How Much Commission Does A Real Estate Agent Charge?
The #2 question I get asked by home sellers as a real estate agent is: “How much is your commission?”
Aside from the #1 question (How much can you sell my home for?), it is the most common and important question vendors ask, so I thought I’d give you a rough breakdown of agent commissions here in Melbourne.
Obviously, the actual number you’ll be paying will come down to your agent and you agreeing on a number that both sides of the equation can agree to.
This video segment was pulled from a long interview I did back in Feb 2022, where I answered a heap of frequently asked questions (FAQ) about real estate.
Once you’ve watched the video, let me know your thoughts in the comments below.
Note: The video was filmed in portrait mode rather than landscape, which is why it is narrow rather than wide. For the best viewing experience, I recommend you click the Full Screen mode button.
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Okay. So the vital question that you actually need to ask yourself is, and assuming that the commission question is coming from, ‘should I make commission the way I choose my agent’ or whether it is ‘what is commission’?
So commission is basically the reward for the agreed payment that the agent will receive for getting you an outcome that you are happy with.
And that is the unconditional sale of your property at a price with terms and conditions that you were happy to sign off on. Okay?
Now the vital question if we’re talking about how that plays into how you choose an agent has to come down to: “If all agents charge the same, which agent would you choose?”
Because that’s the other way of looking at it. But most of the time people want to know what the nuts and bolts are.
So commissions will typically range anywhere from between 1.5% and 3.5% of the final sale price of a property.
Now this can come down to a variety of things.
You will generally get – Less experienced agents will generally be charging a lower rate to get business, and to get that experience.
It’s the same thing. You know, you see a job ad and it’s like must have experience. And all the, and the youngies are like, well how do I get the experience if I can’t get the job? Simple as that.
So you will sometimes find that.
But what you’ll also find is that rightfully so, the larger the anticipated sale price, the lower the percentage of that commission should be, if that makes sense.
So realistically, what I encourage you to do, is work out not what the percentage is, but work out what the money is.
So if 1.5% doesn’t sound like much, but when you took a look at that on $1.5 million, what does that actually work out to?
What dollar value does that actually have and what will that leave you with your walk away of what you will get out of it?
But also too, have a look at, between the differences in the commission, have a look at what they’re including. What do you get for that?
Will the agent be the agent that is at every open home for you?
Or will you have a second agent working with them?
Do they have a team?
Do they help you with the setup of the preparation of the property?
Are there services that you get, that the agent is actually paying for until you get sold?
So there’s a lot of ways of looking at it, but generally speaking, you’re going to be looking at anywhere between 1.5% and 3.5% as a commission.
And don’t be afraid also to ask about a flat fee if that’s what you are more comfortable with.