Negotiating Your Real Estate Agent’s Commission

Real estate agents don’t work for charity and you won’t need reminding of that fact. Everything they do for the client is ultimately self-serving: quid pro quo. And that’s axiomatic. You won’t get free wheel alignment from your mechanic. Your builder won’t simply accept a sincere “thank you” for services rendered. There is no way on earth that your solicitor is handing out free legal advice. Likewise, your real estate agent is strictly in it for the shekels. They’re selling you their services. You’re paying for their skills, experience and knowledge. Every contact in their Rolodex adds value to what the real estate agent finally bills you for selling your property. However, when it comes to the size of their commission we enter a grey area. Mind you, it’s not too vague, since standard rates apply. But most people don’t realise that you can negotiate your real estate agent’s fee.

Your Real Estate Agent’s Commission

An agent’s commission can be either fixed or tiered. The first is a set percentage of the eventual selling price of the property. This invariably excludes monies spent on marketing. The second is a percentage of the final price. This sliding scale serves as an incentive for agents to achieve the highest possible sales price for their clients. The seller negotiates their agent’s commission beforehand so that from the outset they each know which page they’re on. Most Australian states have deregulated commission structures. This means that real estate agents establish their fee structures. However, there is a base guideline, and it varies according to location. Real estate agents working in regional areas charge more. The rule of thumb is an average commission of between 2% and 3%. Lately, it’s hitting around %4 and higher. Marketing and advertising might constitute a separate fee from the sales commission.

Real estate agents working in regional areas tend to be scarcer than in the cities. As such, they’re handling more properties over a larger area, hence the higher scale. This also applies to less affluent areas. For instance, in Sydney, the rate might be 2.1%, while outside of Sydney, in Orange, you could pay 3%. That will mean a bigger bite out of a smaller sales price. In this case, the law of the marketplace, supply and demand favours the real estate agent. You can tell right away that there is a value variance between the states as well as the cities and regions. For a rough idea of commission rates by state, click on the following links: Bear in mind that commissions and fees do change each year and are subject to other factors. Again, we stress that you can negotiate the commission and these are just guides.

Real Estate Agent Commissions: What You Need To Know

The only way to avoid paying a real estate agent’s fee is by selling your property privately. Many home sellers manage to sell their houses off-listing and earn a sweet return. Yet, can we be sure? Perhaps the seller was a formidable negotiator, to begin with. Maybe they had experience in selling real estate at some point. The vast majority will find that negotiating is a tricky game, especially if the buyer plays hardball. Do those private vendors know that they secured the best possible sales price for their properties? You’ll always do better with a master haggler in your corner. Having been assured of that, when does the agent’s commission become due? Some agents charge upfront fees for advertising. This is a separate payment from the commission. On the other hand, the agent invariably extracts their commission once the property is paid for in full.

When negotiating the fee with the real estate agent ensure you’re apprised of all charges. Get this in writing just in case your agent turns out to be a slippery eel. They’re a real estate agent after all. Bear in mind there is no cooling-off period after signing a sales authority. In which case, you mustn’t lend your signature to anything until you’re satisfied the agent is on the level. You don’t want to get stuck with a sleazy hack, especially if they’re lousy at negotiating a sale. Therefore, it pays to shop around for the right agent. By no means sign with the first agent that you contact unless they’ve got an impeccable reputation. Ask plenty of questions and don’t stop asking them until you’re convinced the agent knows the answers. You’ll not be serving your cause if you negotiate a pleasing commission structure with a sub-performing bottom feeder.

How To Negotiate Your Real Estate Agent’s Commission

If you’re not used to negotiating it can prove daunting at first. That’s why you should practise in front of a mirror. Record yourself reading from a script and play it back. How do you sound? You want to hear confidence and precision in your diction. You need to take command of the situation. Observe the actors in the shows that you like: characters with a strong presence. Film yourself once you’ve got it down pat. Watch it back and see how come across. How will this help? You’ll feel more self-assured when the time comes to talk turkey with the pilgrims, so to speak. Real estate agents are used to taking advantage of weak communicators. You don’t want to project a shy presence. They may not be the most corrupt of agents. But if they see a sucker coming they mightn’t be able to help themselves.

When you’re face to face with your agent and feeling them out about fees rely on your gut instinct. Can they be entrusted with selling your biggest asset? You’ve investigated your character now what about theirs? What can you tell from the signals they’re giving off? Is this person likely to negotiate their way out of a wet paper bag? Do they have the grit, the right stuff? Can they talk the paint off a brand new car? Keep in mind that the cheapest agent won’t necessarily guarantee you the best price. Subsequently, don’t use the rate of their commission as a guide to whether or not you engage with them. Consider, too, the factors at play that determine your property price. Research the average property price in your suburb. Compare whether or not your property is better located, or bigger. All these factors will influence the ultimate price structure.


You were initially counting every cent from what you hoped to get from selling your property. Then it sold. Part of your soul begrudges ever having to pay your real estate agent. After all, the house sold itself. All they did was hammer a “for sale” sign into your front yard. But that’s not true: they built up buyer interest in your property and advised you on its presentation. They dipped into their Rolodex of contacts and helped to spread the word. In the end, they got more than you bargained for and now it’s time to pay the piper. A fair trade. And all because you negotiated a reasonable commission with your real estate agent. If you’re looking to sell your property and need the perfect agent to negotiate a fee structure contact us! Perfect Agent will do the heavy lifting and find the right agent for you!