Selling a home or property is a tedious task because it is not as simple as running an fb ad to get potential leads. It is an umbrella of multiple tasks, in which marketing is just one of the tasks. Other tasks are managing the property, negotiating the price, handling legal and financial matters and giving property rights to the buyer.
If you love to juggle around different tasks related to people management, it’s your cup of tea, but if you are new to this field, then you need to hire a real estate agent.
Who is a real estate agent?
A real estate agent is a certified professional who sells your property to the potential buyer at a cost that benefits you. Yet, there is a cost of those benefits, which is known as real estate agent commission and fees.
What is a real estate agent’s commission?
It is the amount you need to pay to a real estate agent for selling your property. It compensates for their services of having thorough communication with the buyers, managing the property, and negotiating the price.
The commission is usually 2% to 3% of the selling price of your property, which is finalized before the selling process and has to be paid when a buyer agrees to make the purchase.
What factors determine the real estate commission?
The value of commission can be higher or lower depending on the factors, such as
Property value:
The worth of the property in the eyes of people determines the commission. For instance, a unit is not as worthy for people as a townhouse, so consequently, the real estate commission for a townhouse is less than the commission they will charge for a unit. After all, a worthy property is sold faster than a modest one.
Location
A property in the center of a city will get huge attention as compared to a home near a slum. If your home is near malls and amenities, remember your real estate agent will charge more commission than the home a person has in a remote area. After all, home in the center will bring advantages and an agent keeps a cost with foresight mindset.
Market competition
The higher the competition, the lower the commission! After all, a competitive situation is no less than a war, and to win a war, a real estate agent has to sacrifice something, and in most cases, they have to lower their value to get the client. For instance, the ongoing housing crisis has increased the number of sellers, which ultimately has increased the competition, leading to have reduction in agent commission nowadays. That’s why it’s considered high time for buyers to make a purchase and fulfill their Australian dream.
Experience of an agent
An experienced real estate agent is aware of the art of buying and selling a property, due to which they can get you buyers in less time than amateurs, leading them to charge less commission than others.
What is the average real estate agent commission in Australia nowadays?
The average commission rate varies in each city and state in Australia depending on the factors we discussed above. Yet, we have tabled the charges of a few cities below to help you generalize the current market trend.
| City | Commission (%) |
| NSW metro | 2% |
| VIC metro | 1.6% – 2.5% |
| QLD metro | 2.6% |
| NT | 1.5% – 3.5% |
| SA | 1.5% – 3.5% |
| WA | 1.5% – 3.5% |
| TAS | 1.5% – 3.5% |
| ACT | 1.5% – 3.5% |
| QLD regional | 2.8% |
| VIC regional | 2.5% – 3.5% |
| NSW regional | 2% – 3.5% |
How to calculate real estate agent commission?
There are two major commission structures followed in Australia
Fixed commission
If you pay a real estate agent a pre-decided amount based on the specified percentage of the property value, it is fixed commission. Most of the real estate agents follow this structure.
In case of fixed commission, if your house’s worth is $800000, and you and your real estate agent mutually decided 2% commission that he/she will be paid $16000.
Tiered commission
If you pay your real estate agent based on their performance, it means you are following tiered commission structure. A real estate agent will be paid more if they sell the property more than the target price, and if they could not make it, they will be paid less amount.
What are a real estate agent’s fees?
Other than commission, you have to pay a real estate agent’s fees, which include the amount of money an agent spends on marketing and advertising your property to increase the reach and get potential leads.
What expenses are included in real estate agent fees?
Real estate agents’ fees include costs and expenses related to marketing and advertising, but these two accounts for numerous activities. We have broken down the cost structure of advertising and marketing expenses to help you understand what it includes.
| Expense | Cost |
| Print advertising | $11000 |
| Online advertising | $1500 |
| Pamphlets | $1000 |
| Photography | $800 |
| Letterbox drops | $500 |
| Copywriting | $250 |
If you sell your property via auction, then GST fees and auction fees will be included in real estate agent fees as well.
Can we negotiate real estate agent commission and fees?
Before signing a contract, you have the opportunity to negotiate the price and take control over your budget to get the best out of the real estate agent for cheap.
During the negotiating phase, make sure to do your research or homework first. For this, you need to meet numerous real estate agents to understand what is the average commission and fees in the market nowadays. Besides, follow the following strategies to make the right decision
- Ask the real estate agent about their tiered commission rate
- Ask all agents to give the price structure on a written paper
- If your property has high value, ask them how much they can reduce their fees or commission
Although real estate agent fees and commissions are the amounts that you have to pay at any cost, it does not mean you have no room to make requests. You can play around to get the rate in your favor to keep your wallet half full.
Conclusion
Real estate agent commission is the amount you pay to a professional for selling your house and offering your services, which include dealing with buyers, handling the property, and negotiating the price. Besides, you also have to pay them real estate agent fees, which are the expense and their effort in marketing and advertising your property.
Every investor has a room to negotiate the commission rate and fees to ensure the cost is within their budget. But for this, they have to do research and ask multiple questions to the agent before signing the contract.
FAQs
What is better, fixed commission or tiered commission?
Fixed commission is better because it does not involve much risk. A real estate agent will be relaxed that they will get a pre-decided amount even if they are unable to sell the property above the target price.
Is it possible to sell the property yourself?
If you are a people manager and have a big social circle, it is possible for you to some extent, but still, you need the support of your friends and family with no guarantee that you will get the expected result. A real estate agent uses their expertise and experience to sell your property at the right price with structured effort.
