More than 600 real estate sales people left the industry in the year to March

Property / news

Real estate agents are leaving the industry as commission levels tumble

27th Apr 23, 10:21am by Greg Ninness

Just over 600 real estate salespeople have left the industry over the year to March as the housing market slump bites into agency commissions.

According to the latest figures from the Real Estate Authority, the statutory body which regulates the industry, the number of people with active licences either as salespeople or agents, declined from 15,415 at the end of March last year to 14,808 at the end of March this year, a reduction of 607 (-3.9%).

There was also a slight reduction in the number of active real estate company licences, which declined from 906 at the end of March last year to 895 at the end of March this year.

This year has seen a dramatic reversal of fortune for the real estate industry with the decline in licence numbers coming after they hit an all time high in 2022.

There has also been a spike in the number of licence holders choosing to suspend their licences, which means they are no longer working in the industry but could return at a later date by renewing their licences.

"In the period 2020-2022, REA saw a surge in new licence applications as more people entered the real estate profession during the hot real estate market and when other industries had slowed in response to Covid-19 conditions," the REA said.

However, the slump in housing sales over the last 12 months had made market conditions much tougher.

"This is a tough market with low stock, reducing prices, increasing interest rates and cost of living challenges," REA Chief Executive Belinda Moffat said.

Interest.co.nz estimates that the total gross residential sales commissions throughout the country declined from $457 million in the first quarter of 2022 to $317 million in the first quarter of this year.

That's a decline of $140 million (-31%) in industry revenue in the first quarter of this year compared to the same period a year ago.

Compared to Q1 2021, estimated commission revenue was down by $277 million (-47%).

The decline in commission revenue was particularly severe in Auckland where it was down by 40% in the first quarter of this year compared to a year earlier and down by 58% compared to two years ago.

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70 Comments

by E46 | 27th Apr 23, 10:27am 1682548045

🎻

by tothepoint | 27th Apr 23, 10:38am 1682548722

Not at all surprising for a cyclical industry during a downturn.

No doubt some ex-REAs will now be selling used cars, vacuum cleaners, homeopathic remedies and so forth - exploiting their generic "skills".

TTP

by Retired-Poppy | 27th Apr 23, 11:41am 1682552462

Praying Mantis begins devouring its own.......

by IT GUY | 27th Apr 23, 12:02pm 1682553761

Thats what traders of any financial commodity do poppy.....

by Crazy Horse | 27th Apr 23, 2:05pm 1682561111

How sad never mind ....

by DDDDebt | 27th Apr 23, 10:37am 1682548641

A few years back I used to go to open homes

I’d ask the agent what price they were expecting

They’d say early, mid, late this or that amount etc

I’d say ‘really, for this place’?

Sometimes I would say “I think the more you cook the market, the more likely it is to burn at some point, wouldn’t you rather slow growth but lots of transactions and commissions”

Normally they didnt understand my point or often said something like “we can’t get enough listings, that’s our only problem”

Well, they solved that problem

by Iceman | 27th Apr 23, 11:00am 1682550008

That’s very noble of you, but the world and global real estate doesn’t work like that if you haven’t noticed yet. This is all cyclical in saying that, the top agents are still around and survive these times.

by Yvil | 27th Apr 23, 11:08am 1682550523

The world just doesn't work like that period. If you're selling a product for a living, no matter what it is, you're going to try to get the best price for it. For those who are employees and struggle to understand this, it's the same with your wages, you're not going to say "no please don't pay me this much, pay me less". It's just that we're very one-eyed, when others try to earn more, we frown and consider it preposterous, when we do it, it's of course fine.

by Weld | 27th Apr 23, 11:14am 1682550873

Turnover can compensate for a lower unit markup. Look at the Warehouse.

by DDDDebt | 27th Apr 23, 3:10pm 1682565045

The average estate agent fee in the UK is 1.18%+VAT (1.42% inc VAT) for a sole agency agreement, according to TheAdvisory.

https://www.movewise.co.uk/articles/estate-agent-fees

What I have noticed about global real estate is that many countries don't pay the ridiculous fees we do.

