How Flat Fee House Sales Are Catching On In New Zealand

It is always interesting to know how real estate sales operate in different parts of the world.

In New Zealand real estate agents usually charge about 4 per cent commission (compared with 2 to 3 per cent in nearby Australia) depending on the price of the property. There is usually only one agent involved who is paid by the property seller and the same agent presents the offer to the seller on behalf of the buyer.

New Zealand has a population of just over 4 million people and has around 17,000 real estate agents. The 4% commission on an average sale is up to $15,000 with the commission usually split 50/50 between the real estate agent and the real estate office. However, for higher priced properties a lower commission rate of between 1% to 3.5% is often negotiated.

Many in the industry believe that the commision rates are too high and believe that the country is ready for flat rate commissions.

A couple of flat rate companies have spread their wings by opening offices around New Zealand. They employ staff rather than have commission agents. These flat fee real estate offices are charging around $5,995 to $7,995 per sale compared to the usual $15,000 (approx) commission.
They argue that it takes just as much effort to sell a higher priced property as it does a lower priced property.