Salut,
First time selling a property.
How much commission should I pay my real estate agent?
They've asked for 3% negotiable. Would 2% be a fair offer?
Property details:
Location: Regional VIC
Type: Land
Zone: Dual - zone 1 & zone 2 (residential and commercial)
Any advice would be appreciated.
Sorry but such generalisations can be totally misleading!
Did you research what agents charge in OPs regional area?
Probably NOT.
The correct answer is for OP to ask a few agents to provide a proposed marketing camapaign, quote of costs and an estimate of the achievable sale price and then compare them.
Furthermore there might be huge variations in what agents think they can achieve with relatively small variations in costs.
Hence if one agent can get $50,000 more than another agent then the amount of commission pales into insignificance!
In other words nobody here is in a position to offer informed and correct advice to OP.
Not even generalisations.
Its entirely up to OP to do thier research.
And with this good advice OP go forth and ask several agents to provide you with a proposal.
Ensure they include:
1. List of recent sales in the area to demonstrate their capabilities including sales where they achieved more than what the vendor was expecting
2. List of comparable sales in the area on which they base their price estimate
3. Marketing campaign in comprehensive detail
4. Outline of all costs
Then compare agents against the above criteria.
You will find that the amount of commission paid becomes a much less important consideration!
If an agent can get you $50,000 more for another $2,000 on commission that a pretty good deal…yes?
Even though you paid a higher commission.
Its always best to go to agents who have a good track record of achieving a sale if not record prices as well.
PS The most desperate agent will always offer the cheapest commission.
Alternatively the agent who does the least amount of work to sell your property and hence most likely achieve the lowest price will also offer the cheapest commission i.e They work on sales turnover (best results for them), not on achieveing the best results for the vendor.
Is that a good way to chose an agent?
Sooooo,,,, you're a real estate agent?
But yeah - about 2% after everything.
I had fixed and variable portions. So there was (from memory) a 1.5% of sale price plus a bunch for various marketing. Domain.com.au and Realestate.com.au don't come cheap.
If you're creative, you could do structured commissions - i.e. have different commission amounts for sales above various amounts, call it a performance reward.
I can tell you, the realestate.com.au fee that some agents charge vendors are such a rip off compared to what they pay. Huge markup. Of course they group it in with other advertising, writing the ad, often ads in the newspaper etc.
Of course, realestate.com.au used to be much cheaper. They actually charged a fixed fee for agents (per month) at one point, but that's all changed.
@bohn: This is exactly why you ask for an itemised list.
Not just to see individual costs but also exactly what is included in the marketing campaign
@bohn: The listing type changes the price a bit. The free listing might be free, but it'll be a tiny card on page 2 or 3. The next step up pushes you above the free listings but the card is still tiny. You want at least the level above that with the bigger card. And depending on the agent account it could be few thousand to them.
Im quite experienced in the property market in both buying and selling but not a R/E agent
Thanks for the compliment
Yes this is what I have done in the past to incentivise the R/E agent to get the highest price.
Speak to more than one agent and play them off against each other. I’ve sold MELB and CBR property at ~ 1.5% from memory. In one case I put a sliding scale in as an incentive ie if you achieve a price over $x dollars then I paid them 5% on the amount over $x. (Make sure $x is a hard to achieve price!)
Can’t speak for regional vic though, because when I sold in melb agents were falling over themselves to get work.
In metro areas the property goes up for 4 weeks and is pretty much expected to sell… can't necessarily say the same about regional
Yeah fair point
Regional Vic properties are (apparently) selling very quickly these days.
Really? Source?
@FareEvader: First hand experience in my local region, but this seems to support it as well:
https://www.abc.net.au/news/2021-01-04/house-prices-rise-1pc…
Properties near me are not even getting to the advertising stage, as all the agents have a list of buyers. Buyers are being informed of the upcoming properties and given a date to submit an offer by, before it is publicly listed.
All properties are selling well above the values of only a couple of years ago.
As one example, a friend heard about a property that was to be listed. They contacted the agent, agent told them a price range, friend (verbally) offered $200k. above the top of that range. The agent told them they had already been outbid by $300k.
What is the value of the property?
Hoping to get $750k
In that case I would suggest 2%, in total, would be a reasonable payment ($15,000) for their efforts.
They will no doubt want to hit you with advertising, brochures,signs, etc., so just factor in all of the add-ons
Advertising is almost going to be additional few thousand.
How do you arrive at this uninformed conclusion?
Did you approach any agents in OPs regional area and ask for proposals?
Another x-pert offering totally irrelevent advice.
Remember to factor in GST , so if you want 2% total it's 2% inclusive. As they will add GST on usually.
It's illegal to quote a price excluding GST when dealing with a non-business consumer. Anyone stung with the + GST scam can use this:
https://www.accc.gov.au/business/pricing-surcharging/display…
I am not saying that they will quote without GST, I am saying if an uninformed vendor tries to negotiate and says that they are happy with 2%, the agent will probably say they can do it for 2.2% including GST.
and if they do they are breaking the law…you cannot add GST to an agreed price when dealing with a consumer. You can't even quote a price "+ GST"
@knasty: The % isn't agreed yet.
It's a negotiation. Agent says 3% neg., vendor offers to pay 2%, agent can say no, we will do it for 2.2%.
No problem.
All real estate authorities specify GST btw.
@bohn: I'm commenting on your original statement "As they will add GST on usually." There is no basis for presenting/quoting/discussing/advertising a price excluding GST when dealing with a consumer. That is my point. Some businesses do it by mistake, some do it deliberately to try and trap an unwary customer.
I've had a few occasions where a business has tried the "oh, that's plus GST" trick after a price has been agreed and I've had to point out that their conduct is illegal to get back to the agreed price.