Though, in the US they pay double as they often use a buyer's agents.

Will be interesting to watch the market over the 'fee famine' years of the cycle to see if some change their model etc

by Prickle | 27th Apr 23, 2:58pm 1682564314

I’d ask the agent what the selling price was and they would say, while leaning against the bench, “just have a walk around and then tell me what you think”. They had no clue.

by Shaft | 27th Apr 23, 10:36am 1682548566

And nobody noticed 🖕

Yet the fat cat " franchise owner" says goodbye staff as he goes to pick up his new Audi .

by scooter_mcgavin | 27th Apr 23, 10:37am 1682548640

good riddance

REA's are the bane of my existence.

-SMG.

by nktokyo | 27th Apr 23, 10:37am 1682548671

Those that stick it out and make ends meet in times like this will do well in the long run.

by tothepoint | 27th Apr 23, 10:47am 1682549226

Hi nktokyo,

Those that stick it out and make ends meet in times like this will DO WELL in the long run. [emphasis added]

"Do Well" at what? Misleading and deceiving people?

Do REAs ever "Do Good"? Not likely......

TTP

by nktokyo | 27th Apr 23, 10:50am 1682549402

Sorry, sorry. Forgot what website I was on there for a moment.

Thieves! Good riddance to the lot of them. Etcetera.

by Dgm | 27th Apr 23, 10:51am 1682549480

Your unpleasant side is showing..

by Shaft | 27th Apr 23, 10:40am 1682548812

The commission structure of the RE cartel is shocking

The franchise owner get 50+% of every sale for owning an office and a secretary.

by nktokyo | 27th Apr 23, 10:51am 1682549471

And paying to rent an office, indemnity insurance, marketing etc.

by WellingtonInvestor | 28th Apr 23, 9:11pm 1682673062

Isn't that much as a percentage. 95% of marketing now seems to be online and trademe.

by Averageman | 27th Apr 23, 10:58am 1682549926

The 20% of agents selling 80% of the houses get a much higher split than that.

by Matt_09 | 27th Apr 23, 11:03am 1682550187

Most agents will be on at least a 60/40 split up to 80/20. Take out of of that costs etc and most businesses will run on a circa 10% margin. PM book is where the cashflow and exit is

by Dgm | 27th Apr 23, 10:46am 1682549196

Ouch.. 4% is a bit of a drop.. I assume that will only increase this year

by J.C. | 27th Apr 23, 10:54am 1682549652

"You can't play in the man's game, you can't close them—go home and tell your wife your troubles. Because only one thing counts in this life: get them to sign on the line which is dotted."

- Blake. Glenngarry Glen Ross

by ZeroCredibilit… | 27th Apr 23, 10:58am 1682549891

Cartman: Mom, what job could you possibly have, you don't know how to do anything?!

Mrs. Cartman: I'm a real estate agent

by peter.may | 27th Apr 23, 11:11am 1682550663

Could apply equally to most politicians

by Averageman | 27th Apr 23, 10:57am 1682549863

A lot more will exit over the rest of the year. The good ones are still busy, the pretenders are...not.

by ex agent | 27th Apr 23, 11:02am 1682550128

A lot of them will find it hard to get a decent job through having a lack of education and talent. That is why they were agents in the first place. They are vastly overpaid for what they actually do.

by Yvil | 27th Apr 23, 11:11am 1682550684

Is that why you're no longer an agent, Ex Agent?

by ex agent | 27th Apr 23, 11:51am 1682553107

Never was one. I would be too embarrassed to be one.

by Retired-Poppy | 27th Apr 23, 12:04pm 1682553853

What's in a name? I'm "Retired Poppy" yet I choose to work full time.

by Yvil | 27th Apr 23, 12:11pm 1682554291

Ex agent, so you think you can troll others by saying that you're an ex agent when it suits you, but then deny it, even though it's your name (you chose it). Yeah right, pull the other one Ex agent.

by ex agent | 27th Apr 23, 12:16pm 1682554569

Does your pseudonym reflect who you are? Are you an evil person. I presume you are not evil notwithstanding a lot of your incessant comments tend to portray you as being a nasty person.

by IT GUY | 27th Apr 23, 12:20pm 1682554841

he is not a meteorologist ...

lets just drop this kids, lets just bath in the demise of real estate commisions.

by Yvil | 27th Apr 23, 2:20pm 1682562011

The problem with your name, if you've never been an agent, is that it's fake and disingenuous. You chose that a name to make others believe you used to be an agent, and that you have insider knowledge of how agent operate. (read how nasty they are).

