The sharp decline in Melbourne dwelling values and transaction volumes (see next chart) has created a war of attrition among real estate agents.
One South Melbourne agent has shocked colleagues by offering clients zero percent commissions, causing a backlash within the industry:
David Barber, an agent at Ray White in Melbourne’s Southbank area, emailed potential clients with the offer last week: “The South Melbourne property market has gone down by 8.47 per cent in 2018 and we understand that it may be frustrating for those who were considering to sell their property in the near future.
“To help cover the burden of a down trending market, we’re offering our South Melbourne clients zero per cent commission for the remainder of 2018.”
His offer does not include fees for marketing, which can run as much as $8,000.
The move reportedly ruffled some feathers in an industry that is already under pressure.
One unnamed agent reportedly said, “People do capture market share by offering discount fees – that’s been going on forever. But nothing? Come on! It reeks of absolute desperation.”
But it has also been reported that this causes a problem for Ray White Group, by raising questions about the value of their service.
Said the agent, “It certainly sets the bar as low as you can get with what you think your services are worth. This is them telling the market that ‘Our service is worth nothing'”…
Mr Barber said forgoing a 2% commission will help property owners who has already suffered an 8% drop in value this year.
When we start seeing real estate agents trade in their BMWs and Jaguars for Toyota’s and Mazda’s, we’ll know the property correction is complete. In the meantime, enjoy the schadenfreude.
