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Understanding Real Estate Agent Fees and Commission Structures
18 days ago
Understanding Real Estate Agent Fees and Commission Structures

Not all real estate agents structure their fees the same way, so it’s important to understand the options available. While basic commission rates vary by area, agents typically charge between 2% to 2.5% of the sale price. For example, an agent would earn between $10,000 to $12,500 for a property that sells for $500,000. On top of this, advertising costs are often added and can range from a few hundred to several thousand dollars, depending on the marketing plan you choose.

Some agents charge a higher commission that includes advertising, while others offer a sliding scale commission structure—especially for more expensive properties. For instance, they may charge 2% on the first $800,000 and 5% on any amount above that. This structure encourages agents to aim for the highest possible sale price.

When negotiating the most effective commission structure for your property, here are a few key points to keep in mind:

  • Include Advertising Fees: Make sure to factor in advertising costs when comparing commission structures so you’re evaluating on a level playing field.
  • Compare Fees: Ask your shortlisted agents for their commission rates and let them know you’re comparing options. Your preferred agent may offer to price match.
  • Don’t Choose the Cheapest Commission: Opting for the lowest commission may seem like a good idea, but it could cost you in the long run if the agent isn’t incentivised to achieve the best price.
  • Get Everything in Writing: Ensure all fees and commission structures are clearly outlined in writing to avoid surprises.
  • Expect a Premium for Record Prices: If you want your agent to work hard for an above-market price, be prepared to pay a premium for their efforts.
  • Consider a Sliding Scale: A tiered commission structure can provide extra motivation for your agent to push for a higher sale price.

By carefully considering these factors, you can negotiate a commission structure that aligns with your goals and ensures your agent is incentivised to achieve the best possible outcome for your sale.

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