05.How much commission?
Agents generally charge between 2% and 3% of the sale price in fees. That’s $10,000 to $15,000 for the sale of a $500,000 home. This rate usually doesn’t include advertising costs, which can range from several hundred dollars to thousands, depending on the type of ad, advertising rates in your local or chosen media, and where the ads are placed.
However, agents’ fees can be structured in different ways:
- Some agents charge a higher commission — up to 5% — which includes some advertising.
- You might be charged on a ‘no sale, no fee’ basis or, at the other extreme, be up for signage and advertising costs regardless of whether your property sells.
- Some agents have low flat fees. Satisfy yourself that you will still achieve a good price through such agents, and that their focus isn’t just a cheap, quick sale.
- A scale of commissions may be charged, particularly for more expensive properties. For example, you might be quoted 2.5% on the first $850,000, and 10% after that. This provides a further incentive for the agent to achieve a higher price, and not a quick sale for a lower amount.
- You may be able to pay a lower commission by sharing some marketing and promotion costs.
Don’t pay an upfront fee. Only pay your agent after the sale is completed.
- Some states require that all fees, including advertising, are set out in the agency agreement.
It’s important to remember that all commissions and fees are negotiable. This might not always be obvious from the agent. One shadow shopper received a marketing proposal that suggested commission rates in Queensland are set at a particular level, for example. In fact, there’s a maximum commission in Queensland, but aside from that commissions vary and are negotiable.
According to Graham Joyce, President of the Real Estate Institute of Australia (REIA), you should pay a fee commensurate with the service you receive. If you’ll be paying top dollar, expect to receive a full marketing plan.