Manawatu Standard

High house prices boost commission­s

- Susan Edmunds

Real estate agents’ income has soared on the back of a hot housing market.

Real Estate Institute data shows there was $90.09 billion of residentia­l property sales, across 100,267 properties, in the year to June. That is up from $69.6b in the year to December 2020 and $53.3b in the year to December 2019.

The amount charged in real estate commission­s vary and firms use different formulas to calculate how much is charged. But at a rate of 3 per cent, which is roughly the average for a midrange property sale, that means the industry pulled in $2.7b in the year to June, compared with $1.6b in the year to December 2019.

There were 16,254 licensed salespeopl­e in the year to June, up from 15,153 in the year to June 2019. That means each agent made an average $166,000. But they would not have received that amount each because commission is split between the salesperso­n and agency, and some sell significan­tly more than others.

On an average sale value of $898,466 in the year to June, sellers would typically have paid anything from $27,000 to $35,000 for one of the big agencies.

Consumer NZ spokeswoma­n Jessica Wilson said her organisati­on would encourage people to ‘‘shop around’’ and play salespeopl­e off against each other to get a better deal. ‘‘We’re not seeing any significan­t difference in service from real estate agents but their commission has increased just because the housing market has been so hot.’’

She said Consumer NZ inquiries had shown Kiwis paid more in commission than people in Australia or the United States.

Real Estate Institute chief executive Jen Baird said calculatio­ns of commission paid were only ever an estimate because no record was kept of what was charged.

‘‘There are a variety of commission models used by agencies, including flat fees and tiered scales, and a choice of service levels across companies. People can also choose to sell their homes on their own and not have to pay commission,’’ she said. ‘‘There is a misconcept­ion that all agents earn six-figure salaries. However, according to the latest MBIE data, the average income for real estate agents is $84,500 a year.

‘‘There has also been increased competitio­n for listings, with the last two months having some of the lowest levels of inventory we’ve seen. This has meant that some agents are competing on commission and others are offering incentives such as free marketing packages in order to secure listings in this tightly held market.’’

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