Agents playing by old rules risk ‘severely reduced' commissions

Agents playing by old rules risk ‘severely reduced' commissions

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Transparency provided by property portal websites could see agents' commissions slashed if the value they provide to the sales transaction is murky.

Prominent real estate trainer and coach Tom Panos said online listing websites have created transparency in terms of the value an agent provides to the sales transaction.

“One of the things that is really, really important is that agents don’t fall into what I call the ‘commodity dungeon’,” he told Real Estate Business.

“The commodity dungeon is basically when an agent is adding no value and is just essentially listing properties on a website."

“If a consumer thinks the only thing an agent does is put a property on a website and rock up to an open house for four weeks to get a commission of $15,000, a vendor will feel the agent is getting paid too much - that is where you will have pressure on the fees.” 

Mr Panos said the “biggest problem” the real estate space is facing is “the game is still the same but the rules have changed”.

“The game has changed because transparency means that consumers now have all the information, and real estate agents are no longer the gatekeepers of the information,” he said.

“So the role of an agent is now actually quite different from what it used to be and the agents that are struggling are the agents who are trying to play the game with the same rules.

“The new rules are: what vendors need is not just an agent that is likeable; they need a problem solver - they need an agent that can say to the vendor, ‘Listen, if you want to get a higher price for your home you need to do this to the home, you need to paint this room, we need to take this furniture out’,” he added.

Mr Panos said property portals like don’t provide that strategy.

“I believe real estate agents won’t be replaced by a website, but what I can say is if agents remain a commodity and don’t become a value-added provider, they risk having their fees severely reduced,” he said.

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