Why Australians Pay the LOWEST Agent Commission Fees Globally 🗞️ Real Estate Market Wrap

00:05 – The 2 types of agents destroying vendor management: 😈“Larry The Liar” and 🧔 “People Pleasing Pete” 

04:31 – Why Australians are paying the lowest agent commission fees globally

07:50 – Where are the highest and lowest commissions in Australia?

11:04 – Is Cold Calling Dying? 🤖 And other ways the industry is being disrupted by AI

14:26 – Etiquette for attending other agents’ open homes 

My Clearance Rate: 7/10 SOLD 

Transcript

The Two Types of Bad Agents

Speaker 1 0:00

If there was a state of origin competition on real estate commissions , melbourne would come last . It doesn't make sense . One of the things I want to touch on today is the two real estate agents . I don't like the two real estate type of people . I dislike One's good and one's bad , but I don't like either , because both of them lack capability and both of them cause problems to the real estate market and both of them cause suffering to vendors . Let me run through the two agents .

Speaker 1 0:35

The first one is the liar . The liar is the one that blatantly tells an owner their house is worth more than what it is . This person causes a lot of damage . This person distorts the view of what the owner's plans are going to be like in the future because they're thinking that they're going to get an extra two , three hundred thousand . This person is bad . Right , this person's bad . Not only is this person bad because they destroy an owner's original campaign and you never get a second chance at making good first impression . But I've got to tell you Larry the liar , as they call him , has the worst , worst reputation in the marketplace and I've got to tell you every area has got a Larry the liar .

Speaker 1 1:29

The second agent that I don't like is the people pleaser . He's not Larry the liar , right , let's call it Nice Nick . I don't even know how I came up with that acronym , nice Nick . Nick wants everyone to be happy , everyone to be happy . The owner says you know , we know what our home's worth , we know it's worth $3 million . And you know what Nice Nick says yeah , it is , it's beautiful . You want to know why ? Because Nice Nick is a people pleaser and I want to let you know . The consequences of a people pleaser is not too different to that of Larry the Liar , and the reason why is that both agents leave a vendor to believe . Listen , I'm not going to comment on that person , right , but I've got to say to you there are plenty of people pleasers and there are plenty of Larry the Liars . Now , a people pleaser , let's call him , yeah , camera . Let's call him People Pleasing Pete , beautiful . Let's call him People Pleasing Pete . So what actually happens is People Pleasing Pete tells an owner yeah , I think you can get your price . Yeah , and then after the first couple of weeks , they're getting feedback coming in , they're getting the market talking People pleaser Pete . He doesn't go and tell his owner hey , this is what the feedback is they don't like that . They don't like what you've done here . They don't like the fact that they're going to have to put in a new kitchen and bathroom , right , because the pleaser wants everyone to be happy . There's only one issue Keep them happy during the marketing campaign and I've got to tell you you devastate them when the property gets sold or on auction day , because what's actually happened is you people pleasing has meant that they believed it was all going to come good .

Speaker 1 3:33

The best real estate agents I know have got the ability to tell people the truth , whether the owners want to hear it or not . The best real estate people I know are able to deliver bad news in a positive way . The best people I know in real estate make data-driven decisions . They will look at the intel that's coming through on comparable sales during the marketing . They will also be looking at the buyer inquiry that is happening physically . Then they will back that up with stuff from Ignite , which gives them the data set . They'll even go into chat , gpt and have that data analyzed . That's what the good ones are doing and I've got to tell you if you're a people pleaser or if you're Larry the liar , I've got to tell you , you've got to shape up . If you're Larry the lawyer , get out . If you're Pete , the people , pleaser go off and do a course on learning how to communicate .

Truth Tellers and Data-Driven Decisions

Speaker 1 4:31

Next , I've got to tell you real estate commissions .

Speaker 1 4:34

I want to touch on that subject for a moment . Let me give you an interesting fact . Australia and the UK are two of the leading countries in the world that have got the lowest real estate commissions . That's right . Australia and the United Kingdom lead the way in the lowest commissions , and I have to say to you there's a reason why that actually happens . Right , if you go to certain places in the world , we're talking about 6% , we're talking about 7% . Right , 6% , 7% commissions .

