Whether you plan or buying or selling a particular property, you are bound to have to deal with real estate agents at one point or another during this process.
This article is designed to give you realistic estimates of commissions that you should expect from real estate agents in Australia.
Not only that, but we'll also briefly discuss the different types of commissions, whether they can charge extra, flat fees, fixed rates and more to answer as many of your possible questions about this topic.
Knowing how the real estate industry works can seem complicated and knowing what to expect will help you in working around possible future issues or even open the doors to negotiate better commissions with real estate agents.
What is Fixed-Rate Commission?
Fixed-rate commission is one of the two structures of commissions that are most common in the industry.
A fixed-rate commission is calculated based on a percentage from the final dollar value of the property. This percentage value is highly influenced by the state percentage average, the anticipated sale price, the type of property, expected sale value and many more factors.
This fixed-rate commission can be followed by a negotiable commission for the real estate agent that can be negotiated down by one to two percent. These things can be negotiated and they vary wildly not only from one state to another but also from one agent to another.
Alternatively, you can compare real estate fees right here.
Tiered commission refers to a specific percentage that is agreed upon between seller and agent that increases based on how high the property is sold in the end.
It uses a sliding scale that encourages real estate agents to try and sell the property for as much as possible in order to get a higher commission compared to a fixed-rate commission.
To exemplify this, a seller and a real estate agent can agree upon a 3% commission fee if they sell the property for any amount up to a set price and a higher commission fee of 5% out of the final sale value if the property sells above the initial set price.
Is there any way to negotiate an agent commission?
Yes, you can always negotiate with your real estate agent before you agree upon a specific percentage for their commission fee.
The best way to have the advantage in this discussion is to ask them details about their strategy to sell the house, why they plan to do certain things if the house will sell openly or privately and more.
By trying to understand their strategy or at least get as many details as possible from them you will be able to get an idea about their plan and if they are asking for too much based on what they can offer.
Do real estate agents charge extra commission?
Hidden fees while negotiating the real estate agent's commission can exist, and typically, hard to find. Why? Because once you negotiate with them you have to pay a lot of attention to see if you'll pay in the end.
How can that happen? Well, a real estate agent may offer you a smaller commission but they can compensate for that by making you pay for conveyancing, for the ad fees and other legal costs that can arise in the process.
That way, looking at the larger picture you'll see all these hidden costs that you accepted to pay for.
If you want to avoid that, the best way to go around it is to negotiate transparently with your agent and be careful what you sign up for.
It's not the real estate agent's desire to fool you into paying more but you'll need to know what cost you'll be taking on.
Is an agent with cheaper commission better?
Getting an agent with cheaper commission rates may sound good when you are starting out and you fear wasting money on the promise of a big sale, but it can do you more harm in the long run.
Generally, the real estate agent that has cheaper commission rates has just started out or paying a slightly higher fee for an agent that gets you a higher ticket price may see you making more in the end. In order to get a leg up on the competition, they offer their service for less. However, this price tag is not a guarantee of their services.
This is not to say that a newbie agent is bad.
Since most are trying to get their names out in the industry, they will do their best to get as many listings for your home and get you the best deal.
You can go with any real estate agent, regardless of their experience, as long as you feel that they can represent you the best and you negotiate their fees.
What commissions do agents my area charge?
Commission in Adelaide
Adelaide, while a metropolitan area with a high density of people, has one of the lowest commission rates in Australia, coming up to a small average of just 2.07%.
This low commission level is created by the fact that commission fees are not regulated by law in the area and there are a lot of real estate agents active here.
In order to win against the competition and have more listings, agents offer very low commissions to potential property owners who want to sell.
Commission in Brisbane
As Queensland's capital, Brisbane is a city that boasts not only a beautiful view but also a particular lifestyle that seems to be completely different from that of other Australian metropolitan cities.
Keeping that in mind, it seems as no surprise that currently, the real estate average commission fee in this area is 2.51%.
Brisbane is slowly becoming the investor's dream city since it has a lot of housing units that can be bought and resold in order to get developmental progress in the area.
Compared to other areas in the country, the commission fees are higher here which shows that, while more people are becoming interested in investing in Brisbane, their real estate industry is not oversaturated yet with agents, meaning that they can impose their own leisure commissions.
