Real Estate Fees Outstrip Inflation

16 May 2016

Lane Nichols New Zealand Herald article - ( has shown that the cost of Auckland real estate commissions have risen approximately 35% in real terms during the past six years, due to the rapid house price rises. What make this more interesting is during the past 10 years the internet has completely changed the way real estate is sold in New Zealand, allowing savings to be enjoyed by the real estate industry.

Before the internet’s dominance in real estate advertising, buyers needed to actively search for a property. This included reading every real estate publication available, searching real estate office windows and dealing with as many real estate agents as possible. The internet has changed all this. Now days any real estate agent worth their salt will have every property they market on the two key real estate websites, and It is rare to find a buyer looking for a property who isn’t using one (or both) of these sites. Buyers are free agents able to access all properties for sale no matter which agency are selling them. The days of a real estate agent driving a buyer all around the city showing them the properties they have for sale are also gone, allowing big savings in time and costs for the agents. It’s ironic that some large real estate agencies continue to preach about the power of their large network of agents but still feel the need to have their hands out to their Vendors for large amounts of advertising fund.

When I established my agency Domett Real Estate nearly five years ago, our fee was based on our perceived costs of a modern real estate agency and the saving the internet offers (our fee is 1.8% + gst on the selling price. We also cover the base advertising and administration cost). Vendors do have a choice of the level of commissions they pay and ultimately it’s up to them whether real estate fees will continue to remain at high levels or not.

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