by a charitable trust. If you want to list your property, you'll have to see a REAL-linked lawyer first who will explain the process and handle your conveyancing and other legal requirements as required. The lawyer will also be able to help you with property finance through REAL Mortgages, an association of lawyers and mortgage broking consultants.
"In a funny sort of way," says Brown, "what we're doing is no different from what's happening at the moment as the average real estate company has links to lawyers on an old mates basis."
"These law firms have looked at and approved the REAL system for buying and selling property and will be recommending it to their clients. They believe that the REAL system is cheaper and more transparent.
"We're really hoping to bring on some sea changes to the real estate business which we believe has atrophied and stuck in inefficient systems, and we believe that's one of the reasons that the Real Estate Institute has been cooperative."
Brown says there's a misconception that lawyers are muscling in on real estate business. However, he freely admits it's in the interests of practice preservation ahead of Phil Goff's Private Member's Bill (currently in recess but likely to be revived later this year), which will open up conveyancing to competition.
"What's in it for lawyers is that they want to get themselves back where they were 30 years ago at the front end of the real estate loop, instead of where they are at the back end. "
Brown says that thirty years ago, it was almost unheard of for a real estate agent to sign up a house vendor or purchaser without taking them along to their lawyer to give the contract a final once-over. The lawyer would talk to the client about finance, any special conditional clauses and the like so any possible problems could be identified and ironed out.
"That hardly ever happens now - and commission rates are up to four per cent."
As for the real estate agents who will actually be working for REAL, Brown believes that the attraction for them is that many people working in the existing industry aren't happy with the way things are run.
"Our sales forces will do nothing but sell; they don't have to shake the trees. They will all have free access to every listing in the country and they won't get any commission for listing. At the moment, 50 per cent of every salespersons' day is getting listings."
Potential homebuyers will be able to check out REAL listings in a weekly list newspaper, on the Internet at www.get-real.co.nz or by phoning 0800 GETREAL.
For all the up-to-date news on mortgages visit the Mortgage News page. Click HERE for the latest mortgage rates.
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