How much do real estate agents charge? Well, it depends whether you are selling a $2 million home or a $500,000 home, but there are some industry-wide estate agent fees by which to judge how much to pay your agent.
Typical estate agent fees
Real estate agent fees are quite consistent across Australia, typically averaging between two and three per cent of the eventual sale price of a home. The more expensive the home, the smaller the percentage.
“Estate agent fees average 2-3 per cent”
This percentage isn’t the only thing to consider when assessing who your agent will be. Consider the following when deciding upon an estate agent’s commission:
- Will you be charged if the property doesn’t sell?
- Does your estate agent’s fees include marketing costs? Generally, they don’t.
- If you the property doesn’t sell and the estate agent fees are not included as a result, do you still have to pay marketing fees?
What a real estate agent charges should generally reflect the level of service they will provide. An unfortunate practice that occurs in the industry is for agents to overquote a property’s worth to secure your business, or even underquote it if they wish to enter a tiered fee structure (where they receive a higher percentage once a reserve price has been met, for example). This sort of thing is becoming less common as vendors and buyers have greater access to property insights and market data.
How to negotiate estate agent fees
Choosing a real estate agent involves many considerations, and is essentially like finding a new employee for your business. If you have never had experience in recruiting, then this process can seem daunting.
A real estate agent should be able to provide you with an accurate quote of the home (in writing), a full marketing plan, accurate market insights and be able to point to recent sales in your area that relate to your own home.
What a real estate agent may not do (and they should) is point out that their fees are negotiable.
For instance, you may want to set up a tiered fee system, where the real estate agent agrees to a lower percentage of the sale price (e.g. 1.8-2 per cent) but agree to receiving 10 per cent of every $1000 they get over the reserve.
If your prospective agent quotes higher than another agent, but asks for the same percentage of the sale as the other agent, consider whether this is reason to negotiate them down. A higher agent commission may reflect a better agent, but you may be able to point to other quotes to drive down the fee.