Fewer agents will be selling homes in the next few years as markets slow and the industry consolidates – but those who do will be achieving higher commissions.
That’s the forecast from Century 21 chairman Charles Tarbey, who told REB that declining markets will drive poor performers out of the industry.
However, those who do remain will be able to claim higher fees because they will have to work harder to close sales, even though there will be less business available, he added.
According to forecasts from BIS Shrapnel, Sydney will experience a fall in prices between 2016 and 2018, while Melbourne and Adelaide will struggle, and Perth and Darwin will remain depressed. Brisbane is likely to be the only strong performer.
Mr Tarbey said any Sydney agent who had joined the industry in the past three years had “never been in real estate”.
“They’ve been in a boom. Real estate is very different. A lot of people who have been in the industry today – unless they get some serious training around how to actually negotiate and educate their sellers on the market – are going to leave this industry,” he said.
“I’d say that the industry is going to go through a major change, and it’s already started in many parts of the country.”
Mr Tarbey said his decades of real estate experience had taught him that commissions fall during a boom but then rise during a downturn.
“In a boom cycle like we’ve been through, real estate agents have a tendency to reduce their commissions substantially to gain property,” he said.
“In a market where you actually have to work for the listing, you have to demonstrate your skill for a period of time – you don’t just put up a flag and take bids from people.
“You’re dealing with fewer people but your commissions are higher, because the service and attention to detail are far greater.”