An Auckland real estate agent has slashed his commission by 50% to try and drum up new business

Nigel Tyre

An Auckland real estate agent has cut his commission rate in half to try and attract business following a slump in the number of homes being sold in the region.

Nigel Tyre is a licensed agent with LJ Hooker's Royal Oak branch and specialises in selling properties in Epsom, Royal Oak, One Tree Hill, Onehunga, Hillsborough and surrounding suburbs.

He has written to his contacts offering to sell their properties at 50% of the normal commission rate if they "are selling soon."

The offer comes following a sharp downturn in property sales in Auckland, with Real Estate Institute of NZ figures showing Auckland residential sales volumes were down 31% in July compared to July last year.

Tyre told interest.co.nz his commission on a home that sold for $1 million would normally be around $32,000, so vendors could potentially save themselves about $16,000 on an average home by taking up the offer.

He described it as "a pretty straight up and down deal" and said the only special condition was that the vendor needed to commit to spending at least $2000 on marketing their property, and most listings at normal commission rates involved a marketing package of $1500 to $2000.

That potentially undercuts other real estate agencies that typically have low standard commission rates, such as Mike Pero Real Estate.

According to Mike Pero Real Estate's website, its commission on a $1 million sale in Auckland would be $27,473.  

Tyre said the promotion was a limited offer that would not last indefinitely and although it was backed by his branch, it did not involve other branches of LJ Hooker and was not part of a national campaign.

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36 Comments

Nigel Tyre's initiative is useful to note - and we might well see more of this sort of thing. Full marks to Nigel for getting the ball rolling.

In any case, don't forget that you can haggle with your agent over the commission. It's well worth the effort - always.

More generally, savvy agents know that the property market has ups and downs.

Thus, career agents put money aside in the buoyant/lucrative times, so that they have something to live on during the downturns.

It's hardly rocket science.

Actually it's not about "haggling over commission". General rule of thumb for business is that service providers clearly negotiate and contract fees before beginning work. Nigel is simply stating what he is prepared to work for with conditions. The only problem for Nigel is that he's positioning himself as the "cheap guy" and this ultimately affects his brand. If you're "cheaper than the rest", it's very hard to increase fees without offering something above and over the rank-and-file salesperson.

I think what you say about REAs is correct. If you require a monthly paycheck to survive, you're likely to be in the wrong business. Personally, I would think that you would want / need a minimum of 12-24 months of income as cash on hand in the bank before embarking on such a career. Considering most NZers are living paycheck to paycheck, it's probably the wrong game for the majority of REAs. Their desperation can shine through and also impact their performance. They're unlikely to rise much further than bottom feeders.

I don't rate that agency at all selling Auckland homes Maybe better in Australia I am sure.
B&T dominate Auckland REcsales & do not dominate selling Auckland for nothing
The agents may be sometimes weak but the B&T network of offices across Auckland affords wide marketing of your home.
Just don't be taken for thousands on marketing. It isn't necessary using their wide network no matter what line they spin you.
Your money though do what you prefer.

I don't rate that agency at all selling Auckland homes Maybe better in Australia I am sure.
B&T dominate Auckland REcsales & do not dominate selling Auckland for nothing
The agents may be sometimes weak but the B&T network of offices across Auckland affords wide marketing of your home.
Just don't be taken for thousands on marketing. It isn't necessary using their wide network no matter what line they spin you.
Your money though do what you prefer.

That's old school thinking. Just because B&T has the largest reach, that doesn't necessarily mean that the "quality of reach" is any better.

What does the B&T network size have to do with marketing your property? Since when did someone looking to buy a house go into a particular franchise branch and ask what they had available? You search trade me or realestate.co.nz and a tiny agency has the same visibility there as the larger one s.

Oh, I see we are at the bargaining stage already
http://www.livestrong.com/article/115001-six-steps-grieving/

Stage 5 will be worth a watch!
"When Nigel accepts the inevitable and realizes that his efforts of avoidance are futile, a period of depression will set in. He will finally realize that he has no control in preventing the outcome, and may believe that there is no one who can understand what he is going through or no one who can help him to feel better. He may cry frequently or appear despondent, and he may also alternate between the two."

Kiwimm, I just read your link. I think it's sad that you revel I other people's misfortune

More of an observation (rather than a revel) regarding how this agent is reacting to a loss of income. It was the first link I could find with the stages of grieving.

We have already had shock, denial (see every Herald article ever) and anger.

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Yvil, so after all these years of those who already own property... Lording it over those who don't, telling them they are lazy, that they spend too much on flat white's and avocado (all proven patently untrue), that they deserve to hoard their wealth while future generations can go [deleted] themselves, you think that the have nots are going to be feeling compassionate to those who have displayed nothing but short sighted greed and disregard for the well being of others? Wow. You know a different humanity to the one I know.

Which is the problem with inequality. It makes everybody turn into an [deleted] eventually.

[Profanities have been deleted from this comment. Please watch your language. - Ed.]

gingerninja, I'm sorry you have so much anger inside you

I'm sorry you have so much wool over your eyes, Yvil.

