PHOTO: What exactly am I getting for that money?
New Zealand homeowners can pay tens of thousands of dollars to sell a property — while technology now does more of the heavy lifting than ever before. So is the traditional real estate commission model still justified, or are great agents actually more valuable than ever?
For decades, selling a house in New Zealand has followed a familiar formula.
Choose a real estate agent. Sign an agency agreement. Pay for the marketing. Hold the open homes. Sell the property. Then watch a sizeable chunk of the sale proceeds disappear as commission.
It has become so normal that relatively few sellers stop to ask the uncomfortable question:
What exactly am I getting for that money?
Because in 2026, that is potentially a $20,000, $25,000, $30,000 or larger question.
And perhaps New Zealand’s real estate industry needs to get much better at answering it.
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The way we buy property has completely changed
Think about how someone looked for a house 25 years ago.
They might have walked into a real estate office, looked through property books, scanned newspaper advertisements and relied heavily on an agent to tell them what had just come onto the market.
The agent controlled much of the information.
That world has largely disappeared.
Today, buyers can sit on the couch and discover properties themselves. They can receive automated alerts, examine aerial imagery, research previous sales, compare neighbourhoods and browse dozens of listings before ever speaking to an agent.
Technology has transformed the transaction.
Digital signing has transformed paperwork.
CRM platforms can automatically nurture buyers.
Databases can match buyers to listings.
AI can help generate property descriptions, social media content, email campaigns and advertising material in seconds.
Yet one of the biggest costs associated with selling a home — the traditional percentage-based commission — remains remarkably recognisable.
That deserves scrutiny.
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What does selling a house actually cost?
There isn’t one standard NZ real estate commission.
Commission structures vary between agencies and are generally negotiable.
Government-backed consumer information from Settled gives an example of a tiered structure of 3% on the first $400,000 and 2% on the balance, potentially accompanied by an administration fee of around $500. It stresses that actual charges vary and are usually open to negotiation.
Take an $850,000 sale using that example purely for illustration.
That’s:
$12,000 on the first $400,000.
Another $9,000 on the remaining $450,000.
That’s $21,000 before considering GST and other charges, depending on the actual agency structure.
And here’s the part that sometimes surprises sellers:
Marketing may be additional.
Photography, premium portal listings, signage and other promotional costs can potentially sit outside the commission. REA rules specifically require agents to explain how a property will be marketed and what additional advertising and marketing expenses the vendor will incur.
Suddenly the question becomes very reasonable:
What am I receiving for $20,000-plus?
But calculating an agent’s value by hours worked misses the point
Here’s where the anti-agent argument can become too simplistic.
“They only spent a few hours selling my house and earned $20,000.”
That’s not necessarily a fair calculation.
You’re not employing an agent by the hour.
You’re theoretically paying them for an outcome.
A talented negotiator who spends an extra hour extracting another $30,000 from a buyer may have provided considerably more value than an inexpensive agent who spent 50 hours working on the listing but accepted the first reasonable offer.
And that’s where this debate becomes interesting.
Perhaps real estate agents aren’t too expensive. Perhaps mediocre real estate agents are too expensive.
There is a difference.
The best agents can be incredibly valuable
A genuinely excellent agent does much more than upload photographs and unlock the door at an open home.
They understand buyer behaviour.
They know when someone is bluffing.
They recognise when a buyer who claims to be at their absolute limit probably has another $10,000.
They know which buyers in their database are genuinely ready to transact.
They create competition rather than merely collect offers.
They understand how to manage an auction room.
They know when to push and when pushing could kill a deal.
They manage difficult personalities, conditions, deadlines, lawyers, building reports and nervous vendors.
And critically, they understand their legal and professional responsibilities.
New Zealand’s regulatory requirements are substantial. Before an agency agreement is signed, agents must provide a realistic written appraisal, explain commission and marketing costs, provide the appropriate agency agreement guide and recommend that the seller consider legal and other professional advice.
Agents also have disclosure obligations concerning known defects and significant potential risks.
That’s real work.
And real responsibility.
The problem is that the commission doesn’t necessarily distinguish excellence from mediocrity
This is arguably the industry’s vulnerability.
Two agents can operate under broadly similar commission structures while delivering wildly different levels of service and skill.
One might have spent 15 years building a genuine database of active buyers and have exceptional negotiating ability.
Another might have entered the industry relatively recently, upload the same listing to the same major websites and essentially wait for enquiries.
Yet to the consumer, the pricing models can look surprisingly similar.
Imagine another profession operating that way.
Would you willingly pay an average lawyer virtually the same as an exceptional one?
Would every builder in town command approximately the same pricing regardless of reputation, workmanship and results?
Probably not.
Yet real estate commissions have historically been heavily influenced by the property’s eventual selling price rather than an easily measurable assessment of the individual agent’s ability.
That creates a challenge for the industry.
Why should commission increase simply because the house is worth more?
Here’s another uncomfortable question.
Suppose two nearly identical homes require roughly the same marketing campaign, photography, open homes, negotiations and paperwork.
One is worth $650,000.
The other is worth $1.3 million because of where it happens to be located.
Why should the cost of selling the second property potentially be dramatically greater?
