Desperate Agents Ask For Less Pay
Sun Herald
Sunday June 13, 2004
A SLUMP in the property market has led to some wins for buyers and sellers and produced one big group of losers: real-estate agents.
Desperate to keep their businesses alive, some agents are offering to slash their usual 3 per cent commissions to 0.5 per cent.
Their plight was highlighted yesterday when only 34 of the 80 properties auctioned around Sydney found buyers, Home Price Guide figures showed.
``As the market becomes less buoyant there are fewer sellers, and to get the listings agents are offering to cut their commissions," Real Estate Employers' Federation of NSW executive director Greg Paterson said.
Mr Paterson said budget rate commissions of 0.75 per cent and even 0.5 per cent were restricted to Sydney's North Shore and eastern suburbs.
``[A commission of] 0.75 per cent on a property valued at $1 million would still allow an agent to cover costs, but on a property out west valued at $300,000, the agent would be selling at a loss."
Agents were looking to cut costs by reducing staff numbers, he said. ``We have also had examples of agents who have said that times are tough and it's not worth keeping the doors open."
Australian Bureau of Statistics figures show that turnover in the property market fell by 10.5 per cent between December and March and, in Sydney, the volume of sales in the March quarter dropped 36 per cent.
At the same time the real-estate industry is groaning under the weight of its personnel. The numbers have increased by almost 50 per cent in the past four years, despite a Roy Morgan poll rating estate agent as Australia's second-most unpopular profession.
People were nervous about the market, the director of specialist employment agency Real Estate Recruitment, Lisa Morell , said. ``There are fewer people looking for jobs, the jobs are not turning over, so there are fewer vacancies," she said.
Real Estate Institute of NSW media manager Karen Allan said: ``It is not something that need necessarily affect home owners, it is something that will affect people in the industry."
L.J. Hooker 's international business development director Michael Davoren expected to see between 1000 and 1500 estate agencies go to the wall before the market picked up.
Ray White Neutral Bay Mosman managing director Michael Gillan said: ``We are coming off the back of five years of good trading so we have to be philosophical about it."
Sydney's most comprehensive auction results: Page 88
HOW THE PROPERTY MARKET HAS CHANGED
THE PAST
* From 1998 to 2003 there was a property boom in the real estate industry that produced about 25,000 more jobs, with each generating an average annual wage of $98,200.
* Last year, agents picked up a total income of $6.82 billion.
THE PRESENT
* Sales in Sydney in the March quarter have dropped 36 per cent. Spending related to transferring the title of, or buying, property dropped 10.5 per cent.
* Agents are slashing commission fees to as little as 0.5 per cent to get vendors to sign with them.
THE FUTURE
* The slump is predicted to last for at least another 12 months. Experts predict that between 1000 and 1500 agencies will close.
* Jobs will be axed, with the Real Estate Employers' Federation reporting a 50 per cent increase in inquiries about making staff redundant.
© 2004 Sun Herald