Fair point, Gingerninja, and well spoken.

I do appreciate and respect your contributions - despite us not always agreeing.

Why were the profanities deleted? :(

GREAT Link Kiwimm
Alas the spruikers that infest this blog won't understand the relevance
Where are champion spruikers DubleD & Zach when it appears a Epsom DDzone REA is halving his commish to "Attract some business " ?
C'mon guys stop tarting up your rentals & give us all another big laugh !

They are still at denial although I am starting to see some anger creeping in (don't mention to fake rental!)

Pardon! What is happening down there ? Agent selling Epsom homes DISCOUNTING ! Ha ! So much for DubleGZ garbage !

Nigel's been selling real estate for 14 years. Desperate measures calls for desperate actions perhaps. That being said, Nigel is an outperforming salesperson.

4th highest salesperson in Auckland and Northland region for Remax in 2006 and 2007
12th place for sales throughout New Zealand within the Remax group in 2010
Achieved No 1 spot for Remax agents selling in Auckland and Northland
Accepted into the Remax Hall of Fame which is awarded for the million dollar income agents in the Remax group .
Rejoined LJ Hooker Royal Oak in October 2011 after 6 years with Remax after a period of working for LJ Hooker for 8 years from 1997 to 2005 and was awarded the Captains Club awards for several years.

TBH Hookers & Remax are minor players in the AK market - not hard to be the proverbial big fish in the puddle

So what? Nielsen is the largest market research company in the world. Many other research agencies you've never heard of are far superior to Nielsen in their area of specialization and have better margins.

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http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=1192...

Note comment about large decline foreign buyers.
Yet again evidence that despite the govt's BS foreign buyers have been a significant factor.

Nigel has 1 current listing. Oh the indignity. [Personally derogatory comment deleted] He is but one of 6686 active Auckland agents and 895 Auckland real estate 'companies'

[Part of this comment has been deleted because it was an unwarranted and derogatory attack on an individual.- Ed.]

Even the top agents can perform badly at times especially when they're doing 80% of the companies sales !
The downturn will provide work for debt collectors & psychologists & psychiatrists & Pharmac will need to increase depression med supplies for a few years
Any bets who will win the election ?
Surely not another Nat 3 yrs ?

Nigel has 1 current listing. Oh the indignity. [Personally derogatory comment deleted. - Ed.]. He is but one of 6686 active Auckland agents and 895 Auckland real estate 'companies'

Nigel looks pretty successful to me. I'm sure there's more to his method than hair. Honestly speaking, REAs' work is probably some of the more 'survival of the fittest' out there. Same as car salespeople. I have far more respect for them than technocrats and their admin teams.

If success is becoming a Hall of Fame agent or reaching the Captains table then we should encourage all our children to pursue the same. Success is a reasonably subjective term, if reaping immense commission for little effort so be it. If reaping half the commission for the same ,so be it. Honestly speaking with five Hospital Consultants in my immediate family, none of whom are Hall of Famer's I have a different view of success..In terms of Nigel's hair it was merely an observation that his photo's are 30 years apart, and would require certification if applying for a new passport..

so Nigel normally charges about 3.2%, but that's 1.6% at his special rate. Mike Pero @ 2.75%. What is the real price here? I'm recently returned from the UK where 1.5% was standard and sub-1% not hard to achieve. I was recently quoted 4% by an Auckland agent. I'm fascinated also, as to the justification for any % model - house prices have doubled within the last decade - has an agent's part in a sales transaction also doubled in time or complexity or have their costs doubled? Don't think so...

Sold my old UK house for 1% including all advertising. The agents there were not poor.

Yes why can the U.K. Sell homes at 1% commission rates ?
I think it's because they don't have so many RE companies per capita of whiskey bottles

I do know that over the years many have set up businesses selling for cheaper rates. And they have all gone bust.

Because any agent who shows a modicum of talent is 'bought' by one of the Gang of Four agencies

So being mediocre at a name real estate agency is the benchmark? You really believe that all agents for B&T outperform agents who don't work for B&T?

Well said gobogo. In the last 5 years agents income would have doubled based on being paid a commission as a percentage of the sale price.
Marketing costs due to modern technology and the internet would have increased very little.
In fact the national agents I understand charge a selling fee of around 3.75% on gross sale price PLUS
A Marketing fee .
What other business does the client pay for the marketing and based on the agents own admission get a pay rise of about 10%per annum.
( Agents claim over a 50 year period residential real estate doubles in value except in exceptional circumstances as the last 5 years one off.)

Perhaps they should lift the hurdle required to sell RE, which would equal less agents. They could then get more work at less fees, and be win win all round.

Well we know RE agents love a good auction, so perhaps sellers could set up a reverse auction with a bunch of agents. Let's start the bidding at 3.2% and go down from there.
Any takers?

Not a bad idea at all!

You're someone who thinks outside the square.

4% compounded on top of flipping houses, soon raises prices beyond all flipping belief.