The Lowdown on negotiating commission and fees


The lowdown on negotiating

commission and fees.


With so many costs involved in selling your home, you may want to save some money and negotiate your agent’s commission and fee structure. If you do so, here are a few things you need to be aware of.

Considering all the costs involved in selling a home – think stamp duty, capital gains tax, legal fees, bank charges and simply preparing your property for sale– you may be keen on negotiating on your real estate agent’s commission and fees.

Commission is the percentage of the sale price that the agent receives for selling your property while the fees are designed to cover the advertising and marketing costs. However, agents often structure their fees differently. For more expensive properties, some will use a ‘sliding scale’ or ‘tiered’ commission, perhaps 2% on the first amount and 5% when they achieve anything above that. Others include advertising costs in the commission and quote a higher percentage.

 Negotiation Agreement Contract

Request a written proposal

Once you’ve done your research and narrowed your shortlist down to three or four agents to consider signing up with, request a written proposal from each of them and compare costs – make sure all fees are included in their proposal, including marketing. Let each of them know you are doing so as this may create a little competition between them. This process will assist you in working out whether their rates are reasonable.


Test their negotiation skills

Next, you’ll want to feel confident about their negotiation skills as this is key to getting the best price for your property. Some agents are inept at negotiation, which could lose you 10% or more on your home’s selling price.

One way to test their skills is by seeing how well they negotiate their commission and fees with you. It is an acceptable practice to sit down with the agent and do so, as long as this is done respectfully. This provides an excellent way to see how well they sell their value to you in determining what you will pay and represents how well they will negotiate with would-be buyers to achieve the desired price for your property.

 negotiation agreements play fair

Play fair

Keep in mind that it is important to pay the agent a fair percentage because you want the agent to work hard for you. You need to look at the whole package you receive, including a professional agent, excellent service and a sophisticated marketing approach. If you try to drive a hard bargain you could end up the loser as the cheapest agent may not get you the best price for your home.

Essentially, you want the agent to be on your side – and they are driven by incentive and money. If you’re paying them too little they may not be as motivated as you would like – especially when they have other properties to sell.


What will you pay?

“There is no ‘standard’ real estate agent commission. The commission paid to an agent on the sale of a property is usually around 2% to 2.5% of the sale price of your home – with a low of 1.6% and a high of 4%. It may also be higher if marketing costs are bundled in,” explains Natasha McElwaine, the Founder and Director of McElwaine Estate Agents.

“The rate depends on a range of factors, including the state or territory you are in, whether your property is located in a metropolitan or regional area, the type of property you own, the agency and the state of the market. If your property is outside of town you are likely to pay a little more. This is also the case in areas where properties don’t sell very easily. Why? Because the agent will need to put in a lot more time and effort to make a sale.”

In New South Wales, the overall average commission rate is around 2.1%. In metropolitan areas, because property prices tend to be higher and more agents compete for business, the rate can vary from between 1.8% and 2.5%. Property values are lower in regional areas, so commission rates tend to be higher at between 2.5% and 3.5%.

Interestingly, the more expensive your property, the less the commission is likely to be. So, if your home was appraised at $500,000 you might have to pay around 2.5% commission but properties priced up to $1 million could be 2% and over $1 million might be 1.5%.


Marketing fees

Marketing fees can vary from around $500 and up to the thousands depending on a range of factors. These fees cover elements such as professional photography and videography, copywriting, online listings, a floor plan and signage. If you are concerned about costs you can request that the amount be capped.

Make sure the marketing material that is developed is designed to promote your property and not the agency. Check with your agent that they won’t have large images of the agent and their logo on their signage instead of images and information about your property.

 Negotiation agreemtn marketing & staging

Staging costs

Professional home styling can be another expensive element. Designed to ensure your property is displayed in its best light for photography and viewings, staging is normally provided by an external party. Costs can run from $2,000 and up.

McElwaine adds, “Lastly, once you’ve made up your mind on your agent of choice, be aware that once you have signed their sales authority document you do not receive a cooling-off period.”

McElwaine Estate Agents always acts in our clients’ best interests.Our inspired and world-class model is founded on creative and unique strategies that capture the emotional heart of your property and is backed by an experienced team that offers genuine care for every person we partner with. You’re welcome to contact us today.

Don’t miss our report 6 alarming things you must know before hiring a real estate agent, where we warn about some of the dodgy practices you need to be aware of.