Marlborough Property Investors' Association

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Flat fee companies being discriminated against?

The inter-market debate over whether real estate agencies should be charging a flat sale fee has arisen again, after Auckland-based firm Property Wizards was banned from advertising in the Property Press.

The agency’s directors believe the move is yet another example of bias against cheaper, non-traditional agencies, which is keeping charges to New Zealand home owners higher than they should be.

“The wrong advertisement was accidentally placed in an issue of the Central Property Press and the publishers have used this as an excuse to ban Property Wizards from ever advertising in any edition of the Property Press,” Property Wizard director Steven Sharp says.

“We believe our flat fee model has sparked antagonism from vested interests who do not want to see the cost of selling a home come down.”

Property Wizards became a fully licensed real estate agency last December and charges a low flat sale fee of $7,000 plus GST, regardless of the value of the property, which is only payable once the sale becomes unconditional. When marketing costs are included, the cost of selling a typical $400,000 home in Auckland is around $10,000, substantially less than what it would cost with a traditional agency.

Earlier this month Massey University senior property lecturer Dr Susan Flint-Hartle was reported as saying Kiwi home owners were paying too much to real estate agents and that the big forms were stopping fees from reducing because, like any established industry, there’s a stranglehold on the ways things are done.

Sharp believes “our situation is similar to that experienced by the Joneses just over 18 months ago when they introduced a flat fee system and found all sorts of barriers erected to keep them in check. However, Property Wizards is taking a more prudent approach to expansion”.