In recent years, Adelaide (the capital city of SA) saw a growth in economy. The capital city is home to 75% of the SA population, is the South Australia’s government centre and home to many governmental and financial institutions. Typically ranking high is terms of quality of life, The Economist Intelligence Unit has ranked Adelaide in the top ten world’s most liveable cities three times over the last decade. One contributing factor to this may have been the climate, with Adelaide boasting a well-known Mediterranean climate with warm and dry summers and short, mild winter. Adelaide is also an arts and culture hub, home to many renowned museums such as the Art Gallery the South Australian.
So, it comes as no surprise that Adelaide is a sought-after destination for many Australians relocating within South Australia. Affordability is the name of the game in this capital city’s emerging market, as low interest rates and lower house prices encourage investment. Boasting one of the lowest capital city average rates in terms of commissions and fees, it’s good news for those selling a property in the area.
How do real estate commissions and fees work in Adelaide?
Like the rest of the state, Adelaide commission rates are deregulated. This means that an agent who works in Adelaide is empowered to decide and create their own commission and fee structure. The market demand in Adelaide is higher and as a result there are more real estate agents who work in the city. This creates increased competition and we see a drop in commission rates averages as agents work to compete for business.
The location of your home in Adelaide and the property type will also have an effect on the total fee you will pay for commission. With this in mind, it makes sense for you to compare agents in the Adelaide market. Comparing local agents will help you understand how commission is charged and the variable factors that contribute to the final figure and the different ways in which agents will attribute various factors to commissions and fees.
It’s also a good idea to understand what an agent considers under the term “commission” and “fee”. It’s common to consider these terms as having the same of similar meaning but when it comes to selling your home, this is not the case. Here are some definitions that will help guide you:
Commission: This is the term usually referring to the percentage allocation of the total price of the property sold.
Fee: This is a term that is commonly associated with marketing, advertising and administrative costs.
Agents will have different allocations for both these terms so make sure you know what is included in this fee to help you understand the bottom-line figures. Real estate agents are usually willing to negotiate fees and commissions due to the competition found in the city, so you are in a strong position to negotiate.
What is the average commission rate in the Adelaide?
It’s good news for those selling in Adelaide, we’re seeing lower commission rates that are amongst the lowest in the country. The average commission rate is 1.94% in Adelaide. The below chart shows how Adelaide compares to the rest of the country in terms of average state commissions.
We see that Adelaide is the amongst the lowest commission and fees rate in the country, next only to Sydney. The city rate is lower than the overall average for the state which sits at 1.94%. This drop is expected and the lack of competition for real estate agents in higher populated areas like Adelaide drive down the cost of commissions in order for agents to compete in the market.
The median house sale price in Adelaide sat at $522,815 in December 2017; with an increasing 3.5% over last year. (Source: Domain Group House Price Report, December 2017). It’s looking like affordability is becoming key in this capital city’s emerging market, as low interest rates and lower house prices encourage investment.
The average commission fee starts to increase in areas on the outskirts of Adelaide, for example, in Adelaide Hills where commission rate increases to 2.2%. This is an Australian wide tend that we see in most states. Generally, real estate agent fees tend to be lower in built-up urban areas with high population density and where there is stronger competition among agents, for example in Norwood or Rose Park, where commission rates don’t tend to reach above 2%.
The price of your property will have a direct impact in the total cost of your commission. The below gives an indication of what you can expect in Adelaide depending on the value of your property.
Property Value Average Commission Rate
To summarise, while the cost of commission rates in Adelaide are amongst the lowest in the country – there are still contributing factors to consider (suburb, property type, property value). With that said, LocalAgentFinder data gives you a strong indication using relevant and up to date data to help you make an informed decision on the amount of commision you are willing to pay.
Negotiating fees and commissions in Adelaide
With the current commission and fee rate in Adelaide, you’re already in a strong position for negotiations. Agents are aware that competition is out there and are more likely to drive down commission costs in order to win your business.
In addition to having an understanding of your local commission average, there are other steps you can take to put yourself in a stronger position to negotiate. One of which is to have a solid understanding of how commission is calculated. In general, an agent will advise of one of two options.
Option 1 - Fixed rate
This method means that the fee you pay is fixed and regardless of the price your property will sell for, this fee will always stay the same. The benefit of this method is the fact that it creates clarity for both parties around the final sum of money. However, some people feel that this can encourage the agent to sell the house quickly and as a result they will sell the house for a lower sale price.
Option 2 - The tiered percentage
This option operates on a sliding scale. The benefit of this method is that it is generally thought to encourage 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 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. The potential disadvantage of this is that you don’t have certainty of the final price and it may be higher than what you had initially anticipated.
Agreeing the type of commission you pay your agent is also sometimes dependant on the property type. For example, if you are selling a larger property in a popular area, it makes sense to operate on a tiered percentage rate as you are in a better position to secure a higher sale price. With that said, it’s up to you as the homeowner to agree the commission structure.
Top Tips for selling your home in Adelaide
We help Australian’s sell their property in Adelaide by recommending them with the most suitable agents available in their location. If you’re selling your property in Adelaide, we have some tips that can help you go through this process with as much ease as possible.
- The averages act as a guide to help you get an understanding of what other homeowners like you are currently paying for commission. There are also a number of factors that can contribute to the overall cost for commission – like the size and type of property you are selling. So, while having an average from local data is certainly useful, it doesn’t mean that it’s a certainty for your home.
- Comparisons are necessary when choosing an agent. Considering your home is one of the most valuable assets you will ever sell, it makes sense to get the right real estate agent to help you secure the highest possible price. LocalAgentFinder can compare agents in Adelaide for you and deliver you with the best agents for the job in the area.
- Hidden fees are a concern for everyone when selling your home. At LocalAgentFinder, our comparison tool is completely free for homeowners. The agent you choose will only pay LocalAgentFinder a referral free after successfully selling your property.
So, if you’d like to compare real estate agents in the Adelaide region, take a look at LocalAgentFinder today and see if we can help. We also have a fully operational Australian based call centre, so if you have any questions, give us a call on 133 033.
Fees & Commissions by City
To determine the average commission by capital city, LocalAgentFinder took the average commission of all active agents in each city respectively on 21 March 2018. This included agents with tiered and fixed commission structures based on a $500,000 selling price.
This article was updated on 11th April 2018