Service matters but commission 'cowboys' remain

Service matters but commission 'cowboys' remain

28 July 2011 by Staff Reporter 0 comments

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.

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.

promoted content
Recommended by Spike Native Network
Listen to other installment of the Real Estate Business Podcast
reb top 100 agents 2016

With a combined sales volume of $13 billion in 2016, the Top 100 Agents ranking represents the very best sales agents in Australia. Find out what sets them apart and learn their secrets to success.

featured podcast

featured podcast
REVEALED: The 10 best agents in Australia for 2017

For the first time ever, the top 10 agents in the REB Top 100 Agents ranking are revealed in this exclusive podcast. ...

View all podcasts

Are dodgy agents being punished enough?

Yes (8.6%)
No (55%)
Only in some states (2.3%)
Not all dodgy agents are being found out (34.1%)

Total votes: 220
The voting for this poll has ended on: April 15, 2017
Do you have an industry update?