High house prices boost commissions
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.’’