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More agents resist commission pressure

More agents resist commission pressure

by Reporter 6 comments

Stacey Moseley

More agents are starting to resist vendors' calls for discount commissions, new research has suggested.

“There is always going to be agents that discount their commission and there will always be vendors that are going to ask the question,” Rebecca Geldard, general manager of Ray White Noosa Hastings Street, Peregian Beach and Peregian Springs offices, located in Queensland, told Real Estate Business.

“But it is a policy of Ray White that we don’t reduce our prices. We will however sit down with the vendor at the end of the sale and more often than not the vendor is happy with the service they received and are willing to pay the full commission.”

According to the latest Real Estate Business’ Quarterly Sentiment Survey, undertaken in the second half of December, 76 per cent of the 171 respondents were asked by a vendor to discount their commission, although only 53 per cent reported they followed through with the discount.

This result was just slightly down from the previous quarter, when when 58 per cent of agents reportedly discounted their commission.

Ms Geldard said she understood why agents discount their commission, although she believes an agent’s services warrant full payment.

“When a vendor is looking for a new agent they make their decision dependent on different criteria. They judge an agent on past experience, what they’ve sold in the area, a discussion about advertising and the [commission] charge.

“It is like buying a brand new car. If all the cars drove the same, looked the same and smelt the same you wouldn’t know which to purchase. It is only when a vendor has no other way of choosing an agent that they rely on the best value for money.”

Graeme Thomson, principal licensee for Internet Realty, defended the use of discounted commissions.

“It is the way we operate and it attracts a niche market of people," he told Real Estate Business. "We get people that have been out of the market for 20 years or more who are then shocked with the commission fees, they can’t justify that type of money so they come to us.”

Mr Thomson has worked within the real estate industry for over 25 years and has been the principal licensee for Internet Realty for over 10 years. The company operates an online-based service based on discounted selling fees.

“We aren’t popular with other agents, but that doesn’t worry us," he said. "We offer a service at a discounted price."

“We’ve run the business the same way for 10 years and are very happy with what we offer. We never felt the recession.”

The Real Estate Business Quarterly Sentiment Survey is an online-based poll. The results to the latest survey were based on 171 replies, with the majority of respondents coming from the residential sales and property management sectors (84.7 per cent). More than half were principals (56.7 per cent) and licensees (12.9 per cent), and another 23.4 per cent were sales representatives.

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More agents resist commission pressure
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