THE WORD - discounted commissions

Markets are tightening and agency competition is intensifying. But does this mean the industry is set for a rise in commission discounting? This month, we ask...




JAS H. Stephens Real Estate

There is definitely a trend emerging in 2011, and agent commissions are facing greater pressure. We are seeing an increasing number of smaller agencies cutting rates in order to keep their doors open. What we tend to find here in the inner west market of Melbourne, is vendors are approaching us with their business claiming some of our competitors are offering a 0.5 per cent discount. In some cases we are meeting these demands in order to secure the listing.



In the current market, returns for sellers are certainly suppressed, and this has led to some vendors seeking out the cheapest possible option available. However, the modern consumer is far more researched and is willing pay for expertise and service of a highly regarded agent. Agents that lack the correct tools will always look for ways to secure listings, and this is simply a way to buy business. But at the end of the day in every industry there will always be those that offer cheaper rates than their competition.



Phil Harris Real Estate

At the initial stage of listing we are seeing cuts to commission rates. Vendors are not to blame for the rise in discounts; rather it’s the industry struggling to deal with a 30 per cent fall in the turnaround of properties. Sales have retracted and good listings are beacoming harder to find, so we are seeing more desperate agents offering discounts to vendors... However, good agents will continue to capitalise, as three to four months down the track when the property is still sitting on the market, vendors are more than willing to pay for a sale in a reasonable time frame.



Phil Harris Real Estate

No, I don’t necessarily believe there are more vendors seeking discounted commissions. There has always been – and always will be – discounted offerings; however what does change is whether vendors seek the lowest price or agents simply offer a discounted rate in order to secure the property. When there is limited stock on the market and listings are few and far between, the number of agents that cut rates certainly increases.


Luton Properties

I don’t believe the number of vendors seeking discounted commissions is increasing, rather I think there has always been those consumers that want the cheapest possible option and have little concern for the quality of service. In the Canberra market I have not seen a major drop in fees and the average commission rate still sits around 3.3 per cent. However for those agents that are experiencing increasing pressure from vendors I believe it comes down to the quality of service you can provide.

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