REINZ angry with planned 50% levy hike on "stressed" agents to fund assumed increase in complaints, loss of agents

REINZ angry with planned 50% levy hike on "stressed" agents to fund assumed increase in complaints, loss of agents

The Real Estate Institute of New Zealand (REINZ) is crying foul over a proposed 50% levy increase it says the Real Estate Agents Authority  REAA is planning to impose on all real estate agents.

The REINZ said the REAA is proposing to increase levies from NZ$495 to NZ$760 per annum. The levy funds complaints processes; the provision of information to consumers, and licensing people and companies who work in the real estate industry, it said.

"We cannot support a significantly large increase in levies being imposed on an already stressed industry,” REINZ chairwoman Rosanne Meo said.

“We understand that the REAA intends to raise their levies to help off-set an assumed increase in complaints as well as a shortfall of income due to an unplanned decline in the number of licensees,” she said.

“In fact we know that the number of complaints have fallen from 55 to an average of 14 per week and the drop in licences sadly reflects the market place.”

Here is the press release from the REINZ:

The Real Estate Institute of New Zealand (REINZ) has reacted strongly to a proposed 50% levy increase the Real Estate Agents Authority (REAA) is planning to impose on all real estate agents.

“REINZ is committed to working constructively with the REAA, and is supportive of the establishment of a regulatory body for our industry. We cannot support a significantly large increase in levies being imposed on an already stressed industry,” says Rosanne Meo, REINZ Chairman.  

“We are very concerned about the timing and the quantum of the proposed levy increase.  We challenge the basis of the proposed levy increase and regard it as neither fair nor reasonable.”

The REAA is proposing to increase their levies from $495 to $760 per annum.  The levy funds the complaints process; the provision of information to consumers, and licensing people and companies who work in the real estate industry.  

 The projections included in the REAA’s statement of Intent (July 2010) show that income from operating levies and applications for 2011 will need to more than double from $2.825m to $6.630m and then double again to $12m in 2012.

“We understand that the REAA intends to raise their levies to help off-set an assumed increase in complaints as well as a shortfall of income due to an unplanned decline in the number of licensees,” says Mrs Meo.

“In fact we know that the number of complaints have fallen from 55 to an average of 14 per week and the drop in licences sadly reflects the market place.”

An independent benchmarking analysis by Grant Thornton undertaken recently showed that when compared to other regulatory bodies, the cost of processing a complaint through the REAA is five to 24 times more expensive.  In fact one organisation is able to process its complaints up to 72 times cheaper than the REAA.

“The cost of processing a complaint through the REAA seems high.  The economic climate has placed a huge strain on our industry.  The REAA’s focus needs to be on managing costs rather than simply passing on more costs through further levy increases,” Mrs Meo says.

REINZ is encouraging all members to make submissions against the proposed increase in levies because the industry has not sufficiently recovered from the global economic recession and the industry wants the REAA to undertake a cost efficiency analysis of the complaints process prior to any increase.

Consultation with the industry began yesterday and runs until 31 October.  As well as seeking submissions from the industry, the REAA is hosting two further industry meetings in Wellington and Christchurch this week.

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26 Comments

My heart bleeds for them.  If they can't afford a few bucks fee increase they are obviously useless agents who dont sell much....so get out and get a real job!

That new levy is very low. Other members of professional organisations pay way more. Perhaps the public should be outraged that agents in NZ charge a far higher percentage commission, than they do in other countries such as the UK, and also charge for advertising on top of that..

"...already stressed..."...haaaaaaahahaha so much for the RE BS about rising sales and fatter fees. Well you lot were happy to cream off the fees when the bubble was roaring...now you get to suck the lemon. Couldn't happen to a more deserving bunch.

"We cannot support a significantly large increase in levies being imposed on an already stressed industry,” REINZ chairwoman Rosanne Meo said."

