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The real estate industry is a difficult one to work in, particularly for a real estate agent. People assume agents live the high-life, driving European cars, wearing tailored suits and earning great commissions.

This article looks at the environment a real estate agents operates in, why their methods of operation are sometimes questionable and how a vendor advocate can balance the equation.


Why Real Estate Agents Behave Badly



Problem 1: A Real Estate Agents Renumeration.


Did you know a real estate agent is only paid commission on successful sales? Their employer loans them money during months they don’t earn any commissions. This makes it quite easy for a real estate agent to fall into the red even when they make a sale as they can have accumulated debit.


It is common for a real estate agent to work for free, 6 days per week and late hours for months on end if properties are selling slowly. This is why the industry has the highest rate of turnover in employment than any other industry.



When a property seller signs the agreement of sale, they will always notice the large lump sum of fees paid to the agent at the bottom of the page. Hence, a normal person will assume your agent is well paid.


Below is an example how the fees are distributed. Let’s assume a real estate agents total selling commission is $12,000 which is paid by the seller:


  • The owner of the business would take over 60% of the commission ($7200), this includes franchise fees & administration fees. Advertising is a separate fee paid by the seller.  
  • The balance of the commission ($4,800) is split 3 ways:

    1. The person listing the property for sale (16%).
    2. The person managing the sale, open for inspections (8%).
    3. The person that sells the property (16%).

It’s common practice for your agent to get paid to list and manage your property, then one of his colleges sells it. From the above example, the $12,000.00 you pay your agent, they really earn just over $1,152.00 before tax, for all their work.  

To make a decent pay check from the above example, your agent must complete many transactions to recover their costs and earn a reasonable pay cheque. 


Problem 2: Over quoting to win your business.


In the competitive world of real estate agents, the chance to sit in front of a seller is what real estate agents live for. Even when selling a property, the agent is thinking about their listing pipeline to ensure their future existence in the industry remains active.

Listing property is the first step of many during a selling process, if the agent doesn’t have the opportunity to list the property, after quoting it well, they don’t get to perform the rest of the process that converts the listing into a sale. 


Hence, there quoting presentation must be convincing to close the deal. Giving a property seller a selling price they want to hear usually proves too much of a temptation. 


This is why every agent recommends over the top advertising campaigns when it comes to selling any property. They require every opportunity to make the sale. This is unfortunately at the seller’s expense.


Real estate agents also display their name and portrait at the front of every advertising campaign as they are simply making the most of their situation and thinking of the next potential sale.


Let’s be honest, a property buyer doesn’t really care about who the company or agent that’s selling the property, it’s the property that matches their buying criteria that moves them into action. The more places a real estate agent is seen enhances their public profile which converts into future listings.



Problem 3: Struggling agencies.


There are many credible real estate agencies out there that care about their employees, prevent staff turnover and implement good training practices. But it takes an experienced eye to find them. Why?


Many real estate agencies struggle to survive, particularly new agencies. An agency that has poor cash flow, puts their employees under massive pressure both emotionally and financially.

They don’t have the resources to offer training and fairly share leads that convert into employees’ income.


The above three problems can make a tough job impossible and challenge any normal person’s behavioural ethics.


A vendor advocate understands the environment real estate agents work in because they were real estate agents themselves. Quite frankly, a property seller shouldn’t have to deal with the issues a struggling agency brings.

A vendor advocate can pick the best agency in a local area by their recent history of property sale transactions, volume of employees and who is selling what.

They bring balance to managing a selling process by:


  1. Recommending appropriate advertising and not over spending in this area.
  2. The correct method of sale (auction or private treaty).
  3. Help vendors understand their property’s true market value.
  4. Manage ethical negotiations.


If you’re thinking about selling, feel free to call 03 9395 0600 and speak to one of our expert vendor advocates about where to start. 


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