Commission in NZ: how much, and what it buys

The typical NZ schedule

NZ residential commission is almost always structured as tiered percentages plus GST plus an administration fee. Typical schedules look like this:

• 3.95% on the first $400,000 of the sale price.
• 2.0% to 2.5% on the balance above $400,000.
• An administration or "marketing coordination" fee in the range of $500.
• GST (15%) on top of all of the above.

The exact numbers vary by agency. Some schedules use 4% on the first $400k; some use a slightly lower rate on the balance; some bundle the admin fee into the percentage. Boutique agencies sometimes quote lower percentages; higher-volume franchise agencies sometimes quote higher.

To make the numbers concrete: on a $1,000,000 sale, a 3.95% / 2.0% schedule produces commission of approximately $27,800 + GST, or about $32,000 inclusive of GST and admin fee. On a $1,500,000 sale the same schedule produces approximately $40,000 + GST, or about $46,500 inclusive. The Commission Calculator runs the exact numbers for your specific price and schedule.

How the schedule was set

The tiered-percentage structure dates from the 1990s. At that time, the median Auckland house price was under $200,000 and the national median was lower still. A 3.95% / 2.0% schedule on a $200,000 sale produced about $7,900 in commission — commensurate with the scope of work the industry was performing.

By 2026, the national median sale price has grown roughly tenfold. The commission schedule has not changed in any structural way. The absolute dollar amount of commission has therefore also grown roughly tenfold. The scope of work the agent performs — kitchen-table listing presentation, photography, listing on TradeMe Property and realestate.co.nz, open homes, offer negotiation, paperwork — has not grown proportionally. The work is broadly the same; the fee is ten times larger.

This is not an accusation of misconduct. It is a structural observation about a schedule that was never re-anchored when the underlying asset class inflated. Hsieh & Moretti (2003) examined this pattern in expensive US markets: fixed-percentage commissions in high-price cities attract excess agent entry (because the percentage-of-price produces abnormally high earnings per hour), productivity per agent falls, but wages do not adjust. The result is what they termed "social waste" — resources drawn into the industry that produce no additional value for consumers. Auckland meets the conditions of the Hsieh-Moretti model closely.

What the 6% (or 4% / 2%) actually buys

The research here is striking and worth stating plainly. Three independent peer-reviewed studies have tested whether using a real estate agent produces a higher net sale price than selling privately or through a stripped-down platform. All three find the same thing: the commission buys speed, not price.

Hendel, Nevo & Ortalo-Magné (2009), published in the American Economic Review, compared MLS-listed homes with homes sold through a for-sale-by-owner platform in Madison, Wisconsin. Net to the seller was not statistically different. MLS sales happened faster, but FSBO sellers kept the same net amount when the commission was removed.

Bernheim & Meer (2013) examined Stanford faculty housing, where the MLS was decoupled from brokerage — sellers could list on the MLS with or without using an agent. Using a broker reduced the sale price by 5.9% to 7.7%, controlling for property characteristics. The agent did not add value; the agent subtracted value.

Levitt & Syverson (2008), in the Review of Economics and Statistics, showed that when agents sell their own homes (where they capture the full upside) they obtain a 3.7% higher price and hold the property 9.5 days longer. When selling for clients (where the marginal commission on holding out for more is small), they produce a lower price and a faster sale. This is the principal-agent gap in one paragraph.

No NZ-specific replication of these studies has been published. The US findings cannot be transplanted uncritically — the NZ market structure differs. But the pattern is consistent enough across jurisdictions that the burden of proof has shifted. If your NZ agent claims that their service produces a higher price than you would achieve privately, the evidence supporting that claim is thin. What the commission reliably buys is speed, visibility, and the handling of the transaction mechanics.

Negotiating commission

Commission is not a statutory schedule. It is not set by REINZ or by the Real Estate Authority. It is a private commercial term in the agency agreement. It is negotiable.

Agents who push back on negotiation often cite "agency policy" or "the schedule we use." Both are negotiating positions, not rules. Vendors who ask for a reduction — particularly in slower markets, on higher-value properties, or where the vendor is bringing a buyer — sometimes receive one. Vendors who do not ask never find out.

