The rise in market prices of real estate in Auckland is showering many agents with big commissions.
Many realtors in Auckland are getting enormous paychecks with some amounting to millions as part of their sales commissions from transactions. According to Stuff, without any additions to their workloads, these lucky brokers have been able to get the extra pay because of the soaring market prices of real properties they are selling. The growth has been astronomical with commission rates increasing by 44 percent in the last five years alone.
One of the main reasons for this amazing windfall of cash for many agents is the tremendous increase in the prices of homes in the city. While the rates have soared, the system used to compute and payout commissions to dealers and brokers has remained the same thus the higher the selling price, the bigger commission they get.
In a report by Real Estate of New Zealand, in 2010, commissions given to real estate agents amount to $18,000 for a property sold at $450,000. Currently, a house sold for $750,000 under Barfoot and Thompson will net them $23, 978 or $26,767 from other brokerage firms. Barfoot and Thompson is the biggest realty company in the city and the difference in the amount of commissions now and in the past is slightly below 50 percent.
Meanwhile, in a report by New Zealand Herald, Finance Minister Bill English is concerned about the increasing rates of houses in Auckland. According to him, people who can afford to spend big money on property need to come to their senses so they help slowdown the price hikes. His comments came after the Real Estate Institute announced that prices of homes in Auckland have increased by 25.4 percent in October.
He said, "Clearly at the moment there are New Zealanders who believe that they can afford that kind of house price. Now the number of them who can [pay], must be shrinking because the ratio of the house price to income is getting up to nine of 10 times and that is, by any global standard, very expensive."
