The Joneses, and the Real Estate Institute

I’ve just finished watching Sunday on TVNZ .

The first story was about the recent spat between the Joneses Real Estate company, and the REINZ (Real Estate Institute of New Zealand).

Chris Taylor of the Joneses talked about their flat fee structure. All of their agents are on salary so that, they say, effectively removes commissions from the incentive to sell a property. They charge a flat fee of $7,995 including GST to sell a property. Other agents can take around $15,000 to sell a $350K house, or $28,000 to sell a house worth $700K.

Chris made some good points – the one about an agent working hard in Invercargill to sell a $140K house and earning a $5K commission, compared to an agent working as hard in Auckland and getting 3 or 4 times that commission hit the nail on the head. As Sugar pointed out the agent in Invercargill probably has to work harder to sell the house because the market is smaller and there are less buyers.

We saw the wealthy agent selling $5 million apartments in Parnell, who assured Cameron Bennett that the commission wasn’t why he sold homes. He maintained he never thought about it, but then admitted that if he was on a salary (a la Joneses) that wouldn’t be very motivating for him. Cameron neglected to push home the point that he’d just told the viewer the commissions weren’t important.

What a real estate agent brings to the sale of a home is a list of potential buyers. I’m not convinced they offer much more than that anymore, since, for a modest sum I can go onto QV and find an up to date valuation for my property plus find out what all other properties in my area sold for.

The discrepancy between a Joneses agent and a commission agent was not made clear in the article. I don’t know how big the Joneses database of buyers is or how long they take to sell homes compared with the others. I suspect that I’ll never truly know that information.

But if I am selling my home, and I can go for a $7,995 commission, which I only pay once I have sold my home then I guess it’s a good gamble, and worth the risk. Especially of I’m likely to save in the region of $21,000.

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