As for my name, it's not evil, it's Yvil, a nickname my friends gave me a long time ago, based on my first name.

by ex agent | 27th Apr 23, 2:30pm 1682562642

I did a four year degree and worked in a profession for 30 years. While doing that I dealt with agents at times. That’s how I know how they operate. I reiterate I would be embarrassed to be one. They are down there with politicians and car dealers.

by Yvil | 27th Apr 23, 2:52pm 1682563965

So tell us, why did you call yourself ex agent?

by Zwifter | 27th Apr 23, 3:00pm 1682564429

He could be 007 or a spy that came in from the cold, does anyone really care ?

by IT GUY | 27th Apr 23, 3:09pm 1682564940

This has really triggered you...... I would try focusing some something actually important, deep breathing. Happy hoour starts in 42 mins at 4pm , pop a tramadol now and report back at 6pm

by ex agent | 27th Apr 23, 5:17pm 1682572646

I suspect Yvil is an agent as he has really centred on my pseudonym. It’s just a name. The topics are far more important than pseudonyms.

by Yvil | 27th Apr 23, 11:03am 1682550236

the number of people with active licences, declined from 15,415 at the end of March last year to 14,808 at the end of March this year, a reduction of 607 (-3.9%).

It would be interesting to know how many licensees there were, before Covid.

by Retired-Poppy | 27th Apr 23, 11:46am 1682552818

This might help....

https://www.rea.govt.nz/news/licensing-statistics/

by Yvil | 27th Apr 23, 12:13pm 1682554419

Perfect, thanks RP. I'm surprised the amount of RE licences didn't increase much at all over 2021-2022.

by Mr Frank | 27th Apr 23, 11:09am 1682550565

As usual, during the downturn cycle the small players realise they actually don't actually have the skills to close deals so they walk over to the departure lounge.

by Matt_09 | 27th Apr 23, 11:22am 1682551369

Very true Mr Frank. Plenty of salespeople have made a crazy amount of money over the last 5-8 years without truly being tested or having the skills required when the going gets tough.

by J.C. | 27th Apr 23, 11:46am 1682552796

Plenty of salespeople have made a crazy amount of money over the last 5-8 years without truly being tested or having the skills required when the going gets tough.

So they're smart. ROE - Return on Effort. Make hay while the sun shines.

by Shaft | 27th Apr 23, 9:05pm 1682586344

Amyone can sell water in the desert.

Try seĺling sand

by nguturoa | 27th Apr 23, 11:12am 1682550743

Is this a real job really? RE agents.

Any crook would be a great RE agent as they lie through their noses.

We teach our kids that do not lie. What do RE agents teach their kids as they lie for a living.

by Averageman | 27th Apr 23, 11:14am 1682550853

Bluffing the vendor with a high estimate to sign the listing is the first sale. In a declining market its a much tougher road to actually realise that and get paid for the sale..

by Yvil | 27th Apr 23, 11:14am 1682550844

I find it a despicable character trait, to revel in other's misfortune.

by Averageman | 27th Apr 23, 11:21am 1682551292

Misfortune....stop it. This is far less of a misfortune than first home buyers being unable to enjoy the security of home ownership because of the ponzi behaviour of the sector. There is plenty of other work out there...

by Yvil | 27th Apr 23, 12:18pm 1682554690

Sure, but two wrongs don't make it right.

by nktokyo | 27th Apr 23, 11:24am 1682551453

Articles like this serve no purpose rather than to gather the gloating masses to the comments section.

by IT GUY | 27th Apr 23, 12:24pm 1682555052

Even the romans understood the value of bread and circus

by HouseMouse | 27th Apr 23, 12:54pm 1682556883

Yes it’s not a good character trait. Neither is rank hypocrisy.

by Yvil | 27th Apr 23, 2:23pm 1682562231

Nor is stinginess

by HouseMouse | 27th Apr 23, 3:50pm 1682567403

Who’s stingey?

