Melbourne real estate agents create their commission rates based on supply and demand. Melbourne, like the rest of Victoria, operates on a system of deregulated fees. Deregulated fees allow an agent to set up their own structure. The good news is Melbourne is currently seeing it’s biggest population increase since the 1940’s gold rush. As a result of more people, we are seeing more agents. More agents mean more competition.
As a result, we see a lower charge for commissions in order for agents to compete for your business. Agents need to compete for your business and so lowering the price of commission is one way they will do this in Melbourne.
Melbourne is home to many suburbs and the location of your property within the city will have an effect on the commission you pay, as well as the condition of the property and the property type. With this in mind, the best way to find out how commissions will work on your property sale is to do some homework. Comparing local agents will help you understand how different agents charge commission, as well as giving you an understanding of their work and how suitable they are for selling your property.
It’s also a good idea to understand that in real estate, the terms fee and commission are often charged separately.
Here are some definitions to help clarify:
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.
It’s a good idea to have a conversation with your agent and define what costs fall under which term. This way, there will be no confusion or last-minute surprise costs.