Stressed industry? strange, I thought the industry was always on the up & up? What happen to all those lovely decade long rip-off commissions guys? Didn't YOU save either? ;-) tut tut

i look forward to paying the fees once I finish my studies - small price to pay to be able to really help people rather than just advise from a distance....

I have been speaking to colleagues around the country lately and the clear majority are saying that selling houses is getting harder and harder and that they don't expect it to improve for some time as the economy needs to come right and give buyers more confidence. More and more they are competing with trade me and other private sale systems and so their incomes are dropping. I expect a lot of agents currently in the business to leave over the next few months. There will always be the dreamers who will join the ranks and replace the leaving multitude however a lot of them will not last long in these times.

Anything not sold before the end of the summer is set to be bashed down to 03 prices as the rising rates arrive to slam the market for a six. (I been looking at cricket) You can see them on Trademe trying to make the point that the asking price is below the GV. Fat lot of good that's doing. Stuff is like stuck man. Imagine having all your capital trapped in property and waiting waiting to get it out...and another week goes by...oh crap what a poor investment.

Selling houses is no harder now  than it was at any time before, ever .The problem is that agents dont want to be honest with sellers about  the reality of a slumped market . The truth is that prices really do need to fall dramatically and sales will pick up again. There has been a dynamic shift in the market , and Agents need to educate their sellers .  The Agents that  will survive in this market are the ones honest enough to tell sellers the truth . Things are tough in the real economy , the  interest rate cycle is pointing upwards , the economy is not out of the woods , consumers are paying down debt and house prices need to adjust to the new reality . If agents are not honest with their clients , they ( the agents) are going to go hungry...... simple.

Seems to me you spend all of your time speaking to agents "lately"

And I quote ' Already stressed industry  ' , Really ? Well blow me down , I thought all was well in the Real Estate Industry if their hype is to be believed  . The neighbours house is for sale , and the Pointy- nosed pompous poofey RE Agent just this Satruday told me the Bernard Hickey was a loon who was seen as a Real Estate agent's 'bully' and who had it all wrong  . He assured me the market is flying ,..... ' dont you want to list your house with us ? He is still driving his impeccably polished  recent model Jaguar , so it cant be all bad .

The Jag should of been a clear warning for your neighbour to stay well clear of that shark. Tell your neighbour to save his money, sell it himself create his own commission! Why lose twice in this market

Wolly, is the prices of residential prperty going ''to be hit for a six'' a fact , or is it just what you hope will happen?  The big banks have done some serious risk analysis and it's not their conclusion (except for farming properties), but what would they know compared to such a learned person from Marlborough ?

Muzza , I think Wolly is right on the money . The yield curve is pointing to the heavens , and Dr Bollard is wasting his time trying to keep the OCR so low .

We could be facing a perfect storm of  a double dip recession ( starting ithe US ) , increased interest rates ( to keep up with the Ozzies ) and an exchange rate that is too high, making our exports un-competitive .

I have yet to see the Banks come out with anything positive about the housing market in the past quarter . They are sticking to their guns of a 20% down-paymnet on mortgages , their scrutiny of income is better than ever before , and they do proper valuations now before passing a mortgage . I tend to go with Wolly's view of the current reality  

Boatman

"....and they do proper valuations now before passing a mortgage".

Glad to hear this.

Can you tell me how  a 'proper valuation' is done?

Is it standardised across all lenders?.

Who pays for the valuation?

Thanks in advance.

We had to use a registered valuer to get our mortgage - the bank actually put us on to somebody they knew in our area.  We could have used anybody though. 

They did a reasonably thorough job - they look at the condition, size and location of the property and also thoroughly investigate all other property sales in the area.  They look particularly closely at the sale prices of other properties that are "equivalent" in size, location etc...

I'm guessing that valuations can still vary from one registered valuer to another however.  I'd just recommend getting somebody who really understands your area rather than somebody from the other side of town however.  Oh, and the purchaser pays for the valuation! 

If these agents can't afford $265 pa more to be registered with a professional body then they shouldn't be in this profession. These agents act on behalf of people making there biggest life purchases and should be happy to "invest" in a professional body.

