Real estate agent fees

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.

Marketing and advertising

Since not all real estate agents include marketing and advertising costs in their commission structure, it's smart to prepare for these costs in your calculations when budgeting for the sale of your property.

Based on the premise that your home is worth $500,000, the recommended budget for advertising and marketing is typically around $2,000-$5,000.

Additional fees and cost tips

Here are some final tips on costs you'll need to factor in, to help you budget and choose the right real estate agent to sell your property. It's a good idea to understand all of these potential costs so there are no nasty surprises as you go!

Unconditional commission

It's common for a real estate contract to state that the commission payable is unconditional once the sale is complete, which is when contracts have been exchanged. This means that you will be liable for the commission even if the sale falls through prior to settlement, so it's recommended that the buyer's deposit is at least the figure of your agent's commission so you don't end up out of pocket.

You should also have your solicitor review all agent contracts prior to signing to ensure the clauses stated are reasonable.

GST

A GST figure of 10% is required for all real estate transactions, and this will be in addition to any real estate agent commission charged.

Auctioneer fees

Selling your property at auction requires paying an auctioneer's fee. Because most real estate agents are not registered auctioneers, this cost is most often considered as separate to your real estate agent's fees.

You can expect an auctioneer to cost, on average, around $400.

Pre-sale repairs and renovations

Even if you're not planning on doing major renovations before you sell, you should put a little bit of your budget aside for small touch-ups to ensure your property is presented at its best. For example, doing things like painting trims, changing handles and taps, planting new flora in the garden, fixing cracks etc. will help get you the best possible sale price.

Other selling costs to consider

In addition to the fees an agent might charge you, there are a few other costs in selling your home that you need to be aware of.

Conveyancer or solicitor fees

Many people are surprised to learn that you need a conveyancer or solicitor not only when you are buying a house, but also when you are selling. This is because all of the same legal processes to be completed when buying must also be performed when selling your home.

You should put aside about $800 for these costs.

Mortgage discharge fee

If you still have a mortgage when you sell your house, you can usually expect to be charged a fee by your bank for the paperwork involved in discharging the mortgage.

These fees vary between institutions and home loan terms, but around $1,000 is a good rule of thumb.

Moving

Once you sell your home you naturally have to move out, so you should always include the cost of moving all your furniture and belongings into your budget.

As a general rule this will cost about $800.