Commission in Canberra
As Australia's capital city, Canberra has seen a lot of improvement not only socially and industrially but also in the quality of life for the people living here.
What this means for real estate is that commission fees are bound to be competitive, meaning lower rates for a property owner who wants to sell.
How low you may ask?
Well, the average commission rate in Canberra is 2.15%. While not the lowest in the country, it is significantly lower when we consider that this is the capital city.
If the expansion of Canberra continues according to state plans, we can expect to see these average commission rates drop significantly in the following years due to competition in the industry.
Commission in Hobart
Hobart is generally a beautiful city to live in since it can offer you both that buzzing lifestyle in the city and also an escape in nature, based on the gorgeous natural environments that are close by.
When we compare Hobart to other capital cities in the state, we can see that it has one of the biggest commissions and fee rates.
The average for Hobart comes up to a staggering 2.96% which is likely to decrease over time due to the investor and tourist boom in the area.
Commission in Melbourne
For almost a decade now Melbourne has been deemed the most livable city in the world which means that it is no surprise to know that the real estate industry in the area is quite competitive.
Part of Victoria, real estate agents operate on an imposed system of deregulated fees.
When it comes to the average commission rate for the city, it comes up to an all-time low among other capital cities of just 1.97%.
This is easy to understand when we take into account the boom of investment and of people moving in the city.
Commission in New South Wales
Since New South Wales has a lot of the booming cities in Australia, it is bound to draw a lot of attention from investors and real estate agents.
Knowing the average commission rate in the state can help you not only if you plan to sell property here but also if you want to buy one.
The average commission rate in New South Wales in 2.02%, one of the lowest averages in the country, proving that the competition among real estate agents is pushing them to drive their prices down slowly.
Commission in Perth
As the capital city in Western Australia, Perth offers a lot in terms of educational, cultural and arts institutions, making it a hub of culture.
Since Western Australia is also deregulated, it should come as no surprise to find out that Perth has an average commission rate fee of 2.36%, high in comparison to other capital cities in the country.
However, since Western Australia is generally one of the most expensive areas, it is natural to expect higher than average real estate agents to offer these types of commission fees.
Commission in Queensland
As of 2014, Queensland has deregulated real estate agent fees.
Agents are free to set up their own commission rates in accordance with the quality of their services. As the second-largest and third most populated state in Australia, we are not surprised to report that the average commission fees here are 2.59%, making it one of the three highest averages in the country.
If we compare that to the average country rate of 2.08% in metro areas and 2.50% in regional areas, we can see that Queensland trumps them both.
Commission in South Australia
People who buy or sell properties in South Australia are interested to find locations that are close to shopping districts, to school and to public transport facilities.
Since around 75% of the population here lives in the state capital, it should come as no surprise to note that the average commission rate in South Australia is 2.01%.
While fees are deregulated here, the low commission average is a good indicator that there is a high volume of real estate agents operating in the area.
Commission in Sydney
Sydney is one of the most expensive cities to live in compared to other capital cities in the country.
As the highest populated city in the country, the large number of people that are moving or relocating in the city implies that the real estate industry is booming.
While prices for properties have soared over recent years, the average commission rate is perhaps the lowest in Australia, coming up to an average of 1.86%.
Commission in Tasmania
As the sole island state in Australia, prices here in Tasmania for real estate have been continuously on the rise, with a recorded increase of 3.4%.
Commission and fees here are deregulated and the average commission rate for the state is 2.87%. What this tells us is that there is no real competition among real estate agents to make them drop their fees lower.
Knowing this average will help you if you plan to invest or sell your property in this area.
Commission in Victoria
While second to last on our list, people who own property and want to sell in Victoria will be glad to know that they will receive some good news: the average commission fee in the area is 2.04%.
What this means is that agents are lowering their prices to compete against one another. If we look at the national average of 2.08% in metro areas and 2.50% in regional areas we can see that Victoria's average is below those recorded.
Commission in Western Australia
As Australia's largest state, WA is home to a lot of lands but yet it is trying and failing to compete with other areas in the country.
What this means for people that want to sell is WA is that the average commission rate is at a high of 2.42%. Not only that but house prices have also slightly dropped recently, making Western Australia a difficult area to sell and profit from.