False pay promised, say estate agents

Unscrupulous real estate companies are hiring hundreds of salespeople with the promise of high pay cheques, but no minimum wage, industry insiders say.

Some long-time salesmen say the practice is crowding the market and forcing honest people to cheat to make a sale.

The Real Estate Agents Bill, introduced by Associate Justice Minister Clayton Cosgrove, was passed this month.

It originally contained a clause stating the status of salespeople would be reviewed within five years, but this was removed.

Real estate salespeople are viewed as independent contractors, meaning they have no minimum wage, but they must work for a licensee.

Howard Booth, an agent for 35 years, said the status of salespeople was the root of the industry's problems.

In Australia, new salespeople had to be paid at least a minimum wage for their first 12 months. This meant licensees were selective about who they took on and supported them, he said.

In New Zealand, licensees hired hundreds more salespeople than needed because they had very little responsibility for their actions and did not have to guarantee a wage.

He knew a lot of "angry and disillusioned" former salespeople who felt they were misled, having been told they could "write their own pay cheque".

The average gross income for all salespeople was $12,000 to $13,000 including part-timers and expenses could total a couple of thousand dollars a month, he said.

"When you put salespeople under the kind of pressure they are under, they will cheat and tell lies to get a deal, because for the size of the cake there's too many people fighting for it and the cake's the tightest it's ever got."

Paul Hamilton, a real estate agent for 25 years, said a group of Christchurch agents and some licensees had fought to keep the status of salespeople clause in the legislation.

The Real Estate Industry of New Zealand (Reinz) had lobbied against the clause but it did not represent the industry as licensees were the only ones with votes, he said.

"They (licensees) don't want the responsibility. If they had to pay minimum wage they would have to be more selective of the salespeople they take on."

Hamilton said the majority of people failed in their first year, ending up further in debt than when they started because of the associated costs.

The huge number of failing agents translated into higher fees for the public as people were "falling over each other to try to make a living".

"There should be a minimum wage and new people should be identified in the market as being new and should have a qualified person going out with them all the time making sure the job is done right," he said.

Reinz president Murray Cleland said the majority of the industry wanted to retain the status quo, whereby employers could choose to employ people as independent contractors or as employees.

The clause regarding a review of salespeople's status would have been a threat hanging over people for five years, he said.

Companies were selective about who they took on and he had heard no complaints of people being encouraged with false promises.

"My opinion is that we should carry on as we are. We have been very successful with this system for a number of years."

- © Fairfax NZ News