The case for real estate agent fees
Q. Can you please explain why real estate fees are so high, literally thousands of dollars per sale? The general impression is real estate agents don’t do a lot. Yes, they spend time working with prospective buyers, doing all the paperwork, and work with the owner. Yes, it is a personal business relationship between owner and agent but how many hours? And what warrants them receiving so much over a short space of time?
A.Yours is a common sentiment. Commentator Shamubeel Eaqub says part of the problem is that we’re working with a model that’s been around for decades.
While house prices have risen, the percentage amount charged in commission hasn’t changed, so agents now earn vastly more than they would have previously, for the same amount of work. There are no rules around what agents charge.
There are fixed-fee and lowercommission options, if you’re willing to look for them. Many have had a hard time breaking into the market because people want trusted, big-name brands when it comes to selling their biggest assets.
For an industry perspective, I put your question to the Real Estate Institute of New Zealand.
Chief executive Bindi Norwell says her agent members work ‘‘incredibly hard’’ for the commission they earn. She says many work a 70-hour week and have to keep up with legislation and continuing education requirements.
‘‘The idea that an agent ‘just’ advertises a property and it sells straight away is a huge misconception. The median timeframe for selling a property across New Zealand is 44 days, however in places such as Westland it is as high as 105 days – in what other industry would you be expected to work week after week without any payment whatsoever?
‘‘Additionally, if a property fails to sell or the vendor does not like the price offered, then the vendor is not required to pay for services carried out by the agent, excluding marketing costs. Therefore, an agent takes on a level of risk with each property.’’
Another option is to sell your property yourself – although you’d need to be confident that your negotiating skills will mean you’ll get the same price as an agent would.