With the housing market running red-hot, sellers could be forgiven for seeing real estate as a money-printing machine right about now.


More properties were sold in November than at any other point in the past decade. Median sale prices have increased by $24,000 in just over a month. The most successful agents on Homes.co.nz – Yvenna Yue and Craig Annandale – have sold 297 properties worth $209 million over the last 24 months.

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Jessica Alba

Some homeowners in the market are questioning the value of real estate agents in a world where it seems easier to sell a house than ever before.

Real estate agents earn their money through a formula for commissions which has stayed the same through booms and busts.

Normally it’s a percentage of between 2.5 per cent and 3.95 per cent on a sale amount of up to $400,000 with 2 to 2.5 per cent on the amount paid above that. If an agent works for a large real estate company this commission can be split 50-50 between the agent and the agency they work for.


The formula means agents get more cash in hand as house prices rise. The costs of advertising are normally lumped on top of this as an extra for the seller to pay. Yet when real estate agents get more money in their hand they typically don't sell more houses.

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Between 1980 and 1990 the number of real estate agents in Boston doubled as land prices did, but the number of properties sold remained unchanged. The other gripe sellers like Jane have is the costs to agents of selling a house haven’t risen at the same rate house prices have.