Tasmania is a tourism and relocation hotspot. Few can deny the natural beauty of Tassie and this teamed with the beautiful cultural and buzzing hype surrounding Hobart makes for an interesting property market. Homes with lifestyle factors are highly sought-after in Hobart, as most homeowners who live in Tasmania’s capital city reportedly enjoy the lifestyle advantages of prestigious natural environments close by.
Reports of high average median house prices won't come as a shock to those who currently reside in Hobart. Reports in 2017 have this cost rising year on year at 17.3% Source: Domain Group House Price Report, December 2017). The reason most give for this house prices surge is due to a tourism boom and an increase in investment, including overseas investors. Due to the Hobart boom, needless to say, a ripple effect in fees and commission when selling a property has been created. A higher price for commission is found in the state of Tasmania, with Hobart scoring high in the commission and fee rate when compared to other capital cities.
How do real estate commissions and fees work in Hobart
Fees and commission rates are deregulated in the city of Hobart, and this is the same for the rest of Tasmania. Deregulated rates mean that a real estate agent who works in Hobart has the ability to create their own commission and fee structure. An agent will base this on the supply and demand of the market at that time.
The city of Hobart has an uncompetitive market in terms of the volume of real estate agents operating. With a lower population than all other capital cities, we would expect to see this trend. The uncompetitive nature of the market in Hobart makes it easier for agents to charge higher fees as they don’t have a need to drive down costs in order to compete.
The suburb where you live in Hobart and the type of property you own will also have an effect on the total fee you will pay for commission. Given the higher rate found in Hobart, it makes a lot of sense for you to compare agents in your area to ensure you are getting the best possible price. In addition, comparing local agents will help you understand how agents charge and structure commission fees.
We recommend having a solid understanding of what is being charged to you under the terms “commissions” and “fee”. We advise you to consider these costs under separate terminologies as your agent often does this.
Commonly, these are how the costs are created:
Commission: This is the term usually referring to the term to the percentage allocation of the total cost of the property sold.
Fee: This is a term that is commonly associated with marketing, advertising and administrative costs.
Ensure that you have an open conversation with your agent to understand their costs. In general, a real estate agent is usually willing to negotiate fees so it’s important to fully understand commissions before agreeing on a bottom line.
What is the average commission rate in the Hobart
Hobart is not a shining light when it comes to commission and rates across Australian capital cities. Like the state of Tasmania, Hobart operates the highest commission average rate found in our list of averages. The average commission rate in Hobart sits at 2.94% and this is only slightly below the average rate of the state of Tasmania, which sits at 2.96%.
In 2017, the average house price rose a whopping 17.3% which is believed to have surged due to a tourism boom and an increase in investment, including overseas investors.
The increase in house prices and the investor and tourism boom hasn’t had a negative effect on the price of commission agents are charging. In general, we expect to see real estate agents charge lower fees in cities, particular cities which are seeing growth. However, Hobart would prove to be an expectation to this trend as the geographical location of Tasmania. The location of Hobart also contributes to his relatively low population which in turn has an effect on the higher rates found here.
City Average Commission
Commission Rates May 2018 based on a $500,000 property sale
The total amount of commissions we pay will also depend on the value of your property. The below table looks at various property value and their current average commission rate.
Property Value Average Commission Rate
Although commission rates are high in Hobart, we don’t think that this should scare you into thinking it’s a bad time to sell. Rates in Hobart are likely to always skew higher and whilst commissions and fees are an important consideration for homeowners, they should not act as a deciding factor.
Negotiating fees and commissions in Hobart
As Hobart is home to the most expensive rates across the board, it is now more important than ever for you to have the right information about commissions. Having a strong knowledge of how commissions work is likely to put you in a stronger position. Now that you have a fair idea of the average rate in Hobart, it’s important 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
The fixed rate is calculated by agreeing on a percentage of the final sum of money your home will sell for. This method means that the fee you pay is fixed and the final sum of money will stay the same.
One benefit of this method is the fact both parties know and have agreed on the final sum of money. A potential disadvantage of this method may be that this can encourage the agent to sell the house in a faster manner and as a result, they will sell the house for a lower sale price.
Option 2 - The tiered percentage
Tiered percentage operates on a sliding scale. 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.
A benefit of this method is that it is generally assumed that because the higher the cost of the home, the more agent makes. As a result of this, it can be argued that this reward acts as a motivator for the agent to secure the highest price. A potential disadvantage of this is that you don’t have the certainty of the final price and so you may end paying a higher fee that you may have initially wanted to.
Whatever option you and your agent decide on, ensure that all your verbal agreements go into writing. Clarity is the name of the game when it comes to commission, so it makes sense to ensure both parties have 100% transparency.
Top Tips for selling your home in Hobart
Hobart is quickly becoming a property haven. With tourism in full bloom and a rising property market, we know that finding the right time to sell your home can be tricky. We help thousands of Australians sell their home and we’ve learnt a thing or two along the way!
Here are some tips to help you on your journey to selling your home in Hobart:
1. Understand your commission calculations
We can’t reiterate the importance of researching commissions in your area. We’ve given you the averages in Hobart and some helpful definitions. In addition to reading up on the norm, you should compare agents in order to understand the various ways in which an agent will charge commissions. This way you can decide what commission is most suitable for your needs.
2. Confirm your agent’s marketing plan
Studies indicate that a sign at the front of your property is one of the best ways to drive buyers. Although you may think of this as an “old school” way of marketing, it’s interesting to note the effectiveness of this. The right real estate agent will have this knowledge and use it to deliver the best marketing plan for your home. Ask questions about your marketing plan and make sure you are comfortable with it – after all, you once bought this home and so you’ll have a fair idea of the market you need to appeal to.
3. Avoid hidden fees
Hidden fees are always a concern when selling a home. Ask your agent questions about any costs you are unsure about. The good news is that our comparison tool is free for you to use (the agent you choose will only pay LocalAgentFinder a referral free after closing the sale of your property).
Selling your home in Hobart? Take a look at LocalAgentFinder today and let us find the right real estate agent for the job. You can also call us on you can give us a call on 133 033 (we have a fully operational Australian based call centre).
Fees & Commissions by City
To determine average commission rates, LocalAgentFinder took the average commission of all active agents respectively on 1 May 2018. This included agents with tiered and fixed commission structures based on a $500,000 selling price. This page was updated on 4th May 2018.