Matthew Sullivan and Simon Parker
Agents shouldn’t shy away from charging standard commission rates in a flat market, so long as they provide top service to vendors, REIQ chairman Pamella Bennett has claimed. Yet agents admit discounters are here to stay.
Speaking to Real Estate Business, Ms Bennett said vendors are prepared to pay a standard commission rate, provided they receive good service and professionalism.
“Vendors want their homes sold and they are prepared to pay for good service,” Ms Bennett said.
“They want a timely outcome and they expect professionalism and communication from their agent. Provided they are getting these things and their agent is working an applied and systematic way that follows through, than vendors will pay a fair commission.”
However, this can be a hard sell for some agents where discounted commissions are offered more frequently.
In South Australia, agents have been cutting their commissions as low as one per cent, leading to greater pressure from vendors, said Jock Gilbert, managing director of Jock Gilbert Real Estate located in the Adelaide suburb of Rose Park.
“Some agents will always offer discounted commissions, but what is really concerning is how far they cut their rates,” he said.
“In South Australia, we are seeing commission rates as low as one per cent. In today’s market two per cent is reasonable but one is seemingly desperate.”
While there would always be agents willing to discount, it was during boom markets when commissions were under the most pressure, said Steve Lorrimar at Harcourts Integrity, located in the Perth suburb of Maylands.
“We’re under more pressure in boom times,” he told Real Estate Business. He said short-term focused “cowboys” were more likely to enter the agent market when times were good, eager to take a piece of the larger volumes and increased sales occurring in these periods.
Overall though, agents offering lower vendor commissions were a constant. “It’s just a fact of life for agents,” he said. Yet the marketing that accompanied properties being sold with discounted commission could be suspect, he added.