Home > Our Publications > New Zealand Outlook > 2005 > November

Estate fees to be cut - New-look agents save you money

REAL estate agent commissions are being challenged by a new breed of companies prepared to sell houses for a fraction of the fees charged by established firms.

Borders Real Estate plans to enter the market in Lower Hutt, Wellington, offering a commission of 1 per cent, about a quarter of the fee charged by big franchises.

Australian franchise Go Gecko will also open offices in central Wellington and Lower Hutt offering a flat fee of just under $6000 for properties over $200,000.

That compares with the nearly $14,000 - based on the standard 3.95 per cent commission, a $500 "listing fee" and gst - charged by the big companies on properties worth up to $400,000, Go Gecko says.

Both firms rely heavily on technology to cut costs, and lower fees to increase listing volumes.

Institute president Howard Morley said that since deregulation of the industry 20 years ago, commission charges had varied considerably, as had the level of service.

"Vendors need to be aware there is a variety of services avail-able, and they have to pick and choose what they want," Mr Morley said.

Consumers Institute chief executive David Russell said sellers should ask what a cheaper agent would deliver for their fee and compare that with the offer from a traditional firm.

"Provided the service remains the same as you get from a conventional real estate agent, it can only be good news."

Traditional agents were also increasingly willing to negotiate their fees, where in the past they would have "laughed you out of their office" at the suggestion, Mr Russell said.

Meanwhile, house prices and sales continue to defy the pundits' predictions of a slowdown.

The Real Estate Institute's figures for August reveal a jump in sales to 8537 from 8213 in July.

The national median of $290,000 is 3.6 per cent higher than July's median of $280,000 and 17 per cent higher than the median in August last year.