Like all states, Victoria operates on a deregulated fee structure. This means that real estate agents control their own commission and fee rates. They aren't lawfully required to charge a certain amount but are instead guided by a few key factors, such as supply and demand.
Supply and demand
Market demands and competition heavily dictate what Victorian real estate agents charge. For example, real estate agents in regional areas charge fees that are higher than agents in metropolitan Melbourne. This is because there's less competition between agents, so they can set higher rates to compensate for lower selling prices and decreased market competition.
In contrast, prices generally increase closer to city areas. The average real estate agent can afford to charge a lower commission rate on properties with high price tags, as they'll still take home a large commission. It's also in their best interest to offer competitive rates because there are many more agents competing for business in high-density areas like Melbourne.
Another important consideration when you compare agents is to understand exactly what's included in the price you‘ll pay for commission and fees. We often bundle the two terms together as one general cost without really considering the different allocations made under each term.
Know the difference between agent commission and fees
In general, the commission rate is the actual percentage allocation your agent will receive of your property's final sale price. Fees are additional costs and can include marketing costs and miscellaneous administrative costs.
It makes sense to speak to your agent to define the charges that sit under each term before closing the deal. Look for an agent who creates a positive working relationship and a comfortable environment that will allow for frank discussion and an open negotiation around commissions and fees.
Related: How to Choose a Real Estate Agent