Days to the General Election: 20
See Party Policies here. Party Lists here.

Mike Pero Mortgages to launch real estate agency group charging 2.95% commissions. Your view?

Mike Pero Mortgages to launch real estate agency group charging 2.95% commissions. Your view?
Mike Pero Real Estate is expected to launch in March or April. It is now recruiting agents.

Mike Pero and Mike Pero Mortgages say they plan to launch a new real estate agency group from March or April. 

The new group would charge commissions of 2.95%, rather than the 3.95% typically charged by established agency groups.

Pero said real estate agencies had charged too much for too long.

"It's one of the most talked about topics, and what people grumble about most, when selling their homes," he said, adding commissions should "reflect the challenging economic times that we are in today".  

Pero said lower marketing and communications costs over the internet and mobile phones meant companies didn't need big overhead costs any more which had to be passed on to customers.

Mike Pero agents would work with iPads, intensive online marketing and modern operating techniques and systems, he said.

The new company placed an advertisement in the Sunday Star Times yesterday calling for real estate agents to sign up, saying smarter use technology meant they would earn more while charging a lower commission because they would use their time better and make more sales.

"Realistically with a better proposition for the home seller the agents sales will increase, we believe, more than twofold," Pero said.

"Effectively, we have taken a large part of the administration and management overheads out and shared those savings between the customer and the agent."

See more detail here at Mike Pero Real Estate's website.

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

36 Comments

I wish the smarmy geezer well. He will need a bit of luck.

"Pero said real estate agencies had charged too much for too long."

And he is not intending for that to change.

Well, he has the midas touch and under the present volume of sales he may well need it. A lot of existing efficient r/e offices can't cut the mustard financially due to the lack of sales made. Perhaps he has a cunning plan that will allow him to muscle into this very competitive market, discounted commissions usually mean discounted service.

Good luck to him, and the team he cobbles together, his advantage is that he has deep pockets and is a recognised brand name, both essential elements in the present climate. 

Lets see if they can last longer than The Jones did, especially in this economic climate.

2.95% commission for selling houses is still a rip off.  In the UK the typical sales commission is 1% to 1.5%.

Why is real estate now the only business that still charges a percentage of the sale price for their remuneration.  As house prices go up so does the Agents income  Which other type of worker doubled their income from 2002 to 2007, without doing anything extra?  There is no reason for this type of sales commission, why doesn't the seller arrange a fixed fee with the RE Agent for this type of work.

Anybody who has bought a house since 2007 has now lost up to 5.8% of its price.  If they now have to sell that property they have to pay another  4% plus GST in Agents fees.  This is not going to happen for very long before the whole RE industry method of remuneration is reformed.  Last year RE Agents were paid over $1 billion dollars in fees, that's not going to continue if house prices continue to decline, which they will.

Come on NZ'ers when are you going to do something about being ripped off by outrageous RE Agents fees.

Well said, Andy.  Comment of the day!

I fume at what a rip-off model it is. 

Cheers to all

Andy you obviously have not realised that for almost 10 years now agents around the country have offered alternative fee structures.

 

Christchurch was the first to offer fees well under 2%. My firm charges just 1% + $250+ GST. maybe we have woken up.

Brad - I appreciate, and applaud, that you and a very few others now charge a realistic fee commission.  However the fee discounting Agencies are unfortunately only a very small part of the overall RE market.  Why aren't NZ'ers using these low cost Agencies a lot more?

most things in NZ are ripoffs!

I put up with it (only just) because I generally love living here 

Having sold and bought a few times, often the house will sell itself (with a matching price). 

In my opinion, the role of a GOOD agent is to initiate the offers and maintaing the commuication between the parties.  I've dealt with  some useless REs and some really good ones whom I think deserved whatever they earned!  

I'd give Mike Pero - unlike the Jones they already have a high profile. 

Good luck to Mike! The way to become a millionaire (in real estate 2011) is to start with a billion & set up a RE company. You'll quickly become a millionaire.

For the last 18mths or so we have had a RE agent in town selling for 1% and after 9 or 10mths he had to take on extra staff.  He was well known in town which I guess helped. 

Which town and which agent?

cheers

Bernard

Stop asking awkward questions.

Bernard there are a number of 1% agencies like mine that have been operating for years on lower fees. In the NBR in 2002 the then president of REINZ Howard Morley said that we probably won't survive a downturn, but we have and still going well in 2011.

Mike Pero offers nothing new to be honest.

 

Bernard, X Realty in Whakatane. I don't know the agent and have never used them. IMO it is great to see this in a smaller town, rather than the cities getting all the benefits of competition within an industry.

http://www.xrealty.co.nz/office/XRW

Why not pay zero commission?

Put an ad on trademe and hold a few open homes.

What SK is claiming is that if you try to do it yourself you'll discover that RE agents such as SK earn their commission.

 

because 90% of people who try to sell privately end up listing with a real estate agent.   There has to be a message in that.

If you get your head out of  'stupidland' - you will see that I am simply questioning the need to pay any commission 'at all.' 

There is nothing 'between the lines.'

