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Increased competition cuts commission

Increased competition cuts commission

Commission cuts
by Elyse Perrau 0 comments

The increase in property management specialist businesses has played a large part in the decrease in the average commission fee, according to a senior property manager.

The comment follows the latest Residential Real Estate Benchmarking Report from Macquarie Business Banking, forecasting management commission rates will continue to decline in NSW and Victoria as new entrants try to win business.

Raine&Horne senior property manager Ramsy Batshon said what property managers are experiencing is an influx of competition in the space.

“There is a lot more competition obviously in New South Wales and Victoria and a lot more agencies are opening up  what they are doing is discounting their commission to build up their rent roll,” he told Residential Property Manager.

“A lot of people are realising a rent roll is very profitable and it is a great asset to have, so they are doing as much as they can to create a portfolio and to grow the portfolio as big as possible.”

Mr Batshon said at the moment the industry has got other agencies that are purely opening as property management.

“They don’t even have a sales side of things and that never used to be the case  that plays a big factor as well,” he said.

Mr Batshon said without a sales side for referrals and potential leads it can sometimes be difficult to build a PM business from the bottom up, and that is where discounting can come into play.

“They want to build up their portfolios as quick as possible,” he said.

“[However] as an established agency, that has a good reputation, you don’t need to drop your fees.

“Our fees have stayed the same; we are still charging the same commission rates that we did three years ago, four years ago,” he added. 

Increased competition cuts commission
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