If you’re thinking of using a real estate agent to sell your home, it’s good to know the costs involved.
A good real estate agent can be a valuable asset when you’re selling your home. An agent who knows the market, understands how to advertise your home and has a good network of potential buyers can ensure you get the best price possible for your property. But this service doesn’t come for free.
Before you decide whether or not to employ a real estate agent, it’s important to understand how much it will cost and what you’ll be getting for your money.
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How much do agents charge?
Real estate agents’ fees will vary depending on your suburb and the level of work involved in selling your home. The market for agent fees and commissions is unregulated, which means agents can charge whatever they feel is fair. While the Real Estate Institute of Tasmania offers its members a non-binding guide to fees, agents are still free to use their own discretion.
In general, agents will charge for their services using one of the following structures:
An agent’s commission is calculated as a percentage of the home’s sale price. Commission levels vary from state to state and suburb to suburb, but LocalAgentFinder offers an analysis of the average commissions in each state:
- NSW: 2.11%
- Victoria: 2.13%
- Queensland: 2.47%
- ACT: 2.18%
- South Australia: 2.07%
- Western Australia: 2.45%
- Tasmania: 3.26%
- Northern Territory: 2.68%
This means if you sell your home for the median price in each capital city, you’d be paying the following commission payments:
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Some agents will agree to a flat fee rather than a commission based on a percentage of the sale price. The benefit of this model is it provides certainty around the price you’ll pay to sell your house. You’ll know ahead of time exactly the amount you’ll be paying your agent, regardless of the sale price.
The drawback, of course, is that a flat fee might not motivate your agent to get the best price possible for your property. An agent negotiating a flat fee could prioritise a quick sale over receiving the highest price.
According to LocalAgentFinder, a tiered commission structure is one wherein an agent receives a certain percentage of the sale price up to a predetermined dollar amount, and a higher percentage for anything over this amount.
In other words, you might negotiate to pay your agent 2.25% for any sale price up to $500,000, and then 5% for anything over $500,000. This structure has the potential to motivate your agent to secure a higher price for your property.
Are there any other fees?
Selling a house costs money. Your agent will generally utilise a variety of channels to advertise your home. These may include online real estate portals, real estate magazines, newspaper ads and window displays. The cost of this advertising will be passed onto you in one form or another.
Some agents include advertising and marketing costs in their commission, while for others this is an additional fee. Likewise, some agents charge a flat fee while others charge based on a percentage of the sale price. According to LocalAgentFinder, you can usually expect advertising and marketing fees to run between 0.5% and 1.0% of the sale price of the property.
Can I negotiate?
Most real estate agents are open to negotiation on the rate they charge. The best way to negotiate is to discuss with the agent their strategy for selling your home. Find out in detail how they plan to market and advertise your home, what price they think you can expect and how whether they plan to sell your home by auction or private treaty and why. Once you understand your agent’s strategy, you’ll be in a better position to assess whether or not you feel their rate represents good value.