New York Finance

Nov 30 2017

Real Estate Agent Fees, Commissions & Costs Explained #how #do #real #estate #commissions #work


Real Estate Agent Fees

When you’re shortlisting potential agents to help you sell your property, one of the most important deciding factors is their costs. There are two key agent costs to consider – fees and commission.

Generally, the fees involved when hiring a real estate agent are designed to cover their costs for advertising and marketing your property, while their commission is a percentage of the sale price that they get for your property.

The average commission real estate agents charge varies between states and between metro vs. regional areas – the lowest is about 1.6% and the highest about 4%. Across the country the average charge is around 2% to 2.5% of the sale price of your home, or from $10,000 to $12,500 when selling a $500,000 house. Marketing costs usually come on top of this, and can also vary a lot – from around $500 into the thousands – depending on how far you want to reach and how diverse you need the advertising to be.

But agents don’t all structure their fees in the same way. Some include the cost of advertising in the commission and quote a higher rate, while others will use a ‘sliding scale’ or ‘tiered’ commission, say 2% on the first $860,000, and 5% on anything above that, which acts as an incentive to work harder for a higher sale price (a practice quite common on more expensive properties).

Use our commissions calculator to estimate how much commission you’d be paying on the sale of your home.

Commissions by state

Commissions by capital cities

Real estate agent fees and commission in Sydney

Real estate agent fees and commission in Melbourne

Real estate agent fees and commission in Brisbane

Real estate agent commissions calculator

Pay the right commissions and maximise your sale price

Real estate agent fees and negotiation

What’s important to remember from all this is that commission structures are flexible. In fact, it’s common to negotiate, especially since there is no longer any legal regulation of commission percentages for the real estate industry.

For this reason, it’s important to ask potential agents all about their commission structure when you first interview them, or when you have OpenAgent pre-screen them for you. Then you can compare apples with apples when deciding on the right agent.

Are cheap agents worth it?

It may be tempting to go with the agent who charges a lower commission. However, something very important to remember is that you’ll usually be far better off with the best real estate agent rather than the cheapest.

Comparing cheap and expensive agents, the difference in final selling prices far outweighs the differences in agent commissions – that’s because selling your property for a much higher price means more money in your pocket, even with a higher commission. Hence it’s usually well worth the money to go with an agent who will work hard for you and has a proven sales record of delivering on promises.

Negotiating fees with agents

Once you’ve researched and shortlisted potential agents using OpenAgent’s free service, the next step is to interview the top 2 or 3 agents personally. Here are our top tips for negotiating fees and getting the right agent on board.

  1. Ask each agent what their commission is, and don’t be shy – let them know you’ll be comparing them against one another. This way you might be able to get an agent you like more to “price match” against a competitor.
  2. If you want a record price for your house, don’t expect an agent to drop their fee. Record prices require much more work, and you’ll obviously have to pay a premium on it.
  3. Consider asking for a sliding scale rate structure (like the sliding commission discussed earlier). The idea is to incentivise the agent to secure you a better selling price.
  4. Don’t just settle for the agent with the cheapest commission. As already discussed, more often than not you get what you pay for.
  5. To make sure you’re comparing like with like, include the advertising fees in your cost estimates, since they may or may not be included in an agent’s quoted commission.
  6. Don’t forget that if your house is worth more than average, you can probably negotiate with the agent on a lower commission rate.
  7. When it comes to negotiations don’t be shy – haggle on all the fees and costs. Of course the agents won’t tell you this, but everything is negotiable.
  8. Lastly, make sure you get all fees and costs in writing from the word go. That way you won’t be left high and dry when it comes to selling time.

Agent fees resource centre

Are real estate agent fees negotiable?

When you compare real estate agents, you will find a possibly bewildering range of comm.

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