Several specific negotiating approaches:

• Lower the top tier. Most negotiable element. Asking for 1.75% on the balance above $400k (instead of 2.0% or 2.5%) is a common starting point.
• Cap the total commission. For high-value properties, a cap (e.g., "no more than $25,000 + GST regardless of sale price") can substitute for percentage negotiation.
• Performance-based variation. A lower base rate with a bonus on any amount above an agreed target. This aligns the agent's incentive with the vendor's — more effort above the target is rewarded.
• Tiered reduction as sale price falls. If you reduce the listed price mid-campaign, the commission rate on the reduced portion steps down.
• Ring-fence the marketing budget. Commission is one conversation; marketing budget is another. Treat them separately so that a lower commission is not offset by a higher marketing invoice.

Whatever is agreed goes in writing in the agency agreement. Verbal agreements about commission that do not appear in the written agreement are at best fragile and at worst unenforceable.

International alternatives — and the Bestellerprinzip caution

Other countries have tried to address the same structural problem NZ has. The results are mixed, and the German example is a cautionary tale worth understanding before advocating for radical reform.

Germany introduced the Bestellerprinzip in 2015 — a rule that shifted liability for rental-agency commissions to whichever party engaged the agent, rather than the tenant automatically. The stated goal was to reduce commission costs for consumers by changing the structural incentive. Stoll (Hertie School, 2022) found that commissions actually rose after the reform, by enough to cost consumers roughly €390 million per year. The mechanism: when landlords had to pay, they passed costs through to rent; when the reform reduced consumer negotiating leverage (because the commission was no longer visible at the point of viewing), agencies raised their fees.

The US Burnett v NAR litigation settled in March 2024 with a $418 million payment from the National Association of Realtors and a structural change banning seller-set buyer-agent commissions on MLS listings. Industry predictions of a collapse in buyer-agent commissions have not materialised; Federal Reserve data (Kang & Lim, 2025) shows buyer-agent commissions actually rose slightly (2.36% to 2.42%) between Q3 2024 and Q3 2025.

The NZ implication: structural reform to commission is necessary, but legislation alone is not sufficient. Market alternatives — flat-fee models, buyer-side-only agents, FSBO infrastructure, iBuyer-style offerings with fiduciary obligations — must run alongside legislative change to produce actual downward pressure on commissions.

The conjunctional commission question

A conjunctional sale is one where a buyer is introduced by an agent from a different agency than the listing agency. The commission is split between the two agencies per the terms of the agency agreement. Both agencies have Rule 6.2 duties to their respective clients.

Barwick, Pathak & Wong (2017) found, using US Massachusetts data, that properties offering lower buyer-agent commissions were 5% less likely to sell and took 12% longer, even when listed at the same price. The mechanism was buyer-agent steering — agents steer their buyers toward properties with more generous commission splits. The same dynamic applies in NZ's conjunctional system.

The implication for your agency agreement: the commission split matters. Ask the listing agent how much of the total commission is retained by their agency versus offered to a conjunctional buyer-side agent. A split heavily weighted to the listing agency reduces buyer-side agent motivation to bring buyers to your property. The Real Estate Authority publishes dedicated guidance on conjunctional sales.

Before you sign: commission checklist

• The commission schedule is written into the agency agreement, including the admin fee, GST treatment, and any caps.
• You have asked for and received a written answer on whether the commission is negotiable, and what variations (lower top tier, cap, performance-based) are available.
• The conjunctional split — how much the listing agency keeps versus offers to a buyer-side agent — is clear.
• The marketing budget is separate from the commission; the agency agreement says marketing cannot exceed the agreed amount without your written approval.
• You have run your expected sale price through the Commission Calculator to see the dollar outcome, not only the percentages.

Where this guide sits in the section

Previous: Method of sale: auction, tender, deadline, or negotiation.

Next (in adjacent section): The agency agreement, clause by clause.

Rules cited on this page: Real Estate Agents Act 2008, Professional Conduct and Client Care Rules 2012.