Mass moves to commission-based agencies

Commenting on an article in the Sunday Star Times last weekend, First National’s John Stewart was not surprised to read non-commission people from agencies like Gecko and Green Door were struggling.

“They only do well in a buoyant market where you can get away with limited advertising. When the market changes, you have to have agents on the ground talking with buyers, trying to get them to put pen to paper.”

He adds the cut price agencies don’t have those people.

“Their fee just covers the price of ads and they hope they get a deal from that. Those days are gone. Right now the focus for good real estate agents is working with the buyer, doing what we call ‘hand holding.’ Even though sales are not huge, our salespeople are flat-out. They have to be talking to buyers two to three times a day, not just doing a few property ads.”

Stewart points out there's a cut price agency in Nelson that's got its business for sale on Trade Me. “That says it all.”

It’s been well-documented a lot of salespeople have left the industry. Stewart says there are now a good volume of qualified members of the profession still involved. “They’ve found that vendors really want professional guidance. And they are more prepared to invest in what’s needed to get the deal done.

“You need someone with some pretty professional legs to convey to buyers what you want. It comes back to the calibre of the people working for you. They’re the ones you want in the industry.”

Ray White’s chief executive Carey Smith has noticed far less private sales being made generally. “According to our numbers, a lot of people will try to sell their house and then come to a traditional agency, whether that’s from the non-commission home sell companies, I’m not sure. But we’ve had a sharp increase in people that have tried to sell privately.”

He believes that’s because the traditional commission-based agencies give a certain degree of service that’s better than the service an individual can provide. “They provide a level of marketing that’s relatively cost-free until the property is sold. Sellers also need to get into real estate sites like the Property Press and websites that are agency specific. That gives a better marketing platform.”

As for an increase in agents raising their fees to bolster incomes, Smith says he has seen no evidence of this, though some vendors have taken the opportunity to upgrade their marketing. And that’s where the extra costs come in. “They’re trying to get more exposure from a shallower buying pool.”