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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.
- <p>Decapitate commissions or face extinction <p class='break'>&nbsp;</p><p class='break'>&nbsp;</p>Property prices are in free fall. <p class='break'>&nbsp;</p><p class='break'>&nbsp;</p>O.5% Is going rate now among top agents now <p class='break'>&nbsp;</p><p class='break'>&nbsp;</p>And that's still negotiable! :eek:</p>0
- <p>It is nothing to do with how good an agent thinks he or she is at getting the highest possible price for the seller. A buyer sets the sale price not the agent and all the clever training and tricks is not going to change this in a buyers market. Good on the sellers asking for a fee reduction - house prices have tripled in 10 years and so have commissions. The ordinary worker has had 30% pay rise in that time.</p>0
- <p>Just like the saying is- If an agent cannot negotiate their own income how are they expected to negotiate the highest price possible for the vendor?</p>0
- <p>I created a point of difference so that my service is unique. I have not discounted a fee since 1999 - not that I did before then come to think of it. David Airey is spot on...teach, train, coach, rehearse...</p>0
- <p>As a young sales rep I was taught that weak salespeople cut their fees because they are poorly trained. Today in this tough market the best operators are charging MORE for their services and succeeding whilst discounters simply buy business to stay afloat. Pretty poor way to act in my view.</p>0
- <p>It is understandable that agents would be cutting fees to secure the business. It is a sign of the times. However, wouldn't it be better to add more value to the product so the fee becomes less of an issue? This is where knowledge and skill come into play.If everyone is offering exactly the same product, then the only thing to compete on is price. We need to differentiate and improve our knowledge and skill. We still may discount from time to time but not out of fear and desperation. Big difference.</p>0
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