I've had a few occasions where a business has tried the "oh, that's plus GST" trick after a price has been agreed and I've had to point out that their conduct is illegal to get back to the agreed price.
Yep, agree with that.
ALWAYS!
The idea that an RE Agent should be paid based on a percentage of the sale price is outdated and ridiculous.
What exactly have they done that would warrant a slice of the value?
Putting aside that rant, it is negotiable so the answer is - the least you can while still getting decent service.
I have only been a seller once, and we put in a sliding scale of commission so if the agent got a higher price than we expected, they got a higher commission.
If they work on flat rate, they have no incentive to get you the highest price possible. The incentive is simply to get it sold as soon as possible.
Read Freakonomics.
They currently have no incentive to sell for the highest price. They currently just want to get it sold asap.
https://freakonomics.com/2008/02/26/real-estate-agents-revis…
https://www.nytimes.com/2005/02/20/business/yourmoney/why-a-…
https://forum.nachi.org/t/exerpt-from-freakonomics-book-rega…
Agreed. There are numerous options to sell a property by yourself; particularly when it is a vacant block of land rather than a house that requires inspections. The person best aligned with your own outcomes is yourself!
I still think for them to be charging these amounts is ridiculous, literally anyone can be a real estate agent as long as you sit their course that gives you a certificate to sell houses.
This is how you get leaches who can talk walking away with thousands of dollars for literally opening a door a couple of weekends and getting some photos taken. IMHO they're on the same rung as second hand car dealers, do zero value adding and walk off with a tidy profit.
If you're flexible, think about taking leave without pay to sort it out, depending on your wage $15k is a lot of hours by anyone's books. I've had friends do this multiple times and it's saved them a tonne of money.
Interesting pt. I wonder what will happen if a true disruptor comes to this industry. I have seen a few small ones but I am talking about stuff like Airbnb or Uber.
Do you remember Purple Bricks?
Unfortunately not flexible and I now live in NSW so can't go back due to border restrictions!
As low as possible. If its an easy sale for the rea, i have seen them go as low as 1.1% inc gst.
if its a difficult sale, ive seen it go as high as 5%
It also depends on the value of the property.
Tree fiddy!
around 1-2.5%
I paid 1.75% + around 7k advertising costs for a unit inner melbourne
7k for an ad? is that normal these days?
Just find a REA that does a set fee
I paid 1.2% with condition of sale over xxx amount 2% which I’m happy to pay as it’s more money in pocket but was pretty sure it wouldn’t hit that price. I think it’s all relative. If I was selling a 1 or 2 million house, I’d only want to pay 1% or less, not like the REA works harder selling a 2 mil house compared to a 500k house in the same area. The house sells itself, how hard is opening inspections and getting a board, which is outsourced any way
Thanks for the advice
I like this idea. an increasing commission as the price increases into values that make the real estate agent work
It also means a very low/undermarket commission for underperformance
Wow…that's a great commission rate…how did you negotiate it so low…I'd have thought you were selling for $3m + to get a rate anywhere near 1.2%
Did they overcharge you on advertising/marketing etc?
In NSW metro residential market you can expect to pay anywhere between 1.3 - 2% depending on the agent.
In a Rural market (as well as for Commercial assets) it's usually 2%+
Getting the maximum dollars in your pocket should be the aim, not about cutting fees and possibly getting a lower return.
2-3% is pretty standard in regional VIC
I paid 2.2% (inc GST)
1% and stick to it.
Car Sales Men… ask a ridiculous amount, then accept lower, which is still high.
Sell it yourself!
1% + GST
That’s what I managed
How Much Commission Should I Pay a Real Estate Agent?
Interestingly enough, this was recently answered by Neil Jenman in How Much Commission Should You Pay an Agent?
There are several important points home sellers should know before choosing an agent based on their rate of commission.
THE PERCENTAGE:
The first point is the percentage. Rates can be as low as half a per cent or as high as five per cent.
But this is where sellers need extreme caution. Sometimes the agent who charges the lowest commission sells your home for the lowest price.
I'm in no way associated with Jenman, but find him good value.
For those who don't know Jenman, he appears to be Public Enemy Number One to many RE Agents, because he tends to mock their less-than-stellar efforts (lazy is a frequent and sometimes maybe even well-deserved accusation) to work hard to get their seller the best possible price.
Speaking of which, Lazy Agents Mean Low Prices
I must be a bit out of touch.
Agent commiss. used to be 5% of the first $18,000 then 2.5% of the remainder of the sale price.
It was a standard R.E.I.Q. Commiss. I think🤔
Interesting to read how people are dealing with %s
.
How much was your first house? $20,000? ;)
Well that was 34 years ago.
But more recently people may of negotiated there agent fees.But sometimes you get what you pay for.
It seems to be a sellers market at the moment,so maybe agents might be a bit more flexable.
Still it pays to check out your potential agent.
Go to their open houses..auctions..see how they handle themselves.
We walked into an agency and were promptly told,
You have to come back monday to pay the rent,we told them we were buyers,but not of them.🤨
hoping on 750k offer 2% up to 750K 20% on anything above 😀
That's very generous of you, but shouldn't be necessary.
I mentioned Jenman above because he's a genuine seller's advocate — I recommend at least a call.
He just posted The Best Way to Sell Your Home. I've not sold a home yet so don't have personal experience, but at the bottom of the post it says:
Here are three huge advantages to using Jenman support:
First, we never ask you for any money.
Second, we never asked you to sign anything.
And third, we always strive to place your interests first.
Normally commercial is I'm the order of 3% plus specific special marketing campaigns. Not sure about your area or the division of your property values resi vs comm.
2% is very common but find out what they provide in the service
ie. signs, marketing, RE, Domain, Open Home Frequency etc. etc.