Queensland real estate agents are no closer to learning when the state government’s proposed deregulation of real estate commissions will come into play and how it will affect their business.
In June, the Deputy Premier and Attorney General, Paul Lucas, announced the state government will move to deregulate real estate commissions, which would bring Queensland into line with other states and territories.
“Over the years there have been numerous national and state reviews recommending the deregulation of real estate commissions and it is also strongly supported by the real estate industry,” Mr Lucas said in a statement released on June 15.
“The problem with the current ‘fixed’ commission system is it does not take into account the circumstances such as the saleability of a property or the amount of effort required for it ultimately to be sold.”
“Deregulation of commissions for the purchase or sale of residential property is expected to lead to increased competition in the industry, which will benefit both consumers and agents.”
Earlier this week Real Estate Business contacted the state government to ask when a deregulated commission system is expected to come into effect, and what’s required for this to become law.
Real Estate Business also enquired as to whether the state government had received any feedback from consumers and the real estate industry since the June announcement, and was this feedback largely positive or negative.
On Wednesday, Real Estate Business received a statement released by the Queensland Office of Fair Trading, which provided little to no information.
“The Office of Fair Trading is currently drafting a discussion paper which it aims to release in the next few months,” the statement said.
Late last week, Real Estate Institute of Queensland (REIQ) managing director Dan Molloy said the REIQ supports the proposed policy and is currently in discussion with the state government.
“The Institute is currently involved in discussions with the state government about the proposed deregulation of commission and the role the Queensland Civil and Administrative Tribunal will play in a deregulated environment.
“The REIQ believes the model for deregulated commission must be right from the outset and a substantial education campaign for both agents and consumers must accompany its implementation.”
The REIQ’s claims that “a substantial education campaign” is in order for both real estate agents and consumer groups could be beneficial to all parties considering the lack of awareness of a deregulated commission system.
One agent located in Gladstone who wished to remain anonymous told Real Estate Business that while she was aware of the issue, neither she nor her peers completely understood the ramifications that the proposed changes may bring.
“I know that this was mentioned several months ago but I really haven’t heard anything since then,” she said.
“It’s not something that has come up in conversation and I’m really not sure how this is going to change our business or affect the industry.”
Graham Cockerill, principal of Raine & Horne Hervey Bay said that while he does not expect a deregulated commission structure to dramatically change the industry, it is still a positive step for those agents that go above and beyond their peers.
“We have plenty of agents out there who discount their commissions and this is not going to change anytime soon,” Mr Cockerill told Real Estate Business.
“Those that generally discount will have the house sitting on the market and they are unable to sell because they do not offer any real service.
“By removing agent commission regulation, agents who offer a complete service to their clients and achieve the best results continuously will be able to charge a commission that justifies their efforts.”
But while some believe deregulating real estate commissions will allow agents to push their fees up, some believe the move could see commissions going the other way.
Nathan Shingle, principal of Cairns-based FNQ Hot Property believes an uncapped commission structure may place great power in the hands of consumers, who may look to lower their agent's fees.
“It’s almost like the market is used to it, there’s only so high we can go and everybody knows that,” Mr Shingle said.
“But once the discussion of ‘agent commissions’ becomes public and everyone knows that agents can move their rate, I think the public will put greater pressure on an industry that is already struggling.”