More than half of principals, sales representatives and property managers are discounting their commissions, according to the inaugural Real Estate Business Sentiment Survey.
Just over half of the respondents (57.3 per cent) had cut their commission in the third quarter of this year.
This is in response to intense pressure from vendors, with almost four in five respondents (79.3 per cent) reporting that vendors had asked them to reduce their fee in the last (third) quarter.
The latest result is higher than the findings of an earlier straw poll conducted by Real Estate Business in August, which found 40 per cent of respondents were cutting commissions.
Starr Partners CEO Douglas Driscoll said he wasn’t surprised with the sentiment poll results considering the lacklustre condition of the property market and economy, although he felt agents were too quick to “drop their pants” in terms of commission when pressured by vendors.
“It’s the first sign of panic,” he told Real Estate Business.
“You [also] put yourself on top of a slippery slope."
He said vendors were quick to tell their friends and family when they’d managed to extract lower commission from an agent, and this may make it harder for that agent to maintain their fees going forward.
He said agents should be prepared to show vendors tangible proof of why they were worth their commission. This includes showing the vendor a detailed schedule of how they would sell their property, along with backup plans if things changed.
He added that most vendors understood that agents were running a business, and had to make some money from a transaction.
“We would be fairly frank with [vendors],” he said, based on his own experience as an agent during the GFC.
“Agents are working harder now, so would you charge less,” he continued.
The Real Estate Business sentiment poll is an online-based survey. The results to the latest survey were based on 358 replies, with the majority of respondents coming from the residential sales and property management sectors (86.6 per cent). More than half were principals (54.8 per cent) and licensees (11.8 per cent), and another 22.8 per cent were sales representatives.
Responses were received in the first half of October.