Agents offering cut-price deals, says real estate commentator

By Susie Nordqvist

Entrepreneur Mike Pero 
Photo / Simon Baker
Entrepreneur Mike Pero Photo / Simon Baker

They won't advertise it, but many real estate agents are already offering cut-price commissions in a bid to secure sales in the current market, says a leading property commentator.

The trend for low commission agencies heated up again this week with mortgage broker Mike Pero announcing plans to enter the real estate game offering a commission of 2.95 per cent - 1 per cent less than the rate "charged by most" agents.

Commentator Olly Newland wished Pero "the best of luck", but said most agents were negotiable on their fees anyway - if homeowners were willing to speak up.

"Kiwis aren't good at haggling - they usually get very embarrassed about it. I'm used to it, but that's my game.

"The tricky bit is knowing whether to haggle at the beginning or when the pen is poised over the paper," Newland said.

Some agents were slashing up to 20 per cent off their commission, and Newland said he wouldn't be surprised if even Pero's commission was negotiable.

"It's very rare to pay the full fee to any agent. Half a loaf is better than nothing," he said.

Pero said earlier this week homeowners would, on average, save between $3000 - $6000 under his business model.

At last count he said he had received 60 completed applications from agents who were keen to join the brand and about 120 enquiries in total.

The company is planning a March or April launch, and Pero said he expected to have 100 agents on the ground in Auckland by the end of the year.

Massey University senior property lecturer Dr Susan Flint-Hartle welcomed the move to reduce commissions which were too high here when compared to many other countries.

"I know New Zealand real estate agents do negotiate - they don't like it, they hate it but everything is negotiable," she said.

"In the UK I know it's lower. I think it's about two per cent."

Flint-Hartle said Pero would find it a challenge to break the strangehold the big firms had on the market, but said the fact he already had a well established brand would help.

Realestate.co.nz's Alistair Helm said he expected the industry would adopt a wait and see approach to assess Pero's impact on the market before deciding how to counter it.

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