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Why Low Real Estate Commission Matters (2015-05-13)
One way a country’s economy gets revitalized is if there is sufficient activity to pump new blood into it. In the case of the real estate sector, that means if there are enough purchases and sales of residential units.
In Australia, it is more complicated because the country has one of the most expensive real estate prices in the world. Cities like Sydney have consistently ranked among the most expensive cities in the world when it comes to real estate prices.
Major institutions and organizations, the World Bank and the United Nations, for example, use “Median Multiple” as a measurement to assess housing affordability. Median Multiple is median house price in a given market divided by gross annual median household income for that market. A Median Multiple of 3 or under is considered an affordable market. If the figure is 4.1 to 5, that market is considered seriously unaffordable. Australia’s Median Multiple for the past 10 years has generally been registered at or over 6. At times, it has reached 8. In other words, Australia is one of the most unaffordable housing markets in the world.
One way to tame the run-away prices is by having low commission real estate agents, those who are willing to break from the country’s unwritten law of charging 2-3 per cent commission on every sale or purchase.
Low commission property sales will generate more economic activity and lift the burden from people who ask themselves, “Should I sell my property without a real estate agent?”so they can save some money toward the purchase of a new place.
Companies like Revolutionary Real Estate (revolutionaryrealestate.com.au) are introducing a new model: charge the customer based on needs and affordability, not a fixed price. That will likely bring about low realestate commission in Brisbane, where the company is focusing now.
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