There’s nothing worse than a cheap real estate agent.
There are plenty of low cost, fixed fee agencies on the market these days but it’s worth querying their incentive to get you the best result. As with all walks of life, you get what you pay for and real estate is a labour intensive job that needs to be decently remunerated for the vendor to get the right outcome.
On the flip side, it pays not to pay too much for your real estate commission fee.
Thanks to the internet and compliance, real estate agencies now all access the same pool of buyers and follow the same sale processes so these days high commission fees are a triumph of brand over performance. Don’t settle for a model that serves the agent better than the vendor - after all, it’s your financial future on the line not theirs.
5 reasons why real estate commission fees in New Zealand are so high
- The traditional stepped commission fee structure is a hangover from the days when the average sale price in Auckland was half what it is now. In those days, the base fee of 4% up to the first $400,000 ensured agency overheads were covered.
- The big agencies remain unchallenged so they’re unlikely to voluntarily reduce fees. It will take an external factor or a new entrant to the market to change the status quo.
- Big real estate agencies carry expensive overheads like multiple offices, admin staff and duplicated management resources and they’re slow to adopt innovative tools like online accounting and trust accounts.
- Traditional real estate agencies have big sales teams to create a perception of size when in fact only a handful of their top salespeople deliver any sales. The rest just pad out the numbers.
- Real estate in New Zealand has traditionally had a low cost of entry which has brought a high number of salespeople into the industry. So the best way for the industry to attract new recruits is to charge high commission fees.