Yes, higher-value transactions can involve different buyers and more complex negotiations.
But not always.
Percentage commissions create a curious economic relationship where the cost of the service rises with the value of the underlying asset even when the workload doesn’t necessarily double.
That is exactly the type of pricing structure technology-driven competitors are likely to attack.
Sellers should remember something important: commission IS negotiable
This point deserves far more attention.
The Real Estate Authority’s own consumer guide says sellers can negotiate what’s contained in an agency agreement, including how much commission they will pay and the expenses they will pay.
In other words, you don’t necessarily have to treat the first commission proposal as untouchable.
Ask questions.
What is included?
What isn’t?
What happens if the property sells immediately?
What marketing costs are additional?
What specific strategy will this agent use?
What evidence demonstrates their negotiating ability?
And most importantly:
Why should I choose you rather than the three other agents who have just given me almost exactly the same presentation?
That last question could be revealing.
NZ real estate has a differentiation problem
Drive through almost any New Zealand town and look at the agency signs.
Different colours.
Different logos.
Different slogans.
But increasingly similar propositions.
“Local knowledge.”
“Exceptional results.”
“Putting people first.”
“Trusted advice.”
“Your property experts.”
The language changes.
The underlying proposition often doesn’t.
The next genuinely disruptive New Zealand real estate business may not win because it charges the lowest commission.
It could win because it finally develops a proposition consumers immediately understand.
Imagine models built around genuinely different offerings:
Fixed-price selling.
Performance-based commissions.
Ultra-premium negotiation specialists.
Technology-first agencies.
Subscription-style vendor services.
Hybrid private-sale/agent models.
Commission structures where agents earn significantly more only when they demonstrably outperform an agreed benchmark.
Some variations already exist.
But there remains enormous room for innovation.
AI is about to make this conversation considerably more uncomfortable
AI isn’t going to eliminate good real estate agents tomorrow.
But it will steadily eliminate tasks that previously justified some of the cost of traditional professional services.
Writing listing advertisements?
AI can already do it.
Creating social media campaigns?
Done.
Drafting buyer emails?
Done.
Analysing databases?
Increasingly automated.
Matching buyers with property characteristics?
Increasingly automated.
Answering basic property enquiries?
Automatable.
Scheduling appointments?
Automatable.
Preparing market reports?
Increasingly automated.
The more administrative work technology absorbs, the more the human agent’s value becomes concentrated in areas machines struggle to replicate:
Trust.
Relationships.
Judgment.
Local intelligence.
Problem solving.
And above all:
Negotiation.
That’s actually good news for exceptional agents.
But potentially terrible news for average ones.
The agent of the future may need to prove their commission
For years, vendors have largely accepted commission as simply part of selling property.
That mindset could change.
A future seller may ask:
How many buyers did YOU personally bring to my property?
How much competition did YOU create?
How did YOUR negotiation change the final selling price?
What did YOU provide that the property portals and technology couldn’t?
Those aren’t unreasonable questions.
In fact, they’re exactly the questions a confident, high-performing agent should welcome.
Because the great agents probably have very good answers.
There is also something private sellers shouldn’t underestimate
It’s easy to look at a $20,000 commission and think:
“I’ll sell it myself and save twenty grand.”
But that’s not necessarily $20,000 saved.
The relevant equation is:
Net amount achieved after selling costs.
If an experienced agent gets $850,000 while a private seller accepts $810,000, saving the commission wasn’t necessarily a victory.
Likewise, if a private seller achieves essentially the same result without paying a substantial commission, the traditional model becomes harder to defend.
The difficulty is that homeowners usually sell houses infrequently.
Agents negotiate property transactions constantly.
That information imbalance still has value.
The industry shouldn’t fear this debate
In fact, the best agents should embrace it.
Because this isn’t really an argument about whether agents are worth $20,000.
It’s about whether every agent is.
And clearly, they aren’t.
Just as every lawyer isn’t equally good.
Every builder isn’t equally good.
Every accountant isn’t equally good.
Every teacher isn’t equally good.
Professional skill varies enormously.
Perhaps the mistake the real estate industry has made is allowing consumers to think of commission as the product.
It isn’t.
The agent is the product.
Their database.
Their reputation.
Their marketing ability.
Their judgement.
Their work ethic.
Their ability to create competition.
Their negotiating skill.
And their capacity to get a transaction across the line when everything starts going wrong.
The $20,000 question
So, are New Zealand real estate agents still worth their commission?
Some unquestionably are.
Some may actually be underpaid for the result they produce.
But others?
Technology is making that question increasingly difficult to avoid.
The days when simply having access to listings, buyers and advertising channels justified a substantial percentage commission are disappearing.
Consumers have access to more information than ever.
Technology can perform more of the process than ever.
And sellers facing substantial commissions have every right to ask what they’re getting in return.
The challenge for New Zealand’s real estate industry isn’t necessarily to cut commissions.
It’s to prove value.
Because the agent who can genuinely demonstrate that their skill put another $30,000, $50,000 or $100,000 into their vendor’s pocket isn’t going to struggle to justify a $20,000 fee.
The agent who can’t explain what they did beyond listing the property online, holding a couple of open homes and presenting an offer?
That’s where the industry’s $20,000 problem begins.