Are real estate agents overpaid?

Posted on November 11, 2014 by | 2 Comments
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This post sponsored by Lawyers Conveyancing

An article by Edwin Almeida

Over the weekend I saw many social media posts of the number of homes auctioneers auctioned off on the day. Some numbers came in between seven to 11 properties sold by a single auctioneer.

Then there were the articles and reports of properties being on the market for as little as 13 days on average across Sydney.

I began to once again ponder on the costs involved in selling a home. More to the point, I wondered about the time given to the sale of the homes by the real estate agents (REAs).

This raised two questions.

  1. Is if the real estate professional an overpaid individual.
  2. Do we need to re-think the way REAs are being rewarded for their services?


The majority of auctioneers in the field on a Saturday chargeon average $500 per auction for attending and overseeing of the auctions. The mean time spent on site by the auctioneer is 30 minutes to one hour. Agents, as we know, on average are charging 1.7% in commissions off the sale price.

Added to the costs of selling a home is vendor paid advertising (VPA), which averages $1,500 per property. Allow me to once again do the math and break it all down to get a better understanding of what it costs to sell a home.Are real estate agents overpaid?

Keep the following numbers and values on hand.

  • Median Home Values in Sydney: $844,000
  • Average commission equal to: $14,348
  • Vendor Paid advertising: $1,500
  • Auctioneer fees: $500
  • Current – Average listing period in Sydney: 13 days

The following question began to re-surface in my mind. Are REAs overpaid? Some will no doubt refute this article and say: “Mate! If you pay peanuts you get monkeys!” Please bear with me and let’s look at the above figures in dollar values per “hourly rates” being charged, before you stone me.

For most of us, we learn early in life, the level of service you expect to receive is usually in line with the amount of money or value you are willing to place on it.

Is the above premise, however, true of the real estate industry or have we fallen into a bad habit into accepting a payment structure that may be seen as out-dated? Will the public wake up to this soon?.


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  • Sharlie Hammond says:

    I agree, I think it ridiculous the amount of commission Real Estate Agents charge as well as demanding Vendor advertising. What other business has the client pay to market that business as well as promoting the salespersons working in that business?What can we do to change it?

    • Peter Mericka says:

      The best way to change it is to avoid using real estate agents. The suggestion that a real estate agent will cause a purchaser to pay more than a property is work, to the point that it will cover the commission as well as provide extra to the vendor is one of the greatest con-myths of all time.

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