Real estate commission is the fee you pay to your real estate agent when they sell your home. It is normally the largest payment you will make during the home selling process, so it’s important that you understand not only how it works, but how to negotiate with a real estate agent to make the commission work for you.
There is no standard commission across Australia and when you’re selling your home, you will realise that commission not only differs vastly between states and cities, but between suburbs as well. If you would like to see commission information by postcode, visit our comprehensive fees guide page.
While commission rates vary greatly across Australia, fees can be broken down roughly by state. On average, commissions are lowest in South Australia, at 1.99% and highest in Tasmania, at 2.96%. Commission rates tend to be lower in city and metro areas than they are in regional areas because property prices are higher, and there is more demand and competition for property.
How Much Do Real Estate Agents Charge? (By State)
If you would like to see agent fee and commission differences between states or find the average agent commission for your suburb, check out our state-by-state guides.
Commission rates can be a pain to figure out, so we’ve developed an online agent fees calculator for you. All you need is a rough value estimate for your property – the calculator will take care of the rest.
There are two main fee structures used by traditional real estate agencies: fixed and tiered.
These are just like they sound: a fixed percentage of the final sales price is agreed upon by the vendor and the agent. It’s based on various factors including the state percentage average and the anticipated sale price. Once it’s been decided on by the vendor and the agent, the agent can’t change it without speaking with the vendor.
The great thing about fixed commission is that you know from the outset roughly how much commission you’ll be paying. One of the things people often worry about is that an agent working on a fixed commission won’t have as much of an incentive to gain a high sales price. This is why finding a great agent is so important – you want to be sure that you’re working with someone who wants to work hard for you.
This fee increases depending on the final sale price of your house. You will often pay a certain percentage of commission up to a certain amount and then more based on how much the property sells for over the asking price. For example, you might decide on a commission rate of 2.6% on the first $500,000 and then 6.5% on anything over that amount.
The idea is that the agent will work harder because they stand to make more money if they sell your property for more. This is agreed upon before the sale and shouldn’t be changed by the agent after it’s been decided upon between all parties.
Non-traditional agencies, who normally operate online, will often require a flat fee, regardless of how much the vendor ends up selling the property for, or indeed, whether the property sells at all. While this can seem attractive to those selling on a budget, it doesn’t offer much incentive to the agent to work hard for your property sale.
In a highly competitive market, agents might try to undercut one another in order to secure vendor business. This can lead to them offering you low commission rates which can seem like good value to you. Sometimes it is, but often this is not the case. Like we’ve mentioned, commission is a real estate agent’s salary – if they’re offering low commission, they might have to take on more work and so have less time to dedicate to your property sale. This might mean that you end up selling for less than you expected or not selling at all.
A higher commission might also absorb some of the other costs associated with selling property, such as advertising and marketing costs. These can add up and you might end up paying more than you had expected. What’s important when choosing an agent is not that you find the cheapest commission but that you get the best value on commission. What this means in practise will vary between vendors, but it’s one of the reasons we recommend talking to more than one agent, so you can compare their commission rates, amongst other things.
An interesting case study is Purplebricks, who entered the Australian property market to disrupt it with a low fee model and has now left as they couldn’t generate a profit.
Costs of Selling Property Calculator
Besides agent commission, there are a lot of other types of costs associated with selling a house.
They are charged at different times of the process, so it’s important to know from the very start exactly how much you need to pay before selling and where you could potentially save money.
To help you figure this all out, we’ve created a property selling costs calculator. Be sure to visit it to find out how much you should pay for marketing and advertising, taxes to the government, and more.
If your home isn’t well publicised, you won’t generate interest amongst buyers and you’re less likely to sell. This is why it’s important to understand not only your agent’s fee structure but also how much advertising and marketing can cost.
Sometimes, the agent’s commission includes the costs of advertising and marketing. If it doesn’t, sellers should budget roughly 1% of the expected sale price of their property as a general advertising and marketing budget. We’ve written in-depth articles about advertising and marketing fees, which you can find collected here.
