Pero has high praise for low commission model

Mike Pero Real Estate launched in February this year and in May the first agents came on board in Auckland and Canterbury, offering the promised commission rate of 2.95% (plus GST), below the national average for real estate commissions from the major industry players or around 4% (plus GST).

"We did our market research before we launched and found that New Zealanders wanted lower commission rates, without compromising on service," said Pero.

"Our next generation culture and philosophies have hit a note with New Zealanders, and we're growing ahead of our expectations."

He said the Mike Pero business model was able to provide a lower commission structure by reducing middle management, new marketing technology and less bricks and mortar.

"We look at the traditional industry procedures and styles and question their effectiveness – we embrace online technology, innovative marketing and forward thinking - these are our points of difference that allow us to offer a better proposition to the vendor."

Pero said that on average, the lower commission rate of 2.95% would save sellers between $3,000 and $8,000, depending on the sale prices and other office commission rates.

"At a time when every cent counts that's a huge saving - for many people that could be a couple of months salary."

He also attributed the fact that Mike Pero Real Estate agents generally own their own franchises for their success in attracting top agents.

"Our model gives them the opportunity to build a business, not just a job, and acquire equity that could one day provide for their retirement, or at least a lump sum of cash."

The company aims to recruit from the top 20% of agents, "and there is no room for complacency - it ends up adding to the operational costs, which typically gets added on to the customers' fees."

Comments from our readers

On 23 September 2011 at 8:09 am Jim said:

Pero did not say he was only looking for experienced top performing agents when he advertised. Consequently a lot of people wasted their time applying and in my case I never even received a proper response. I hope his agents are going to be more upfront with the people they deal with than their boss has been

On 23 September 2011 at 1:22 pm graeme said:

Pero Real Estate is only cheaper than average at the bottom end of the market, at 2.95% plus gst they are actually more expensive than the biggest player in Auckland for a $750,000 property.

On 23 September 2011 at 5:51 pm Tony said:

Dont agree did a recent sale with Barfoots, across the board the commission was 2.6%.Go figure.

On 26 September 2011 at 7:48 am Andrew said:

Actually, the 2.95% is on the first $390,000, after that it drops to $1.95%, so considerably less expensive than the biggest player in Auckland

On 27 September 2011 at 9:22 am Tony said:

Actually it looks like Auckland may finally be getting Real Estate Agents offering commissions which are well under Peros. Two examples are domett.co.nz & thepropertymarket.co.nz.

On 29 September 2011 at 7:33 am Jenny said:

Good examples, but does Domett or ThePropertyMarket have the brand recognition and trust that Mike Pero has built over the last 30-odd years? I think not, and that puts MPRE in a unique position of building on the trust already established with customers of the brand. I also think this business model of owner-operator franchise owner offers real estate agents a better solution to long-term income as under the current system if you leave you have no fall-back, where as with MPRE you can sell your business for tangible equity. Sounds intriguing and I'm fascinated to watch how this develops.

On 3 October 2011 at 9:18 pm Shelley said:

Brand recognition has nothing to do with a successful sale lol. Maybe if your are buying a pair of nikes. :) I have my house on the market with Barfoot & Thompson and I think willing buyer + willing seller = sale. I saw a recent Consumer rating of real estate fees and this new company of Mike Pero was more expensive than heaps of others!
I dunno, am always skeptical of slick people and marketing.

On 3 October 2011 at 9:41 pm John said:

Sorry but I dont call 2.95% low commission. My mother-in-law has just sold in the South Island using a 1% company (sorry don't know name) and she got $26k over asking price and couldn't fault the service. Shame we can't get that deal here but I'm sure it's only a matter of time. Large companies have been negotiating to 3% since Adam was a cowboy.

Pero has high praise for low commission model

Mike Pero has hailed the success of his ‘next generation’, low commission real estate company, announcing it has established 17 franchise owners and a total of sales force of 23 between Auckland and Christchurch.

Thursday, September 22nd 2011, 12:00AM 8 Comments

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