Home Agents & Agencies 87% of Agents Think Commission Structure Needs Revising

87% of Agents Think Commission Structure Needs Revising


Written by Christian Longobardi



87% of Agents Think Commission Structure Needs Revising

In a recent poll conducted by SA Real Estate News, 42 respondents answered the question, “Would you consider asking clients to pay you a retainer/monthly service fee instead of commission?”


A screen grab of the poll conducted by SA Real Estate News
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45% of respondents were unsure exactly what should be changed but agreed the system needs revising, with a further 42% open to considering a retainer/monthly service fee from their vendors.

Just over 10% of respondents indicated they were happy with the current system of ‘success fee’ commissions, and that asking for an upfront fee or retainer would place “too much stress on myself and the client”.

Real Estate Agents Not Getting a “Fair Deal”? 

The results indicate growing concerns within the industry that agents are not getting a ‘fair deal’ from their clients, since the deregulation of commissions.

It is estimated that the average real estate agent earns $45,000 a year, but according to 2011 census data, most work more than 60+ hours per week.

(To put this into perspective, a 60-hour week at $45,000 equates to $15.63 per hour, while the minimum adult wage is $17.60) (Sources: Fairwork SA, Census 2011 abs.gov.au)

Industry Giant Lee Woodward Recommends Getting “Half your fee upfront,”

Lee Woodward speaking at his “Complete Salesperson Training Course” in late April this year.

At his recent appearance in Adelaide, Lee Woodward spoke to attendees about instances of agents taking half their fee upfront when confronted by a vendor pushing for a fee discount.

“It’s completely legal, all you’re doing is being paid a project management fee for the sale of their house.”

He also pointed out “…how many vendors would leave you for another agent if they’ve already paid you half?”

OPINION: Is the bigger issue in your office withdrawn listings rather than commission percentage? 

Take the example of the hypothetical, fairly successful real estate agent working in the Northern suburbs of Adelaide. This agent may list approximately 30 properties a year, with an average gross commission of $7,000 per property.
Of these 30 listings, a handful (let’s say 3) may never sell or settle under this agent’s direction and are withdrawn from the market. The agent is then left short-changed $21,000 in lost income. This is not including the time and effort spent attempting to sell the property over a number of months.

While the above scenario may not apply to all agents, the underlying issue remains. Should one in every two agents in South Australia face this predicament, the amount of lost income within the real estate industry would reach the tens and hundreds of thousands of dollars every year. Clearly, this is an unsustainable model.