Although QLD has a higher skewed commission and fee rate; this doesn't mean that you're not in a position to negotiate your fee and commission rate with your agent. There are steps you can take to ensure you're in a better position to negotiate. It's a good idea to be in the know before you start to negotiate fees and commissions with your potential real estate agent. It's a good idea to have the correct up-to-date information and data to inform your bottom line (averages in your area) as well as understand the process of how commission and fees are calculated.
As experts in the property industry, we know that averages can help paint a picture for you. So, we've calculated averages and compared these against the entire country to help you understand the trend. However, while we deem this information useful, we encourage you to consider it as a guide. We also encourage you to remember that commission and fees will depend on a number of other circumstances, like the size of your property, property value, the current property market, and the number of prospective buyers, etc.
Understanding how commission works may also put you in a stronger position to negotiate. Here are some explanations that may help with that process:
A commission-based approach is used to encourage the agent to secure a higher price for your home which earns the agent a bigger commission. In general, agents will use one of two of the most common commission structures; fixed rate and tiered percentage.
Option 1: Fixed Fee
Fixed rate means you agree to pay a specific dollar amount upon the sale of your property and because the rate is fixed, it doesn’t matter what the final price is.
This approach gives you certainty over the fee, but this approach can sometimes cause fear that the agent will sell the house quickly, even if that results in a lower price.
For more information about fixed-fee commission structures work, check out our article: How do Fixed-Fee Real Estate Agents Work?
Option 2: Tiered Percentage
The tiered percentage option operates on a sliding scale, and this encourages agents to secure a higher sale price. For example, you may agree to a 2% commission rate if the sale price is $480,000 or less and an additional amount if the property is sold for more than that. So, if the sale price is $500,000 you'll pay 2% on the first $480,000 (being $9,600) and, for example, 10% on the additional $20,000 (being $2,000). The total commission payable would be $11,600.
Should I choose a cheap real estate agent?
It's going to be tempting to choose an agent with a lower commission rate. However, we recommend comparing real estate agents, including not only their commission rates but the services included in that fee and their sales history. This is so you can understand why they're charging the rate they are, so you can weigh up which real estate agent has a better deal.
By using our real estate agent comparison service, you can compare real estate agent commission rates as well as their sales history, marketing fees, independent homeowner reviews and more. A higher agent commission rate could put you off, to begin with, but remember, the right real estate agent with the right strategy can add thousands of dollars in value to your property sale.