On another note "Stressed agents" I thought the property market was okay Mr Barfoot and Thompson?

Simple solution: Increased levies is a business expense that can be paid for by the real estate companies who have been enjoying stellar profits over the years (Harcourts, B&T, etc.). It's a small price to pay for the loyalty and financial well-being of your agents.

KW John , I have recently been through this 'proper valuation' for the sale of a family owned property. As far as I can see the valuation process is not standardised , but many banks were previously doing what they called 'desktop ' valuations, and this has stopped.... I am told  .

I have no idea precisely what a desktop valuation  involved but I assume they did something like look at property on GOOGLE EARTH , and then compared other sales in the area .

I guess a desktop valuation is something like a farmer doing a 'Ute window' inspection of his flock of sheep to check if they are all well. Not very comprehensive or thorough , but if it looked okay then it was accepted as okay .  

Anyway , they now send a real flesh and blood human from an independant valuation company to asses the property properly . He would have to have professional indemnity insurance , so he is on the hook if he cocks up . We were not asked to pay for this ( as sellers) so I assume its part of the bank's raising fees passed on to the borrower .

In the end there is only one valuation that counts and that's the price someone is prepared to pay out of their own pocket, net of any debt being shoved along behind it.

Thanks Boatman

Done differently in the UK (all those years ago). Seemed more sensible than just letting your builder mate have a squizz.

http://www.godirect.co.uk/mortgages/mortgage-surveys.php gives you an idea if you're interested..

Not foolproof - and riddled with clauses that 'excused' the surveyor.

Caveat Emptor eh Fred.... love it.

I think this fee increase needs to be put into perspective. As I understand it, it is going to rise to something just under a $1,000 from about $595.00 Currently there are around 17,000 registered agents.

Compare this to the Motor Traders of which there are only about 2,300 and their annual license fee is still only $595. I think the agents have a fair gripe as both organisations are set up for consumer protection.

I also understand that for every 300 complaints only about 30 ever go anywhere, so a lot of time is wasted dealing with issues that must be a strain on the agents.

I think it is about time that compliant ants had to pay a fee that could be refunded if upheld, which would sort out a lot of time wasters in this PC world of ours.

This is just another Government run department that thinks funding falls out of the sky. They forget someone has to earn it!

Many here keep on proclaiming the doom and gloom for the real estate market, however I have a question. With 17,000 real estate agents and only 2300 motor traders do we sell more houses on a annual basis than cars? I would genuinely be interested to know.

@Gavin - according to the MTA there were 54,404 NEW car sales last year.  On top of this would be second hand, sorry, pre-loved cars, for which I would imagine a much, much higher number based on our reliance on Japanese cast offs.  During the same period, REINZ report 69,929 dwelling sales.  So I think it's pretty certain that car dealers sell more cars than agents sell houses.

Do bear in mind, that the number of motortraders (2300) is not equvelent to the number of actual car sales(wo)men.  I beleive that number is about 11,000.

You sound like an agent. How can you round $760, and say it is 'just under $1000' 

You are comparing apples with oranges, when comparing car sellers with real estate agents. Real estate is far more complex to resolve when people have a compliant, and involves far far more money and expensive lawyers.

Thanks for that I appreciate it. So it appears that every person selling Real Estate has to be registered (as well as the agency they work for) and pay a fee, yet only those owning a Traders licience for selling cars has to pay a fee and salespeople working for them don't have to be registered or pay a fee. Gets very interesting.

Perhaps quite apt that the benchmark for Real Estate Agents appears to be Used Car dealers...?

$760  ? they are joking Right?  this tongue in cheek ??

A factory worker pays more in Union fees per yr.

A  part timer person in a fast food outlet pays similar

A Truck driver pays far more than this

A tradesman pays more to their Association

And All of these people earn far less than a Real estate agent.....

I have to ask again, this is a joke, right?

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