I think I have made it clear why I don’t donate here, and it’s nothing to do with stinginess.

It’s everything to do with the tolerance shown by this website for trolling and bullying, things that the website’s own commenting policy denounces.

Sort that out and I would donate.

After all, it’s the comments that I and many others come for, more so than the articles.

(PS I have donated in the past)

by Von Metternich | 27th Apr 23, 11:30am 1682551846

A sign of a more productive economy, stacking shelves or even just consuming popcorn on the couch is more productive than what 'Real Estate Agents' claim to do.

by Squishy | 27th Apr 23, 11:56am 1682553413

This is a very bad time to figure out you can't sell. Surviving a contraction as a salesperson is savage. Only those with the brightest smile, whitest teeth, bounciest step, smoothest presentation etc. will survive. The world is not a meritocracy.

by ozzzy2 | 27th Apr 23, 1:28pm 1682558887

Left the industry, or gone into early retirement? LOL

by Frank Sobotka | 27th Apr 23, 1:37pm 1682559450

Frank always needs workers down on the docks, hopefully these folk are going to help fill the labour shortages across wide range of industries such as hospo and aged care.

by rastus1 | 27th Apr 23, 2:04pm 1682561067

The pipeline.

A big decline in the first group that is closest to the coal face of a declining market.

Next step is those that are a degree away - this will be architects, designers, surveyors and so on.

Next will be the builders, electricians, plumbers etc and materials supply side.

One step at a time......

by Faivo | 28th Apr 23, 8:47am 1682628468

True. We probably don't have the same stats for architects, planners. It'll be interesting to see next lot of building consent application figures.

https://www.stats.govt.nz/information-releases/building-consents-issued…

Just looked at BCs issued and there certainly looks to be a severe downward trend emerging.

REs may continue to be quite busy because there looks to be increasing number of properties for sale. Maybe not as profitable but still work there to keep them busy.

by Averageman | 27th Apr 23, 3:43pm 1682566998

Talking to a construction PM friend in the weekend. He has about 6-8 month on the current project and then its a fast retreating pipleine. All he is hearing is all engines stop signals.

by IT GUY | 27th Apr 23, 2:32pm 1682562734

Plenty of vendors willing to list if they could get last years prices...... this is going to cause issues, too many House shops on the high street paying high rents

by dumbthoughts | 27th Apr 23, 2:52pm 1682563967

I've said it before and I'll say it again - www.suzuki.co.nz 

by lekkerbydiesee | 27th Apr 23, 5:18pm 1682572713

not sure i understand all the hate on REAs. I reckon the good ones are worth their weight in gold.

It's almost as if some on here blame them for the property bubble that's now bursting. REA's are not to blame, it's cheap money, overseas money and kiwi mum and dads that believe property is the only game in town so they need to help their kids into property regardless of the price. Oh yes, the banks should share some blame too for allowing reckless lending.

Anyway, chickens are coming home to roost . . . . and we are just getting started. Watch for an US equity crash in the next couple of months, this time no dropping interest rates due to sticky inflation. Coupled with a banking crises and some ugly geopolitics, this thing gets really messy by about September 2023.

by WellingtonInvestor | 28th Apr 23, 6:47pm 1682664422

As the vast majority work for the seller, they could be a contributing factor in how much prices rose. If they were instead working for the buyer, then agents would be trying to get better deals for the buyer. They are experts in their field in term of extracting as much as they can from the buyer.There was so much spin and FOMO created over the last three years.

by Black and White | 28th Apr 23, 11:27am 1682638027

Fantastic

Now they need to bring there commissions back to reality.

Why have kiwi let this get so far out of whack.

by WellingtonInvestor | 28th Apr 23, 6:48pm 1682664483

Until we get a big overseas budget player in NZ, I can't see it happening. Many do it part time, so only need to sell a few houses to make it worth it.