A Real Estate Agent’s commission and fees are how they are compensated for the work they put into selling your property. From one state to the next, there is almost always a variance in the commissions you can expect to pay. This is partly due to different markets and competition, but also due to laws and regulations particularly in Queensland.
QLD is the only state that is officially regulated by law when it comes to agents fees. The QLD governing body has set the commission structure to equal no higher than 5% of the first $18,000 and no higher than 2.5% of the remainder.
Experience Is Priceless…
…And it’s not just about what you know, but who you know. There’s no substitute for years of first-hand experience in local Real Estate markets, or for having a reputation as a company that Real Estate Agents are eager to work with to sell your home.
Typical Real Estate Agent Commissions
As mentioned, commissions will vary by state. They will typically range from 2%-3%, with the occasional outlier. As a general rule of thumb, the national average is around 2.5%.
Types Of Commissions
There are various ways that a Real Estate agent can agree to be compensated for their work, namely tiered percentage commissions and fixed rates. Both models have their pros and cons, which are as follows…
Tiered Percentage Commissions
The majority of agents in Queensland for example charge a standard fee of 5% of the first $18 000 and 2.5% on the balance + GST. Obviously this will add up to a lot more than a flat fee in some cases but often you will find the best agents stick to this formula as they do get the best price for the seller. This certainly doesn’t mean that there are not excellent agents working on reduced commissions, but sellers require the correct information to find out who are the best agents in the first place.
For example a $500,000 house would attract a commission of:
$ 18 000 x 5% = $ 900
$472 000 x 2.5% = $ 11 800
Sub Total $12 700
+ G.S.T $ 1 270
TOTAL $13, 970
Fixed Rate Fees
If tiered commissions sound like more of a hassle that you’re just not interested in, sometimes agents will sell your property for a flat rate fee. This isn’t ideal, in most cases, since the agents have no incentive to get a higher price for your property, and they have every incentive to sell it quickly, collect their flat fee, and move on to the next property. This generally isn’t in your best interest as a seller.
Keep In Mind
Whilst the cost of commission is important, its not as important as having the right agent sell your property and sellers should keep that in mind.
Remember, the agent is only getting about 2.5% of the extra money he can earn for you by working harder. If they manage to get an extra $50 000 on top of your expectation for example, they will only get $1250 (ex GST) and YOU will be getting $47 750
State specific guides to real estate commissions