Speaker 1 5:13

I've got to say to you it's really simple . Here is why the commissions in Australia are probably one of the lowest in the entire world . Number one it has a strong auction culture . What that means is that days on market are condensed into being shorter periods of time . Hence , if you're working less time , you get paid less money . The second reason is that Australia has a very unique principle with marketing , and it's called vendor paid advertising , and what that means is that the vendor is actually carrying the cost of the advertising , whereas if you go into other countries , ie the USA , you will find that the real estate agents absorb the

Australia's Low Real Estate Commissions

Speaker 1 6:14

advertising and marketing costs and what they do is in turn , sort of integrate it into their selling fee .

Speaker 1 6:22

Let me give you another reason why Australians are paying the lowest fees in the world , and that is our prices overall are very high , particularly in Sydney . So if you look at our percentage say 1.5% on a $3 million property , that's quite different to actually say 3% in another country of a $500,000 property . So the cost of real estate affects the commission you're going to get if you're using a percentage fee . The next reason why real estate commissions are lower in Australia than anywhere else is that in many countries the buyer's agent is also paid for by the vendor . That's right . There is two sides there's the buyer's agent's commission and there's the listing agent's commission , right ? So all of a sudden you turn around and you start saying to yourself oh , there's valid reasons why . Look , in some countries it can take a year to sell a property . That's why the fees are higher .

Speaker 1 7:39

But I want to go dig deep , lower , and what I've done is a bit of an analysis of real estate commissions in Australia and let me run through some interesting data . The highest commissions as a percentage in Australia are in Queensland . The lowest commissions in Australia as a percentage are in Victoria and specifically Melbourne . In Melbourne it is quite normal to see real estate agents charging fees of 1% to 1.5% and then Sydney's only just ahead of Melbourne in real estate commissions . But I've got to tell you the big difference is that Sydney prices are significantly higher than Melbourne prices . So even if you've got you know , so even if you've got you know , 1% in Melbourne is a lot more lucrative than 1% . Sorry , 1% in Sydney is a lot more lucrative than 1% in Melbourne . But I've got to say to you , I've got to say to you that as far as I'm concerned , when you look at Perth , adelaide , the rest of the places around Australia and Perth and Adelaide have probably got higher fees and they're probably more like 1.5% to 2.5% . That's Perth , south Australia . In Queensland . I can tell you there are real estate commissions up to 3% . I actually know people even more .

Speaker 1 9:12

But if there was a state of origin competition on real estate commissions , melbourne would come last . It doesn't make sense . How is it possible that you've got Sydney as the highest median price , then you've got Brisbane , then you've got Perth , then you've got Adelaide and then

Melbourne's Commission Crisis

Speaker 1 9:29

on top of that , you've got the lowest commissions in Melbourne . So I'm trying to work out how did we end up here like that in Melbourne ? How did we end up here and I can only make the assumption that it is a very much industry-led result , that what's happened is that real estate agents have actually cut , cut , cut and it's been a race to the bottom . Look , there's so many things that need to get sorted . I've been spending a lot of time in Melbourne and I can't understand how Melbourne that's got so many of the big corporates , how Melbourne has got so many great institutions , education facilities , how Melbourne has got incredible migration . Such a diverse city is now not only under Sydney , under Brisbane , under Perth , under Adelaide . Man , between those taxes and between the exodus that happened during COVID from Victoria to Queensland , I think that that's been the biggest driver of the fact that median gone down . But I think real estate agents have pretty much just gone in and not defending their fee and showing value , so it doesn't make sense . However , I've said it and I'll say it again Melbourne is underpriced . Melbourne is good value .

Speaker 1 11:04

Let me move on , and I want to let you know that there's major changes happening as we speak , apart from the AI impact to real estate agents , and that is that buyers and sellers are going to chat GPT . Yes , you're right , richie , taxes on top of taxes , hey Aaron . So yes , I've got to say to you , we've got chat GPT that is driving buyers and giving them transparency and working out what a property is worth , and that's outstanding considering all the fuss we've had with auctions and price guides

AI and Cold Calling Changes

Speaker 1 11:38

. Yes , we have vendors that are going and selecting which agents that they're going to call to an appraisal using AI . Yes , we have so many things .

