Agent fees and commissions are one of the most elusive cost of selling a house. Jump on Google and you’ll see a list of common search questions like:
How much is the real estate agent commission?
How much does a real estate agent charge?
What percentage do most real estate agents charge?
Which real estate agent has the lowest commission?
It’s no surprise that it’s a puzzling part of the selling process because in most states and territories, commission for real estate agents is deregulated. Because there’s no true ‘standard’ commission, there’s nationwide confusion.
New research shows most people have little idea about how much commission they should expect to pay their real estate agent to sell a house – the most prized, and expensive asset they’ll likely own. It’s not just a lack of public understanding or regulation that’s the problem. Without this knowledge, homeowners are spending thousands of dollars more than they need to, which obviously reduces the amount left for the vendor.
In fact, a national survey (by real estate agent comparison website) AgentSelect.com.au, shows that over a quarter of consumers thought that agents mostly charge the same commission and fees as each other. A further quarter had no point of reference as to what agents cost to engage. That’s 50% of people who are vulnerable to paying more when they sell a home, simply because they don’t know better. Property selling costs are skewed, as a result.
This resource will help you understand the factors that determine the cost of an agent, so you can make a more empowered decision. The commission fee and structure depends on:
The type of property you’re selling
The area the property is in (E.g. whether it’s a state or territory, in a city or regional suburb)
The individual agent or agency you choose
What’s included in the sales package (how widely it’s promoted and where)
The sale price of the property.
When learning about commission rates when selling a home, keep these two important points in mind:
Real estate sales commission and fees are negotiable. Be direct from the get-go and communicate what you’re looking for, pricewise. Remember, you’re the one who’s making the final decision, so just use that to your advantage.
Ask about extra fees that may be charged. Keep in mind other charges such as, conveyancing, staging, photography, copywriting, signboards and premium website listings will be necessary. Don’t assume these will covered as part of the commission – confirm it. Always ask questions if you’re unsure. Know what you’re signing up for, particularly if you’re agent is trying to “woo” you with a” No Sale No Fee”approach.
The reality is most agents’ fees in Australia are lower than people expect. Depending on the state or territory your property is in, the average real estate agent commission fee is generally closer to 2-3% (in most city and metropolitan areas). Regional homeowners tend to pay a little more.
Commissions are usually quoted as a flat fee or, more often, as a fixed or variable percentage of the sale price. For example, let’s say you and your agent settle on a 2.6% commission rate. If the house is $500,000, you’ll pay $13,000 to the agent. Some agents will also negotiate an incentive structure or staggered fee, which means there’s a clear benefit for both the seller and the agent if they get a higher-than-expected price.
Many vendors still ask agents to discount their fees and, while competition is healthy, reducing the commission doesn’t always mean you’ll end up making more on the sale price of your property. Make sure to factor in what the fee covers. A lower rate might mean less marketing and publicity spend – therefore, less exposure. Use this calculator to find out the cost of selling a house.
Finding the lowest real estate fees for selling a property isn’t always the best-case scenario. Most often, it’s not. The old saying, you get what you pay for, applies here. It’s also important to incentivise the agent to put in the hard work to get your best price. The bigger their commission, the more they’ll push to get you the highest sale price and convince that buyer, your house is the one worth paying the top dollar.
How do you do this? By dedicating time to comparing real estate agents.
Interestingly, 20% of the survey respondents chose the first agent they met. What does this tell us? These sellers didn’t know better and probably got pressured to sign early before truly comparing the market. Instead of going with the first agent you speak to, it pays to compare multiple agents. Not only will this give you a better understanding of the standard commission percentage real estate agents charge in your local area, but it’ll also inform you about the various approaches they’ll take to sell your property. And, most importantly, save you thousands in the process.
Learn more about real estate agent fees and commissions by capital cities and states:
Don’t just go for the agency you know. Don’t put the sale of your home in the hands of the agency simply because you recognise their name. Research should go beyond brand names, comparing specific agents, their reach, personalities, and how you feel about them.
For more property selling tips and to compare agents in your area like-for-like, use a proven tool like AgentSelect.com.au. This will give you peace of mind that the sale of your house is in the best possible hands – the most experienced - at a price that you’re happy with (and the agent is motivated to work hard for).
Agent Select is a free, independent service that helps homeowners select the best performing real estate agent and negotiate the most desirable terms to sell their property, anywhere in Australia.
Agent Select uses their sophisticated algorithm to find 2-3 top agents and coordinates the appraisal process. Rather than inundating homeowners with hundreds of calls from agents, like other comparison websites do, Agent Select gives homeowners all the information they need to make an empowered decision with the complete freedom to appoint their agent of choice when they’re ready to sell.
Find out more at AgentSelect.com.au or call 1300 040 463.
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