Commission charged on high end of price
Auckland real estate agency The Property Market has launched a new commission structure that means vendors are only charged for the top end of the sale price.
Monday, September 23rd 2013, 12:00AM
by The Landlord
Most real estate agents charge the bulk of commission on the first portion of the price, with decreasing amounts as the price goes higher.
Under the Property Market’s Fare Share approach, vendors can negotiate a price up to which they pay no commission, based on market data and recent property sales. Above that, a commission level is negotiated.
There is a minimum fee of $12,000 plus GST.
Director Antonia Baker said it made sense to incentive agents to work hard for the best price possible.
"Given the demand for properties it really isn’t difficult to sell a house, and in record time. But in this market there is a risk that some agents can look for the fastest commission, rather than working to try and get the highest available sale price for the home owner - which is the whole reason you engage a real estate agent."
Property commentator Alistair Helm has endorsed the idea.
"I think the belief that standard commissions are part of the business model for agents for ever is short-sighted. I think this new Fare Share concept is exactly the kind of thing this industry needs to show it is responding to smarter vendors. Vendors who ask ‘why should I pay a commission on the total sale price, when I want you to show me you are motivated to get that top price. I trust you can do it, now show me your commitment.’ That commitment for me is embodied in the Fare Share concept."
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