Vendors told: Commission is negotiable
If you don't like the commission a real estate agent is going to charge you to sell your house, negotiate.
That's the message from the founders of a new website that is designed to help vendors find high-performing agents - and get them to offer a reduction in the commission they charge.
AgentAuction.co.nz launches on Wednesday morning.
Chief executive and Treasury economist Andreas Heuser said that with sellers forking out $1.6 billion a year in commission, there was a lot at stake.
He said while it was possible for people to compare prices across most other industries, real estate was still "in the 1980s".
Using AgentAuction.co.nz, would-be sellers can enter their property address and get the details of top-performing local agents.
They can then ask them to offer competitive commission quotes and home appraisals for the property.
"Until now, vendors had to endure lengthy sales pitches where commission rates are always discussed last. There was no easy way to compare proposals or commissions," he said.
"Kiwis like a fair deal, but hate bargaining. AgentAuction takes away any haggling over fees and preserves the friendly relationship between agent and vendor. Agents can focus on what they're paid to do: finding buyers and selling the house for the highest price," he said.
He said it would save agents the time they would otherwise spend canvassing for new business.
Heuser said there were other sites that would take a vendor's details and shop the listing around agents in return for a cut of the commission. But he said the AgentAuction model was new because it would be up to the sellers to choose the agent they wanted to work with, and add the element of competition
AgentAuction receives a percentage of the agent's commission when a sale is final.
Heuser said commissions were a concern for vendors.
"We think New Zealanders care deeply about how much they pay for a given level or service, especially since such large sums of money are at stake. We've spoken to many vendors and they are amazed at how high commissions are but they assume it is non-negotiable.
"We offer vendors the ability to search for the best local agents and then receive competitive proposals from them - so vendors and agents agree on a fair price for the service provided."
He said the 3 per cent to 4 per cent vendors paid in New Zealand was higher than the UK's 1 per cent plus VAT and Australia's 2 per cent to 2.5 per cent, but less than charged in the US.
"Vendors should realise they need to negotiate their commission rate. But many New Zealanders feel uncomfortable negotiating, especially with someone who is paid to negotiate higher prices out of buyers. Our website takes all of the haggling out of negotiation so vendor and agent can focus on the most important task: finding buyers and selling the property. "
Real estate salesperson Karl Leathley, who works under the LJ Hooker brand, was sceptical.
"It's guaranteed to have some agents sign up but the concept is flawed. It's another way to discount your commission before you have even won someone's trust – and business."
He said many vendors would not want to have someone sell their house who was willing to drop their own price so quickly.
"It just comes across as a bit desperate and shows that you don't really have much else to offer other than being cheap. Top agents will always justify their fee."