Why million dollar agents in Australia are ‘broke’ as first home buyers struggle with interest rates

A veteran real estate agent and businessman has criticized flashy ‘million-dollar agents’ for complaining about being bankrupt as early homebuyers face an increasingly difficult battle to break into the real estate market.

Podcaster and author Tom Panos, who runs the Real Estate Gym, said in a video shared this week that real estate agents who make $1 million in commissions a year were wasting their money on extravagance.

“You want to rent a nice fancy apartment and you want a nice Maserati with a lease of $4,000 a month,” Panos said.

“You’re eating in flash restaurants three or four times a week and you’re flying business class, travel is now allowed.”

“The reason you’re broke is because you have a small penis,” he said.

Panos said a million dollars doesn’t go as far as many would hope and that wiser realtors were more frugal and didn’t try to appear flashy.

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

‘Let’s say 40 percent and that leaves you with 60 percent, so that’s $600,000.

‘You probably have two staff members working for you, so that’s $75,000 each, and you have $450,000 left over.

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

However, Panos said real estate agents were still confident because they had made so much in commissions and were throwing money around until suddenly the cash ran out.

He advised agents to think in terms of what’s ‘leftover’ when everything is paid for and not the ‘turnover’ they’ve gotten.

Panos said smart real estate agents weren’t paying $4,000 a month on a Maserati lease or flying business class.

But while agents continue to rack up exorbitant commissions, the real estate market continues to get tougher for first-time homebuyers and it’s only going to get tougher.

This week the RBA raised interest rates again, pushing the monthly cost of mortgages to almost unaffordable levels.

Borrowers and those looking to enter the real estate market were hit by a ninth straight cash rate hike.

The 25 basis point increase to 3.35 percent is not the last, as the bank’s board added that it expected more interest rate hikes would be needed in the coming months for inflation to return 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 2 to 3 percent.

“High inflation makes life difficult for people and damages the functioning of the economy,” the RBA said in its statement on Tuesday.

‘And if high inflation became entrenched in people’s expectations, it would be very costly to bring it down later.

“The board is trying to bring inflation back to the two to three percent range 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 home prices, those looking to break into the real estate market are faced with ever-rising mortgage bills.

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

For a $750,000 loan, the latest rate increase will mean an additional $114 a month or $1,362 since the start of the increase cycles.

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

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

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