If you're selling in NSW, expect to pay your agent an average of 1.85% of the sale price, or 1.63% in Sydney, according to internal data. Both rates include GST. There's no standard rate, so what you pay depends on where you live, your property and the agent, and you're free to negotiate it.

No law in NSW sets how much an agent can charge, but the law does set how it's agreed. The commission has to be in a signed agency agreement, and if it's a percentage, the agreement must also show what it comes to in dollars on an estimated sale price.

The commission rate you pay depends on a number of factors including your location, the value of your property, the current market, and the real estate agent you're dealing with.

At the end of the day the market, simple supply and demand, dictates what you pay an agent. For comparison, the national average is 2.01% of the sale price, and most commissions fall between 1% and 3.5%.

What's the average real estate commission in NSW?

According to internal data, the average real estate agent commission in NSW is 1.85%, and commissions can be as low as 1.14% or as high as 2.77%. These rates include GST.

That range leaves out the most extreme rates. Averages in a few regional areas, such as Tamworth, sit above the range.

To see just how much commission rates can vary between areas, check out the table below.

Within Sydney, area averages range from 1.32% in Canterbury Bankstown to 2.24% in the Blue Mountains.

In real terms, what commission you pay makes a big difference. It's usually the biggest single cost of selling. Let's take a look at two examples:

• Sell for $1 million in Sydney's Eastern Suburbs, where the average rate is 1.61%, and you'd pay $16,100 in commission, including GST.
• Sell for the same $1 million in Tamworth, where the average is 2.85%, and you'd pay $28,500, including GST.

What's included in NSW real estate agent fees?

The rates or commission a real estate agent charges varies, with some including advertising and marketing costs in their commission structure, while others break these costs out and charge you separately for them.

If you're paying for marketing separately, the agency agreement has to list those costs and when they're payable. The agent must also tell you about any rebates or discounts they receive on them.

Commission rates also include all of the work that an agent will do for you when selling your home, including:

• Giving advice around how to style and present your home for the market to achieve a top sale price
• Managing the marketing and advertising of your property to help get buyers through your door
• Prospecting their own databases to pitch your home to buyers who may be looking
• Arranging and managing viewings
• Taking charge of the entire negotiation process. A great agent could push the sale price up by getting interested buyers to compete.
• Managing the auction process, if there is one

And plenty more.

Factors that can influence commission rates

The type of property

If you have an unusual property or one that is only going to appeal to a small subset of buyers, your agent is going to have to work harder to sell it, so they are likely to charge you more for their time and efforts.

The value of your property

If your property is at the expensive end, agents may be prepared to accept a lower rate. According to internal data, Sydney's average falls from 2.03% on homes sold for up to $500,000 to 1.43% on homes over $3 million.

Location

The commission real estate agents charge in NSW varies quite widely depending on where you live. If you live in metropolitan Sydney, where there are lots of agents competing for your business, you can generally expect to be charged less than in a country postcode.

In Sydney's Inner West, for example, the average rate is 1.58%. In Dubbo and Orana, it's 2.80%.

See: Real estate agent fees are negotiable: find out how to talk the lingo

The supply and demand of agents

The simple rule of supply and demand dictates that postcodes with lots of local agents will drive competition for your listing. To get business they are forced to lower their rates. The reverse applies in rural areas, where fewer agents mean there is less competition for listings, which results in higher commissions.

If you're looking to sell your home anytime soon, it's a good idea to calculate the cost of selling your home to help you budget accordingly.

Quality of the agent

How do you know an agent is any good? By their track record of course, so look for recent sales of properties similar to yours.

Some agents are great at selling one type of property and make it their speciality. Others are more flexible and understand the best way to sell a particular property.

Sometimes, it is not so much about what an agent charges you, but more about what it could cost you if you get the wrong agent to sell what is likely to be your most valuable possession.

Experienced agent vs. newbie

Experience counts, but it doesn't always work in your favour. An experienced agent may have sold more homes like yours, but may also charge more.

A newer agent may be more willing to negotiate, to win your listing. Weigh any saving against their track record.

Understanding commission structure

Most agents charge either a set percentage of the sale price or a tiered rate, and some charge a flat dollar fee instead. A set percentage is straightforward: you multiply your sale price by the rate.

The incentive-based or tier-based commission structure is performance-based, and motivates the agent to put more effort into getting a higher sale price for your property. You would then pay a higher rate on anything they get over a set price.

For example: suppose you agree to a set commission of 2.2% and your home sells for $800,000. The fee is simply 2.2% of the sale price, so you'd pay $17,600. No matter how high or low the final price is, the rate stays the same.

Now imagine you negotiate a sliding scale to motivate the agent: 2% on the first $830,000, and 6% on anything above that. If the property sells for $900,000, you'd pay 2% on the first $830,000, which is $16,600, and 6% on the extra $70,000, which is $4,200, for a total commission of $20,800.

You pay more if the agent beats the agreed threshold. NSW Fair Trading warns that a tiered deal can cost significantly more than a single set rate on the final price, so work out what you'd pay at a few different prices before you agree.

The rates on this page include GST, so check whether any rate you're quoted does too. A rate of 2.2% including GST is the same as 2% plus GST.

Can you negotiate a real estate agent's commission in NSW?

If you want to get the lowest possible fee, you have to fine-tune your negotiating skills. It's worth speaking to a few different local agents to see how open to negotiation they are. You might be willing to pay a slightly higher commission if they have a proven track record of selling above market rate.

Also, find out what is included in their commission rate. Some agents include marketing and advertising in their overall commission rate, while others don't.

Whatever rate you agree, it has to be in a signed agency agreement before the agent can claim it. You usually have a cooling-off period, until 5pm on the next business day or Saturday, whichever comes first, to change your mind.

Visit our Real Estate Commission Calculator to work out the average real estate commission in your area of NSW, or for more information, visit our Real Estate Agent Fees Hub.

Related content:

• Is using a real estate agent worth it?
• Why are commissions so expensive? What do they include?
• Can I sell on my own?

Frequently asked questions about NSW real estate commissions