The housing market may be in the winter doldrums but real estate agents shouldn't be complaining. That's because the industry earned an estimated half a billion dollars in residential sales commissions in the second quarter (Q2) of this year.
Interest.co.nz estimates that real estate agencies earned $501 million in gross residential sales commission in Q2 this year.
That was up by $80 million (19%) from the $421 million the industry is estimated to have earned in Q2 last year, but still down by 15% from the second quarter record of $592 million the industry is estimated to have earned in 2021.
The increase in commission in Q2 this year compared to Q2 last year was mainly driven by increased sales numbers, which were up by 20% in Q2 this year compared to Q2 last year.
The average gross commission has been relatively flat at about $25,000 for the last two years.
Unsurprisingly the most lucrative market for real estate is Auckland, which accounted for around 30% of national residential sales in Q2 this year, earning Auckland agencies around $178 million in commissions.
The average commission in Auckland was just under $30,000.
In the 12 months to June this year real estate agencies throughout the country are estimated to have earned $1.9 billion in gross residential sales commissions.
That figure excludes any additional costs vendors may face such as auction fees, valuations and property presentation costs.
Add on legal costs and the total amount of money being spent selling residential properties each year is likely to be in excess of $2 billion.
27 Comments
Mongrels and Artful in Deception, the lot of them.
Mongrels and Artful in Deception, the lot of them
Why? You think REAs should work for free?
Gecko is out debugging, I'll answer for him. REA dont add value by simply swapping the names on a piece of paper. Sharebrokers aren't much better but at least charge less
I'll add more. Their commission percentages haven't changed since house prices were affordable (my first house is now valued 4 - 5 times higher than when I bought it in 1997 and I doubt many of us have stayed in the same job and had a total pay increase that matches that).
REA dont add value by simply swapping the names on a piece of paper. Sharebrokers aren't much better but at least charge less
I would say most property sales involve an agent. People exercise their right to use agents. They don't have to, but they do. Ashley Church might not do so, but that's beside the point.
Mate is a high performing REA. Used to be a DJ. Very good salesperson and has the demeanor to work the top end of town. All power to him IMO.
Paula Bennett Sally ridge Matt Chisholm rawdon Christie amongst a list of others
They do sweet FA, but want the big bucks from the big deals
I thought Paula Benefit gave up the commercial property sales gig. Too much like hard work - closing sales. She's the Chair of Pharmac (with zero experience in pharmaceutical procurement) and Director and Strategic Advisor at Bayleys (sounds like a meaningless role).
Phoenix,
To answer, no, but much less. In Scotland I paid the Agent the standard commission of 1% with no extras. He still drove a BMW.
Negotiation. Good work.
Pretty standard in the UK. I sold my house over there for 0.8% - normal rate is 1% but a small discount as they already managed the property.
Not an expensive house either, but they still showed up and did a good job for the equivalent of $3k or so.
Hi Pjc, yes and about 0.8%, same as a share broker.
The stories they can spin are notorious.
Earned?
Parasitically syphoned-off, more accurately.
I've sold your house, that will be $50k please
Thank you so much, I'll transfer it to you right away
I've sold your house, that will be $50k please
OK. Then think about banks. They create the mortgages to enable the transactions. No money transferred from anywhere to credit the loan. The ledger is created by keystroke.
Then they charge you for it. For most of your working life.
That doesn't help me make sense of $50k for a simple sales process, personally.
Well, is should.
Because it is the bigger parasitism.
By far.
Yes, but if someone steals my wallet I don't feel any better if they point out that someone else has stolen my car.
No, but your anger is at least proportionate.
Unless of course your car-keys were in your wallet...
If there's ever a time to talk about real estate agent commissions rather than bank profits, I think it's under an article on real estate agent commissions. Obviously there are more important topics, but...this is the topic.
As Finance Insurance Real Estate (FIRE) section of economy expands its crowds out the productive sectors.
Would be interested to see a good % time series applied to NZ
Off on a tangent: Looking at that photo at the top of this article I notice that there isn't a hand holding the middle champagne flute.
It's the invisible hand at work.
Kiwi vendors are too soft negotiating with the agent from the outset which is why the commissions are still so high. I don't think the commission rates will be like that in 10 years time though
Yawn. Sell your house yourself. Biggest issue is having a realistic price expectation. The last ten years of sell has been easy pickings. Most listings still "price by speculation"...aka no price listed.
Lots of wasted money in that sum. I sold myself last year - for the third time - and happy with the outcome. I think, how long would it take the average person to earn back that commission money on a salary? It's hidden by the house inflation over time, but really it's time out of their life that they're losing.
I don't think REs are highly dishonest, it's just the commissions (incl GST) are too expensive and at least half goes to the agency doesn't it? The flat percentage doesn't reward the agent for getting that last extra 5% the seller might want on the sale price.
I've found when agents are being used, it's often the sellers who are being dishonest. They can hide behind the agent and not disclose things that they'd have to if selling directly. Agents don't ask any hard questions, but why should they, that's the buyer's responsibility.
When selling yourself, it pays to be open about the price range you're aiming for and fix any problems to make it easy for people to buy. Pay for professional photos and do some decent marketing.
My better half reckons I couldn't sell myself.
Says there would be no takers...
Ha ha
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