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Are real estate agent commissions too high?

March 3, 2022 11:00 am by Upside

Real estate agent fees – are they too high? It’s one of the biggest issues for those selling their homes. While the argument goes that you need an estate agent in order to get the best price for your home, sometimes, the added value simply gets eaten up in the high fees homeowners pay out to their agents. So, what’s really behind estate agent fees?

How much are real estate agent fees?

The amount that real estate agents charge varies across Australia, and is even different from suburb to suburb. They might be anywhere between 1.5% and 3% of the cost price, with the average real estate agent commission usually hovering around 2-2.5%. However, there’s not a lot of information out there – many traditional estate agents keep their cards close to their chests when it comes to giving out information on their commission, so it’s hard to compare estate agent fees.

However, given the high average value of Australian properties (especially right now in the face of record house prices), it’s clear that many real estate agents are walking away with a large chunk of your sale price.

Why have house agent fees risen?

Low stock levels amid high demand from buyers and above average sales transactions have fuelled a price increase over the last 12 months. Agent commission fees are a percentage of the sale price, so with the rise in Austrailan home prices, naturally so too will agent fees increase.

As an example, house prices in Sydney have increased 33.1% in the last 12 months. The median agent fee to sell a median priced home (based on an average 2% commission rate + $2000 marketing) was $26,056 12 months ago, but is now $34,029 - that’s a $7,973 increase in just a year, with little to no change to how an agent would market and sell your home.

At Upside, believe this pay increase should be in your pocket instead!

best time to sell (1)
Restricted market activity over 2021, coupled with high levels of buyer demand has meant a surge of activity to kick off 2022. It's currently a golden opportunity for sellers looking to make the move before the market changes.

Real estate agent fees across Australia in 2022

What commission you pay makes a big difference - in fact it is the largest single cost associated with a property sale.

Real estate commission fees can depend on a few different factors, some of which are your location, the value of your home, the type of agencies you choose to sell with, as well as the current market conditions.

The cost of selling a home can be very different depending on the area you live in. Typically, real estate commissions in rural areas tend to be higher than in major cities due to the scarcity of housing in more remote regions. Some rates that agents charge will include advertising and marketing costs in their commission structure, while others break these costs out and charge you separately for them.

If you’re planning to sell a property in Australia, it’s important to know the fees and commissions that can come with selling through a traditional real estate agent.

  • Agent commission fees in Sydney in 2022: House prices in Sydney have increased 33.1% in the last 12 months. The median agent fee (based on an average 2% commission rate + $2000 marketing) was $26,056 12 months ago, but is now $34,029 - that’s a $7,973 increase in just a year.
  • Agent commission fees in Melbourne in 2022: House prices in Melbourne have increased 18.6% in the last 12 months. The media agent fee (based on an average 2% commission rate + $2000 marketing) was $20,582 just a year ago, but is now $24,032 - that’s a $3,450 increase.
  • Agent commission fees in Brisbane in 2022 have increased 25.7% in the last 12 months. The median agent fee (based on an average 2% commission rate + $2000 marketing) was $14,597 12 months ago. It is now $17,841 - a $3,244 increase.
  • Agent commission fees in Canberra in 2022: House prices in Canberra rose 36.6% in the last 12 months. The median agent fee (based on an average 2% commission rate + $2000 marketing) was $19,247 12 months ago. It is now $25,567 - a $6,320 increase.

With Upside, no matter how high a property sale price is, our customers pay the same low fee, including marketing costs. We charge a flat, cheaper fee that covers all the essentials for selling your home. Get in touch with Upside today to find out how we can maximise your sale price when you sell your property.

You can find out more about our fees and processes here.

What do real estate agents’ fees pay for?

Now, the fees you pay to an estate agent don’t just go direct to the agent. You’re paying for paperwork, administration, and research, not to mention the agents’ time and skill, which can be significant. There might also be a property valuation and auctioneer’s fee to consider. However, with many homeowners paying extra for marketing via the major websites and printed materials, as well as home styling and photography, you might start to wonder exactly where all your money goes.

How to choose the best agent for you:

  • Shop around: Don't go for the first agent you meet with; it's important to get different opinions and to look into the various strengths and offerings that each agent has.
  • Negotiate: Our advice would be to ask the agent if they are willing to set the fee so you know what it’s going to cost you at the very beginning and the best way to understand how hard the agent will work for the best price is read their vendor/owner reviews on sites like 'Rate My Agent'
  • Don’t be fooled by bells, whistles and fancy cars: A fancy office doesn’t mean you’ll get the best offering, or biggest database.
  • Ask about their marketing strategy: Make sure you understand how the agent's selling strategy is likely to get the best result for you and always check whether there are any additional or hidden marketing costs.

Is there a better way?

Many people assume that you need to pay out tens of thousands of dollars for an agent to sell your home, it’s possible to do things differently. While many traditional agencies can be a little – well – traditional, newer models like a flat fee service are changing the way real estate gets sold in Australia.

How does a flat fee model work?

More modern agencies keep costs down by having a central hub to manage marketing, administration, and customer service, leaving the agents to do what they do well – manage open homes, negotiate a great price, and sell your home. With a flat fee for selling your home, you can save a lot compared to the average price.

By leveraging technology and a fresh, customer-centric approach, newer agencies are better placed to get both a good deal for sellers and also offer a fair fee.

Unlike traditional agents, who have many offices with high upkeep costs, Upside have one head office that takes care of all the admin and marketing. As we run everything through one head office we also get volume discounts on printing an advertising. We pass all of these savings onto you.

The agents we hire have many years of experience with most having worked as a traditional real estate agent in the same suburb before they joined Upside. Our agents work in the areas where they live, so they are well and truly local.

Why do you need to sell fixed-fee in this market?

Across Australia right now, for every home listed, 1.2 homes are sold. Record prices are being achieved off the back of low supply and high demand. Selling in this hot market should benefit you, instead of putting extra commissions into an agent’s pocket.

Talk to your local Upside agent to see how your local suburb market has been performing, and what your home could be worth right now .

Upside

Upside is an Australian-owned, full-service real estate agency with local real estate agents, low fixed fees and zero commission. Our standard is other agents’ ‘extras’, delivering vendors a complete agent managed service including a full appraisal, open home management, copywriting, photography, signage and advertising. It's the way real estate should be.

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