 

I notice SK did not deny he or she is an RE agent.

Low commssion real estate services are nothing new in New Zealand, there have been a few over the years and around the country there are a number of great local firms already charging even lower fees.

Premier Realty Ltd in Christchurch was one of the first fully professional real estate agencies that charged less than 2%, as long ago as 2002. 

Premier Realty Ltd charges just 1% + $250 + GST, which saves the average client $10,000, as it managing director I have been in real estate since 1985, and the savings we make our clients is twice the savings that Mike Pero may achieve.

Entering real estate in a tough market is brave, anyone who thinks it is going to be easy is going in with blinkers on.

 

 

 

Poor Mike how will he survive. Only 2.95% commission plus the brokage fee for arranging the mortgage and a great big fat cheque on top of that for arranging the Insurances. He should be laughing all the way to the bank! Bonus: Punters still think they got a great deal.

"Low commssion real estate services are nothing new in New Zealand"

Yes but this time round is a new ball game - You don't have to join up to the "Institute" aka the mafia group!

That's true, but you are still required to be licensed as Mike Pero has employed someone to do for his company, to meet the rquirements of the REAA, funny that nobody know who these 2 chaps are, fronting the licence for him??

RE commission at 1%
And Bernard Hickey didn't know?
There you are David/Bernard, an opportunity (a new service to readers and a new source of advertising revenue) to set up a new section on Interest.co.nz listing all RE agents in NZ together with the rate of commission each charges.

 

To those commenters above discussing selling privately, it is HARD. Whilst I agree agency commissions are way too high, I've sold privately before and I can say that an agent adds value to the sales process. Buyers are generally more comfortable with the process of using an agent and those that do like to buy privately are often those who will demand a discounted price since there are no commissions involved! 

 

 

 

shhhh...you'll get lynched.

 

no one ever puts a dollar amount on their own time.

 

Does Mike Pero Mortgages  not get all their business from networking with the existing Real Estate agents? Opening up in competition is a bit like shooting the only goose you have, if you ask me . 

I'm pretty sure Pero said numerous times in public that he was not going to do this. So.......he's off to a pretty good start in this profession for liars

I wonder why B & T sold half the houses in Ak last month  ..

May have something to do with a fee structure that delivers value to sellers.

MP will fail in this venture. He has no particular expertise in this field.

Record low sales and half the market taken. A really dumb investment MP !

 

 

Pero says on www.mpre.co.nz

"The large national brands work on a commission rate of 3.95% - we think that’s too much (so do you), so that’s why we’re establishing a network of salespeople who can deliver their services for 25% less. They’ll deliver the same, if not better, service for only 2.95% (plus $390 admin fee, advertising & gst). That means that if you’ve got a property that sells at $500,000, you’ll save $5,000 with us."

However this is not correct as most big players drop to 2% after $300,000 or $350,000 so they are not actually going to save much with the Pero 2.95% structure which runs all the way through. In fact on higher priced properties they will need to get out the calculator as they may be paying more with Pero!

ie on a $500,000 sale through most national groups:

3.95% on first $300,000 = $11,850
2.00% on next $200,000 = $ 4,000

Total payable would be $15,850 plus GST

on Pero structure

2.95% on $500,000 = $14,750
Plus admin fee =         $     390

Total Pero fee would be $15,140 plus GST

So in actual fact a saving of only $710

http://www.barfoot.co.nz/Selling-With-Us/Stories/Commission-Rates.aspx

Barfoots charge $29,728 incl GST for a $1m sale but Pero would charge $29,890 plus GST!

If Pero offered a rate of 1.5% then he may have a point of difference but 2.95% plus $390 admin fee plus marketing plus GST is hardly an enticing alternative.

 

 

 

Thirty years ago, Barfoot and Thompson charged a graduated scale capped at 3%, and that covered all marketing expenses. How times have changed.

Funny how MPRE is going in a joint venture with MPM

MPM is 50% owned by a Company that has announced it will be unable to repay "capital notes" and investors but offerred shares in the Company as alternative or have to leave their funds for a further 5 years at lower interest (shares were at 10c !!) .

Bernard has made scathing attacks on the Hubbards,Hotchins etc. of this world.. albiet based upon historical evidence unearthed after the companies demise. Most problems related to inter company advances/lending.

Here we seem to have an alarm bell ringing but nothing said or investigative journalism undertaken - just main headlines in case there is an opportunity for future advertising income possibly???

I for one would like to know who the others involved in the ventures are and if the 50% owner of MPM can start a new venture(even if jointly) then surely they can pay investors in the capital notes out if they want/need their money..........

Or is Mike buying MPM back as well ???

  

I think you will find Mike will be trying to build another franshise to sell. The money will possible come in from people buying into locations and taking the majority of the risk. I don't think he is still connected with Pero mortgages apart from promotion, however I may be wrong.

 

Gavin ,

I may have missed something but the opening paragraph says....

 

Mike Pero and Mike Pero Mortgages plan to launch.....no connection.. therefore no responsibility  ???

Days to the General Election: 20
See Party Policies here. Party Lists here.