The total amount of commission earned from residential property sales was likely at its lowest level in four years in 2023.
Interest.co.nz estimates the real estate industry earned around $1.56 billion in gross residential sales commissions last year, it's lowest level since 2019 when it earned an estimated $1.55 billion.
Estimated commission levels rose sharply after the lifting of Covid restrictions, rising to $1.92 billion in 2020 and peaking at $2.34 billion in 2021, then sliding back to $1.6 billion in 2022 and $1.56 billion in 2023.
Although the estimated amount of commission revenue earned last year was down by $780 million compared to the 2021 peak, it has really only fallen back to pre-Covid levels after a brief surge during the 2020/21 boom.
However the quarterly figures, see graph below, suggest better times may be ahead for the industry, with estimated commission levels in the second, third and fourth quarters of last year all running ahead of where they were in the same quarters of 2022.
Most of the damage to last year's total commission level was done in the first quarter of the year, when the market was particularly slow.
If the trend evident in the last three quarters of last year continues into this year, there should be slightly more money sloshing around in the industry coffers in 2024.
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34 Comments
They are overpaid for what they do. Often they have failed at what they were doing prior to being an agent or they have no skills at all yet we pay them more than we pay a specialist trying to make us well again. Have a look at their Tribunal site. There are a huge number of them being disciplined on a regular basis. And those are the ones who were caught. Look at the commissions they are paid overseas such as in the UK. Our agents are paid far more. We grumble about petrol prices, food prices and tradie bills. Yet we are willing to pay someone $20k , $30k , $40k and so on to sell our homes. We give them a key, they talk (a lot) and we pay them a kings ransom.
Good to get some insider knowledge, Ex Agent.
I am no more an ex agent than our PM. But I did deal with them a lot when I was working.
Why do you pretend to be someone you're not?
I am not pretending. Are you Yvil or is it just a name.
An alias is a pretty different concept to a fake description.
"Yvil" is a name, "Ex agent" is an occupation. You chose your moniker to be an occupation on purpose, which you now say, was never your occupation. So the question stands:
Why did you choose to mislead people with your name as a fake occupation ?
Perhaps he once worked for the CIA Dr Yvil
Ex Agent could be anything. For instance:
Border Security Agent?
Real Estate Agent?
Shipping Agent?
Transport Agent?
The list goes on. But I guess that Yvil simply assumed "real estate" Agent? You know what they say about assumptions.
100% agree.
In the same vein, in covid times people accepted to pay 50% more than 2 years ago for a house, and then were complaining about the cost of everything else. Several hundred grands can buy you a lot of everything else...
People pay it because essentially it gets covered by the buyer in the price they pay, even though the agency contract is usually between the seller and the agent. But they do only make the money if they sell it. Otherwise they get far less. So it can also quite speculative, especially if the seller is wanting a lot of money. You sometimes see houses go on and off the market for years when it fails to sell, and it is usually because the seller is wanting more than the market at the time will pay. Agents usually want turnover and quick sales.
🎻
We need more private sales, so agencies start to lower their fees
They'd probably just lobby and next thing you will only be allowed to sell or buy a house through a licensed operator.
Agree with you wholeheartedly, Dgm.
Those who have sold/bought homes without hiring a commission agent commonly report that it's not that difficult to succeed - and that there's good money to be saved.
TTP
If the government doesn't step in to support the industry, we are going to lose all our best and most talented RE agents to Australia.
Hi 1689 Baptist,
In my view, the Australian government would be better to ban RE agents than support/subsidise/encourage them.
TTP
We sold our house in 2014 - it was the easiest $40,000 someone made in literally 2 days work, much much easier than selling crack!
Would have done it myself if I was living in Auckland.
The agent's commission is also negotiable, not just the house price.
and you think i didn't negotiate?
Yeah, by maybe half of one percent max.
I'm so sad for those poor agents. When TV presenters are leaving their jobs to sell real estate, you know it nuts. People of the future are looking back at this period amazed at how mad it got.
Throw in an ex politician as well, an ex cabinet minister if I recall now in the RE business?
Great time to buy an Audi RS. Not….
Well… maybe it is the right time to downgrade...
I agree that RE agent's commission is very high.
So here's a thought, why doesn't someone (maybe a commenter on Interest?) start a new RE company, which charges significantly less than mainstream agencies? It's a free market. I think Mike Pero and another agency used to charge a flat 1% fee instead of other's 2.95%.
Because agents want to work for companies where they make a higher % fee. So why would they want to set up a company where they make a smaller percentage or a fixed fee? There are a few, but overtime fees seem to have increased
"why would they want to set up a company where they make a smaller percentage or a fixed fee?"
A) To gain market share
B) Commenters on here seem to think RE agents are overcharging and are not being fair, so a commenter here who starts a new RE Agency would surely want to be more fair or kind, and charge less.
The same reason no one is opening up a third supermarket chain even when the existing two are clearly overcharging. There is an olignopoly of four major RE companies that cooperate and take viewers to one anothers houses. So long as they cooperate in this way it is near impossible in a small economy like NZ to break in to the market.
Speaking of REA's, seeing the latest numbers out from homes.co made me laugh last week. Up, up, up & crash over the last 4months. The crash part is minus 20% or thereabouts for our properties. I don't [can't] take them that seriously anymore, but it made me laugh as so much of it is driven by guess who - yes, you're right, our good friends the REA's.
On another note I have a son who wants to do up his gig & sell it on this year, who explained to us that he was keen to get involved in the selling part himself. Good for him. He's never done it before so it will be a great learning curve & an interesting watch from our perspective.
PS: Watching your children grow up can be fun. It's when they repeat the same mistakes you made that it gets a little bit frustrating.
Having sold houses and cars privately, it isn't too difficult. But some home buyers do expect a better deal when buying privately, as they know that there is a saving on the commission.
A friend has been a top-selling REA for 15 years and has done very nicely thank you very much. Has polished sales skills and superb presentation. I would trust him to handle any transaction.
Used to be a DJ. Good one at that.
Probably earns more than a specialist doctor who trained for 13 years or so. Don’t you think that is ridiculous. Did a quick course and has the ability to talk well.
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