Speaker 1 11:46

But in addition to that , there's another thing happening in the background and that is Sales calls . It's changing . Every update we have with iOS and Android is bringing in cleaner features to stop people getting sales calls and having canvassing done . There is screen calling happening now and that , to me , is basically saying the old model of just doing cold calls to get appointments is dying . I'm telling you , do I think that phone calls and database is over ? No , I think that a fat database with a very low connection with the agent , that they're not across their database . They haven't gone deep . If you've just gone very broad but not deep you're going to suffer . I suppose what I'm saying is we're about to see something really interesting happen in real estate . Hello , peter , from Glyfada , I'm letting you know I will be back in Greece at your office in October and I am letting you know I'm heading to London for more conferences in October . I'm heading to Bulgaria for a major conference . I think there's thousands that are going to be there and I'm really looking forward to that . But I'm telling you now FAT is out , fit database is in . Have not meant cold data is out , have meant warm data is in . Get close to your database , because we're about to see the weak disappear in real estate . We are changing .

Speaker 1 13:36

Ladies and gentlemen . Tommy , are you going to the Sydney FC Australian match versus Auckland ? David , can you tell me what time it is and where it is ? Malcolm Quinn , if the Tigers win every game , they can sneak into the eight . I'm telling you . I'm telling you now . There's no artificial light right there . I've got to say to you , mel , tomorrow all roads lead to Leichhardt Oval . I'm leaving my home at 2 o'clock , I'm putting on the V-neck jersey with the Philips and I'm heading straight to Leichhardt . I'm going to go there and I'm going to come back with two points and a win . I know that , ladies and gentlemen , that's what's happening .

Respect at Other Agents' Auctions

Speaker 1 14:23

Last thing I want to touch on . Last thing I want to touch on I had a real estate agent walk in today just trying to find out what's going on in the market competitive offers and I shot a video on it . It happens one , two , three times , two times last week . It happens all the time . Real estate agents walk in and they look at an auction right and what actually happens is they go back to the office and they tell their agent oh , that house in Excelsior Street sold for two and a half right , product knowledge . I get that , even though , having said that , you can get the data on realestatecom and online by Monday . You can get the data . So there's really not necessarily that much need , but I get it . You want to go see what's going on . I want to see who's bidding . Get your product knowledge . Listen if . Thank you , david .

Speaker 1 15:21

7.30 pm , jubilee Stadium I'll be there . I'll be there . I'll be going to the game . I've got an option at 6.30 and I'm going to leave the option and I'm going to go straight to the game and I'm going to watch Sydney FC . But I've got to say to you if you are an agent that goes to other agents' options to get information , that's fine , be respectful , walk in . Hi , I work for the office up the road . Do you mind if I have a quick skip in ? Quick , look , great , fantastic . Do you mind if I just watch and see how it goes ? Do that ? Stay away , no need to talk to anyone , like some agents do . Oh , they grab the attention of a buyer . They start talking to them . That owner has paid big money to have their auction . They don't need another agent who's not a listing agent , who hasn't signed a contract to represent that vendor . They don't need that person to be there . And , quite frankly , I actually get really concerned when I see an agent at an auction at another property that shouldn't be there , because I think that sometimes they actually might be talking the buyer out from bidding on that property to try and sell them something else . That's bad form , it stinks .

Speaker 1 16:23

Last couple of things 23rd and 24th , ladies and gentlemen , invite only for my real estate gym plus members and my accountability group . I'm letting you know we're going to Byron Bay , you're coming to my hometown to spend two days to actually learn how your brain works , to learn how effective business

Byron Bay Event Announcement

Speaker 1 16:43

unit teams work . We're going to do everything on AI , but I'm letting you know this ain't a Netflix show . This is going to be actual experiential learning Small group . You can't hide . I'm letting you know my real estate A-plus members are coming in , obviously free of charge , so look out for it . And I'm so pumped about Byron Bay some amazing speakers . We've got Rubenstein McGrath , lahood team , big names , names more speakers to come . Good to see you everybody . And , on that note , it's time to head off .