Commission

A commission refers to the fee paid to real estate agents or brokers for their services in facilitating the sale, purchase, or lease of a property.

What is commission?

In the context of real estate, a commission refers to the fee paid to real estate agents or brokers for their services in facilitating the sale, purchase, or lease of a property. Typically, the commission is a percentage of the property's sale or rental price and serves as compensation for the agent's efforts in bringing together buyers and sellers or tenants and landlords. 

How much commission do agents charge?

In Australia, real estate agent commissions typically vary between 1.0% and 3.6% of the total sale price. With this said, the exact percentage depends on factors such as the property's location, type, sale price, and the level of competition among agents in the area.

What are the types of commission structures?

Real estate agents typically operate under two commission structures: fixed and tiered. 

The fixed structure involves a pre-agreed set figure, determined when you sign the contract with the agent. To calculate your payment, you multiply the sale price by the agreed-upon commission rate. For example, if you’ve sold your home for $1 million and agreed on a 2% flat commission, you would have to pay $20,000. 

Alternatively, an incentive-based or tiered structure offers the agent a higher commission rate for every dollar earned beyond a specified amount. For instance, if your property is listed for $1 million the agent might propose a 2% rate up to that amount and 2.5% for any value exceeding it. This setup aims to incentivise the agent to secure the best possible price for your property.

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