Why it costs so much to sell a home in Auckland (and what we’re doing about it)

04Many a New Zealand seller has bemoaned the exorbitant real estate commission fees that local real estate agents charge, but few realise just how over-priced the traditional service is.

We’ve done our sums and they show it costs nearly twice as much in commission fees to sell a property in Auckland as it does in Sydney… The difference on a $500,000 home is more than $11,000!

There are a number of reasons why this is, and they include:

    • Agency structure: The traditional set up of a real estate agency in New Zealand includes a large number of fixed expenses – from a branch on the high street and a traditional trust account to paper-based accounting systems and a team of admin staff to manage them. These running costs are significant and industry standard commissions are set up to support them.


    • Low barriers to entry: There are few barriers to entry for aspiring real estate agents and there is a perception that vast commissions await anyone that undertakes the necessary qualification. In practise, this is far from the case – based on national figures, the average agent will only make 5-7 sales per year. With so few sales, commissions need to compensate for the quiet times.


  • Due diligence: There is no requirement for sellers in New Zealand to demonstrate the structural integrity or value of their home and many transactions fall through based on the results of the due diligence that buyers need to undertake. This is a key reason why nearly a third of real estate listings in New Zealand don’t sell, a factor that is worked into the traditional real estate fee as well.

Of course, all of this begs the question – can it really be done any differently? In our experience, the answer is yes.

We think the whole industry needs a shake-up – especially around commission fees. We’re also able to prove that a leaner fee approach works, if it’s done well. For example, we invest heavily in smart digital marketing solutions and cloud-based administrative software. The net result is our 2%+GST real estate commission fee, which is significantly lower than the industry average.

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