Why Australia’s million-dollar estate agents are ‘broken’ as first home buyers struggle with interest rates

A seasoned real estate agent and entrepreneur has criticized ostentatious “million-dollar realtors” for complaining that they are broke as first-time homebuyers face an increasingly difficult battle to get into the housing market.

Podcaster and author Tom Panos, who runs the Real Estate Gym, said in a video shared this week that real estate agents who rake in a million dollars a year in commission are wasting their money on extravagances.

“You want to rent a nice luxury apartment and you want a nice Maserati on a $4,000 a month lease,” Mr. Panos said.

‘You eat in flash restaurants three or four times a week and you fly business class, now you can travel.’

“The reason you’re broke is because you got a little d***,” he said.

Mr. Panos said a million dollars is not as far as many would expect and that more sensible brokers were more frugal and didn’t try to appear ostentatious.

“When you write a million dollars (in commissions), you give a percentage to your office,” he explained.

“Let’s say 40 percent and you’re left with 60 percent, so that’s $600,000.

“You probably have two staff working for you, so that’s $75,000 each and you’re left with $450,000.

“And you haven’t even started (paying bills). You haven’t eaten or drunk anything.’

However, Mr Panos said the brokers were still confident as they had made so much in commissions and were throwing money around until suddenly the money ran out.

He advised the agents to think in terms of what ‘surplus’ is when everything is paid and not in terms of ‘turnover’ they have brought in.

Mr Panos said savvy brokers weren’t paying $4,000 a month for a Maserati lease or flying business class

But as realtors continue to rake in exorbitant commissions, the real estate market remains increasingly difficult for first-time homebuyers and will only get harder.

This week, the RBA raised interest rates again, driving the monthly cost of mortgages to near-unaffordable levels.

Borrowers and those looking to break into the real estate market were hit by a ninth straight rise in cash rates.

The 25 basis point increase to 3.35 percent is not the last. The bank’s board added that it is expected that further rate hikes will be needed in the coming months to bring inflation back to its target.

Inflation is at 7.8 percent – the highest since 1990 – and the central bank aims to bring it back to a range of two to three percent.

“High inflation makes people’s lives difficult and harms the functioning of the economy,” the RBA said in its statement Tuesday.

And if high inflation were to take root in people’s expectations, it would be very costly to reduce later on.

“The board is trying to bring inflation down to two to three percent while keeping the economy in balance, but the road to a soft landing remains narrow.”

While real estate agents enjoy huge commissions thanks to high house prices, those looking to break into the real estate market are faced with ever-increasing mortgage bills

RateCity says the increase represents an additional $908 per month in principal payments for the average borrower with a $500,000 loan since the RBA’s rate hikes began in May.

For a $750,000 loan, the last rate hike means an additional $114 per month or $1,362 since the cycles of hikes began.

The cash rate is at its highest level since September 2012.

Treasurer Jim Chalmers acknowledged that the rate hikes that began in May – before the last federal election – had put additional strain on Australians and the economy.

“It is our job to focus on the wider pressures that are coming at us from around the world and being felt at the kitchen tables of this country,” he told parliament.