Online Property Advertising Costs
Advertising online is now the best way to get your home seen, so it’s something you have to budget for when you’re working out how much you need to sell your house. Licensed agents usually advertise on realestate.com.au and domain.com.au for a lower cost than a private listing.
Advertising costs on realestate.com.au and domain.com.au range between $500 and $5000, depending on the location of your property, the type of ad you would like to run and any discounts the agent may receive.
Real Estate Photography Costs
Getting good images of your property can be make or break when it comes to selling – they’re the first thing most buyers will see and if they don’t like the photos, they won’t bother coming to the open house.
Real estate photography can include photos and videos, with differences based on time of day and need for specialised equipment like drones. Photography can range between $150 to $15,000, depending on how advanced your needs are.
A property that looks its best sells faster and for more. You may choose to use a property stylist, also known as property staging, to help you style your home while selling. These are companies which will bring in furniture to make your property look as good as possible to prospective buyers. Expect to pay between $2000-$8000+ for these services.
While online marketing is becoming more and more important, you shouldn’t discount traditional marketing such as signage outside your house, letterbox dropping flyers or newspaper listings. In general, this will factor in as part of your overall marketing budget of around 1% of your property’s expected selling price.
Taxes When Selling A House
Capital Gains Tax
Capital Gains Tax is a cost you’ll have to take into account if the property you’re selling is not your primary residence, it is the difference between the cost of the asset when you bought it and your gains when you dispose of it.
You need to report any capital gains or losses to the Australian Tax Office in your income tax return so that you can pay tax on any gains. There are a number of different methods for calculating capital gains and the tax associated. You can find our capital gains tax calculator here, so you can get an estimate for how much money you could end up paying when your property is sold.
You also need to worry about the foreign resident capital gains tax, even if you are an Australian resident and citizen. Read more about obtaining a ATO clearance certificate to avoid the tax here.
Stamp duty, also called transfer duty, is paid by the buyer to the government as a property tax. The rate paid varies by state and depends on how much your property is worth or how much it sells for. Depending on your property value and state, stamp duty ranges between $300 to $100,000+.
Read more about stamp duty in our comprehensive guide here.
Sellers often have a marketing and agent commission budget in mind, but there are still other costs to consider. You may need extra help when it comes to selling property, especially when navigating property law, moving, conducting repairs or hiring an auctioneer. Price ranges are listed under each section.
Conveyancer And Solicitor Fees
Conveyancing is an essential part of any property sale and costs can vary depending on whether you use a conveyancer or a solicitor. Fees can range between $400 and $1500, depending on where you’re selling your property.
Discerning buyers will always pick up on issues with properties, so it’s important to fix them up before it comes up at the negotiation table. Regardless of which state you live in, any upgrades and repairs will depend on the age and the condition of your property.
Moving can be a headache, so it’s important to know the costs ahead of time. The costs of hiring removalists will depend on the size of your house and the distance you’re moving. A bigger house or a longer move will obviously cost more money.
You should budget between $300 and $1500 for moving, depending on how large your property is. If you want more information, read our comprehensive guide to moving costs.
Mortgage discharge fees are incurred when exiting a home loan earlier than expected. Mortgage discharge fees will depend on your bank and the type of mortgage you have, but they can range from $150 to more than $1000.
The best auctioneers excite crowds, encouraging higher and higher bids for your property. Hiring one is only a concern if you’re planning to sell your house by auction. Auctioneers vary by state and city, and work with two different price structures. Either you pay a flat rate for the sale or a percentage of the final sale price.
It’s increasingly common to offer bonuses to auctioneers for achieving prices above the reserve. Expect to pay between $200 to $1000 for your auctioneer.
Compare Real Estate Agent Fees
Now that you’re armed with the information you need about agent’s fees and commissions, you’ll should be looking to find an agent to sell your home. We can help you compare agents and their fees in your area so you don’t have to worry about getting ripped off by an inexperienced, expensive agent.
Working with over 60,000 agents across Australia, we know great agents in your area and we can do the research for you. Get started here