Pero slashes commissions on top home sales

By Susie Nordqvist

Mike Pero 
Photo / supplied
Mike Pero Photo / supplied

Entrepreneur Mike Pero has again moved to undercut the competition by slashing his commission on homes sold over $390,000, by a further 1 per cent.

Pero, who last week announced plans to launch a low cost real estate company offering a 1 per cent reduction on the rate "charged by most companies" has now lowered the fee advertised on his website for higher value homes, to 1.95 per cent.

Property investor Olly Newland said the move could prove to be a "watershed" moment for the industry if Pero lasted the distance.

"All power to him if he can hang in there - he may have started a mini-revolution," Newland said, adding that lower commission rates were common in many other countries.

Rival agents would be "gnashing their teeth" and "putting pins in their waxed dolls" upon hearing the news, Newland said.

Pero said he had always planned to reduce the fee on higher value properties, but details were initially omitted from his website and other marketing material.

"Somehow it dropped off. We know that commissions reduce across the country at $400,000 or $500,000 so there would be no point us offering a dearer rate up top," he said.

Newland earlier said most agents were negotiable on their fees, and said he wouldn't be surprised if even Pero's commission was negotiable.

He expected Pero would be taking a loss on the commission in a bid to get people through the door initially.

"It's welcome to capitalism - he's undercutting everybody to make sure he gets the business. I don't blame him."

Pero said while other agents would probably be "out there trying to pull us apart", he would always be cheaper than the other brands.

"I didn't come down in the last rainshower," he said.

Pero said he expected the business to be cashflow positive within three months of its launch and was at pains to point out that there were fundamental differences between his model, and other cut-price agencies which had failed to establish themselves in the market here.

The Joneses, which charged a flat-fee commission, folded after just 18 months in 2008.

"They (the media) keep comparing us to the Joneses. We are nothing like them. They had no brand prior, no history, no financial resource, a salary and non-performance related package, and a business plan that did not work," he said.

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