Lawyer disappointed real estate business is flat
The lawyer behind real estate business ACRES (A Complete Real Estate System) is disappointed the business hasn’t taken off.
ACRES director Mike Tolhurst launched the programme in 2011 following a law change that allowed lawyers to sell real estate so long as they do not charge a commission.
Mr Tolhurst says that since then, the lawyers who are part of the programme have sold 32 properties valued at $18 million in two years. He charges $10,000 flat fee per house.
In contrast, online real estate company 200 square, which is just over two years old has sold over 100 houses, totaling more than $50 million.
He says the failure of REAL back in 1999 had put a lot of lawyers off selling homes.
But he says that was a bricks and mortar real estate company started in a tough period when the market was flat.
“Now, since 2008, we can sell real estate legally and we have an internet based marketing program.
“Everyone goes on Trade Me to look for property – you don’t need bricks and mortar. It’s a different model.”
The system works by providing vendors with a real estate professional to do the marketing and open homes and splitting the flat fee with the lawyer.
Mr Tolhurst says it is “money for jam” and more profitable, with less risk than conveyancing.
He says at least the ACRES service is driving down the price of traditional real estate agency fees.
For example, he says although he lost a recent bid to sell a home, the REINZ licensed agent who won the bid had to drop his fee down by more than $15,000 to compete.
He says real estate fees are too expensive as, for example, a Queen’s Counsel can earn $600 an hour while by his calculations a real estate agents are earning $980 an hour.
But Real Estate Institute chief executive Helen O’Sullivan says at the end of the day there is more to just legal advice on a transaction.
“The sale process is one whole process - it is not just taking photos or writing the blurb. It is about understanding the market.”
She says registered REINZ members get access to data and information about properties that enables them to know the true value of a property and this gives them an advantage.