Numbers right for WA agents

Western Australia’s real estate agents took home bigger commissions than their interstate counterparts while selling properties in half the time during the 12 months to August 30, according to a new industry survey released this week.

Macquarie Bank’s inaugural Real Estate Agency Survey also highlighted that WA agents had the second highest commission split in the country, taking home 46 per cent of the commission compared with 47 per cent by Queensland agents, 39 per cent in New South Wales and 37 per cent in Victoria.

But the commission splits are beginning to tighten, as the average time to sell homes in WA increases and real estate agency profitability decreases, according to Real Estate Institute of WA president Rob Druitt.

Mr Druitt said WA agents typically took home a bigger slice of the commission because the market had operated for a longer period of time without an award underpinning the industry, which meant agents had to incur more of the cost to do business but took home a larger amount of the commission.

He said the size of agents’ commissions was contracting as the property market started to slow.

Not surprisingly, WA agents are most concerned about the profitability of their businesses, and rank balancing the role between the selling agent and the principal as a much bigger concern than their counterparts in other states.

Whereas 16 per cent of agencies across Australia shared the concern, 38 per cent of WA respondents viewed it as their greatest challenge.

The Macquarie survey of 300 agents showed that the average commission WA agents charged to vendors was the highest in the country at 2.9 per cent, compared with a national average of 2.4 per cent.

Coupled with the booming property market, this helped push the state to the top of the table in terms of gross commission paid to top agency salespeople.

WA’s top agents took home average commissions of $371,675 (see table) compared with the national average of $304,091.

In terms of commissions paid by vendors, Queensland agents charged 2.6 per cent, NSW agents 2.4 per cent while Victorian agents earn a 2.2 per cent commission.

The survey found commissions charged to vendors in WA ranged from 1.9 per cent to 5.5 per cent, while the average WA real estate agency sold 248 properties in 2005-06, 97 more than the national average of 151.

Macquarie joint head of real estate, Nick Dowling, said anecdotal feedback indicated that time to sell properties in WA had slowed since August, and that agents would look at their cost structures next year. He encouraged agents to get up front vendor-paid advertising.

“The survey shows one third of Western Australian agencies had no vendor-paid advertising, yet nationally 95 per cent of agencies get vendors to pay. This has a direct impact on cash flow and profit,” Mr Dowling said.