Last year was a pretty good one for the real estate industry, although commissions would have been spread a little more thinly among a greater number of agents.
A surge in home sales in the final quarter of last year and rising selling prices in Auckland probably helped hold the residential real estate industry's commission revenue for 2014 at about the same level as 2013, although the average number of homes sold per licensed salesperson was down on the previous two years.
Real Estate Institute of NZ figures show there were 74,537 homes sold last year, down 7% on the 80,188 in 2013 but ahead of the 74,000 sold in 2012 and well up on the 61,269 sales in 2011.
In a commission-based industry, last year's dip in sales would normally mean a significant drop in industry revenue, however it's likely the decline in sales was mostly offset by a steep increase in prices.
Interest.co.nz estimates that rising median prices pushed a typical sales commission to $16,554 (including GST) last year, up 4.8% compared to 2013, which took the total estimated commission revenue generated by the industry to $1.234 billion for the year, down just 2.5% on the estimated $1.266 billion in commission revenue in 2013, but well up on the estimated $1.13 billion generated in 2012 and the $919 million estimated to have been generated in 2011.
It is also likely that the strong rise in prices in the Auckland region last year would have pushed a typical commission on a sale there past $20,000 for the first time, taking the estimated total commission revenue estimated to have been generated in the Auckland region to $591.8 million.
However the money had to be divided among a growing number of salespeople.
Real Estate Agents Authority figures show there were 13,798 active agents and licensed salespeople in the middle of last year, up from 13,179 in mid-2013, which meant that on average each agent or salesperson sold 5.4 homes last year, compared to 6.1 in 2013.
Interest.co.nz estimates that on average each agent or salesperson generated $89,426 in gross sales commissions last year, compared to $96,072 in 2013.
But they would not have kept all of that money for themselves.
It is common for the commission on a sale to be split between the agent and the real estate agency they work for, which means the estimated average real estate salesperson's commission would have been just under $45,000 last year.
In Auckland, where commissions are higher due to higher selling prices, the estimated average commission income was $50,285 last year, compared to $53,554 in 2013.
The money may have to be spread even more thinly this year.
REAA figures show the number of licensed agents and salespeople in Auckland increased by 9.4% in the second half of last year.
With competition between agents for new listings in the region already fierce and new entrants with lower commission structures like Mike Pero Real Estate starting to make their presence felt, agencies are increasingly likely to cut a deal on commission rates, which could take a bit more of the cream off the top of the market this year.
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18 Comments
@ xelnaga | 21 Jan 15, 10:37am
Why the sarcasm in this low quality comment? This is not much different from name calling in the playground.
Real estate sales people provide a service that is used by many people. It's is a highly competitive business and not easy to be successful. The sales people are only trying to earn a living, just like everyone else. Being commission based, they work for themselves and not for the seller, as is a common misunderstanding. So long that is understood, the service they provide can be excellent.
When we sold our house few years ago, I was genuinely impressed with the sale price that was achieved as well as the energy and professionalism (and the naked competitiveness!) of the sales people we worked with. Thank you for a job well done.
Of course, if you want to and can do it yourself, nothing to stop you and good luck.
Why? Because that bloated industry skims a ridiculous 4% from real estate transactions, while doing very little to justify the cost. Every time you purchase a house, 4% of that money is going to some ticket clipping agent to take a few pictures, run them through an HDR program, slap them on trade me and run a few open homes. I guess if they are a really good at what they do they are also manipulating people into paying over the odds.
Look around the world, most other countries manage with a much much lower percentage and without the gimmicky agent mugshots being plastered everywhere.
Of course they are just trying to make a living, what other "profession" requires only six weeks of study and limited ability to basically print money. And if there was really highly competitive the market would see agent commissions forced lower. Much lower.
1. A person that actually earns their living is someone that produces something.
2. 75% of the New Zealand economy is a housing market. It doesn't produce anything and relies on the next gullible fool to pay a higher price than the previous fool. A real estate agent is just a pawn in this game and a person of sound moral fibre would not be involved.
Pretty much all available on the RBNZ website should you have the curiousty and intellect to find it. Mind you the E3 series has been discontinued since I first found this two years ago. Bernard certainly knows and understands these things, hence his comments a few years ago that NZ is a housing market with a few bits tacked on.
Don't be lazy, I have stated that many times here so use the search function. One thing I have found in life is that things that come for free are not valued.
Trying to attack my productivity is a fallacious tactic, another reason why I won't yield to your laziness. But I have spent my fair share of time on the back of the tax payer, but I current own the world best combustion system, that is an energy saving device...
Look at it this way, if you don't find the answer then it will find you.
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