PHOTO: Real estate agents in New Zealand operate in a ‘weird’ commission only environment. FILE
The real estate industry in New Zealand has long been a cornerstone of the country’s economy, providing a platform for property transactions and investments. However, as the world rapidly evolves in the digital age, several aspects of New Zealand’s real estate sector seem to lag behind, causing concern for both industry professionals and consumers alike. This article delves into three key areas where the New Zealand real estate industry appears to be out of step with the modern world: commission-based sales structures, traditional advertising methods, and the high attrition rate among salespeople due to insufficient earnings.
- Commission-Only Compensation Model: A Risky Proposition
One notable characteristic of the New Zealand real estate industry is its reliance on a commission-only compensation model for salespeople. Unlike salaried or base-salary-plus-commission models that have gained popularity in other parts of the world, New Zealand real estate agents typically rely solely on commissions earned from successful property sales. This approach creates an inherent financial risk for agents, as they invest time and effort into deals that may ultimately not materialize, leaving them without compensation.
The commission-only model has drawn criticism for potentially pressuring agents to prioritize their own financial interests over the best interests of clients. This misalignment can compromise the quality of service provided and may contribute to an environment where transaction speed is prioritized over client satisfaction. As the global real estate landscape continues to evolve, New Zealand’s industry might benefit from exploring more sustainable compensation structures that promote long-term relationships and better customer outcomes.
- Persistence of Traditional Advertising in a Digital Age
In an era dominated by digital platforms and social media, the New Zealand real estate industry’s continued reliance on traditional print media advertising is a notable anachronism. While print advertisements have historically been a staple of property promotion, modern technologies have opened up more targeted and cost-effective avenues for reaching potential buyers.
By not fully embracing digital advertising and marketing, the industry risks missing out on a vast and engaged online audience. The use of high-quality photos, virtual tours, and interactive listings can enhance the property browsing experience for potential buyers, but these elements are often underutilized due to the industry’s continued focus on print. Adapting to a digital-first strategy could provide a competitive advantage, reaching tech-savvy consumers where they spend the majority of their time – online.
The line that many real estate agents spin is that print media is important – rubbish! Print media in our opinion is all about ‘real estate agent ego’ – yet they convince New Zealand homeowners to spent millions of dollars a year still on newspaper advertising.
- Attrition Rate: The Struggle to Make Ends Meet
A significant concern within the New Zealand real estate industry is the high attrition rate among salespeople. Many agents enter the field with high hopes of earning substantial incomes, but a considerable portion find themselves unable to sustain a living wage due to the commission-only compensation structure and the unpredictability of the market.
The attrition rate in the industry is compounded by the misconception that real estate is a “get-rich-quick” profession. The reality often involves intense competition, long hours, and significant investment in professional development. As salespeople struggle to meet financial expectations, many are forced to leave the industry, resulting in a loss of experienced professionals and potentially affecting the overall quality of service provided to clients.
While the New Zealand real estate industry has undeniably contributed to the country’s economic growth, it is facing challenges that stem from its resistance to fully embrace modern practices. The commission-only compensation model, reliance on traditional advertising, and the high attrition rate among salespeople are all areas of concern that need to be addressed to bring the industry in line with contemporary expectations.
To thrive in a rapidly evolving world, the New Zealand real estate industry must consider adopting more sustainable compensation models, leveraging digital advertising methods, and finding ways to support salespeople in achieving a stable income. By doing so, the industry can not only adapt to the modern world but also ensure a more equitable and effective experience for both professionals and consumers.