New Zealand's real estate model: In “need of a shake up”?

According to an investigation by this week, New Zealand real estate agents are charging more commission than any other nation in the English-speaking world.

Economists say the current high commission model works only in the favour of the agent, not the seller. Most real estate agents in New Zealand charge upwards of 4 per cent commission, while in the UK they only charge 1.6 to 2.5 per cent, in Australia it's also as low as 1.6 per cent in certain states, and in the US it is 2.5 to 3 per cent.

While many industry professionals are arguing that what is needed here is regulatory invention and more transparent fee structures, we think it's also in the power of every individual seller to demand a better deal from their real estate agent.


Before you hit the open market with a property, interview several different agents on site to gauge how their selling personality will best suit your offering. At the end of the meeting, ask what their commission is. They will always try the highest rate first and call it their “company standard”. It's important to know this is negotiable, but don't do it straight away. Thank the agent for his or her time, let them know you're interviewing other agents, and say you'll be in touch.


In 48 hours, once you know which agent you want (and what the other commission rates are), phone your agent of choice and tell them the commission rate you're willing to pay them to sell your property. They have had two days to ponder how quickly they could sell your property already, and will be somewhat emotionally invested in getting you on board as a client.

Any commission around 3 per cent is reasonable in today's market – agents still receive a five-figure fee on properties over $500,000 – which is most of them in 2017 New Zealand. If you have a more valuable property, a fee closer to 2 per cent after a certain amount (e.g. $400,000) is desirable, as agents will still take home that large five-figure fee.


Real estate agents like to add GST on top of the commission rate, but you should request that it's inclusive. GST is not a cost to a real estate agency – it gets offset when they pay Inland Revenue and declare GST already paid through business expenses. It's only an extra cost to you as a seller (it will add several thousand dollars to your final fee).


In today's market in metropolitan areas, it's incredibly competitive and properties largely sell themselves. While many real estate agents will tell you marketing must be paid by the seller on top of their commission, you should ensure that the agent him- or herself covers such costs.

Again, these are business expenses for the agency and are GST deductible. Moreover, an agent's sole job is to sell a property – they don't do any legal work or building guarantees – and it is wholly nonsensical that the seller would have to front up several hundred dollars for advertising. If an agent believes they can sell your property, they'll have no problem making this small investment in you, as a sign of good faith.