• 14/06/2024

How to Negotiate the Best Commission

News.com.au – June 13, 2014


SELLING your home can be expensive with legal fees, stamp duty and of course the agent’s commission. It can all add up to tens of thousands of dollars. While you can’t negotiate on government fees and charges the one thing you can save money on is the commission you pay your agent. Almost every state in Australia has deregulated agents’ commissions. Knowing how much commission to negotiate can be difficult for those not often in the market.Source: News Limited


• Ask a couple of agents to submit what they charge for commission. This will help you work out whether you are being charged a reasonable rate.

• Create a little competition between agents, make sure they know you are asking others. You can use this to try and get the agent you really want to “price match’’.

• Don’t expect agents to be competitive with their fee if you want them to sell for above where the market is. If they have to work a lot harder to sell your property for the price you want expect to pay for it

• Don’t always take the cheapest commission — you often get what you pay for.

• Don’t forget advertising fees may not be included.

• Do your research, higher value properties can often negotiate a lower percentage commission.

• Get it in writing.

Buyers agent Josh Masters of Your Empire says ask upfront if they will reduce their fee.

“This can go both ways, you get what you pay for and it is your largest asset you will ever own, do you really want the cheapest agent?

“And if they reduce their fee straight away when you ask imagine what they will do when they are trying to sell your home and they have a buyer in front of them.’’

Another trick he has heard of is offering to allow agents to keep their signboards up for a few weeks after the sale. It is good advertising for them and could reduce the commission enough to cover GST. How do the states compare?

In Queensland there is a cap on the maximum allowable commission in place but new legislation will remove that by the end of the year. According to Real Estate Institute of Queensland CEO Anton Kardash once that is abolished sellers and agents will be free to work out commissions between themselves. He says there has always been the ability to negotiate lower commissions, but historically most agents offered services at the maximum cap permitted by legislation. Until the new legislation comes into affect the current formula for the maximum commission payable is 5 per cent of the first $18,000 and 2.5 per cent on the balance of the sales price plus GST. On the sale of a $500,000 that would equate to $13,255.

Mr Kardash says the changes make it a more competitive environment and agents will have to be prepared to justify what it is they’re offering for the price they’re charging. Robert Williams of Australian Real Estate Consulting says they have analysed what the average commission are throughout Australia. He says it is not so much about what agents charge but what it could cost you if you get the wrong one.

Saving on commission can mean more money in your pocket. Their research shows that real estate fees in The ACT generally range from 2.5 per cent in the city and metropolitan areas to between 2.5 per cent and 4 per cent in the outer areas. In New South Wales fees range from 2 per cent to 2.5 per cent in city areas and 2.5 per cent to 3.5 per cent in outer areas. In the Northern Territory commissions range between 2.5 per cent to 4 per cent.

South Australia commissions generally range from 2 per cent to 2.75 per cent in the city and metropolitan areas, then 2.75 per cent to 3 per cent in outer areas. Victoria commissions range from 1.6 per cent to 2.5 per cent in the city and metropolitan areas, then 2.5 per cent to 3 per cent in outer areas. Western Australia commissions are generally from 3 per cent to 3.25 per cent.

In Tasmania commissions are deregulated but the Real Estate Institute of Tasmania retains its scale of commission as a guide. Where the purchase price is from $100,001 upwards — $5523 plus 3.99 per cent of excess over $100,000 is the suggested commission.

Negotiating a good commission can save you thousands when you sell your house. Real Estate Institute of New South Wales president Malcolm Gunning says often individual offices set what they think is an appropriate commission to charge. “I think agents would love a prescribed fee,’’ he says.

He says agents tend to ask for a higher commission in an area where properties are not selling as easily because they know they will need to put a lot more time into selling the property. Paul Bird of the Real Estate Institute of South Australia says some agents will negotiate to sell for a set fixed price rather than a percentage so at least you know how much you are paying no matter what the property sells for.

But he says normally they deal in percentages. Mr Williams says also be prepare to pay a slightly higher percentage commission if your property is outside of town. He says while agents don’t collude on what they charge for commissions most know what each other is doing which can make it difficult to get them to come down in price.


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