How Much Are Agent Fees & Commissions
Real estate agent fees are a reality that you have to deal with if you are so long as you decide to use a real estate agent to sell or rent your property for you. The thing to understand though is that there is no average fees that you can expect to pay. Real estate agents charge differently from state to state and there is a big difference between the highest and the lowest. If you assume a property worth $500,000, you can expect to pay commission of about $10,250 (2.07%) in New South Wales while for the same property in Tasmania would require a commission amount of $16,250 (3.25%). As you can see, that’s a difference of $6,000 – very substantial amount of money.
There are charts online that show how much you can expect to pay in commission by region. Once you find out what the rate in your area is, take the value that you expect your property to fetch and multiply to get what you might pay on average.
Your realtor expects to be paid his agent commissions after the house is sold. If for any reason you have to hand him money before he sells, like for marketing and advertising, you must insist that you sign a contract to indicate that you handed him the funds and what they were for. Insist on doing proper accounting at the end of the sale – compare the amount that you gave him to receipts of his expenses and any money that has remained.
Because you want to take away as much money as possible from the sale, you should be ready to negotiate with your agent for a lower fee. There are 2 ways that agents will suggest when you negotiate with them:
Fixed Rate Commission
You will pay the agent a fixed rate after the sale no matter how much he sells it for. This is good because you know for sure what you are paying right from the beginning and also because the agent will want to get rid of the property faster. He might, however, not negotiate very much on your behalf to fetch a better price for your property – he has no motivation.
Tiered / Percentage Based Commission
This is a good way to encourage your agent to sell your property for the best price possible. Let’s say that your property is worth $500,000. You can offer him 2% commission if he sells for $480,000 or less. You then offer him 10% on every additional $20,000 he can bring in. He will make a lot more commission but at the same time, he will want to sell for more which means that you get to benefit too.
Is There A Way To Save On Real Estate Agent Fees?
Indeed there is. You can do a private sale. Private sales are conducted online and the idea is to list your property and expose it to as many people as possible. There are several websites that are already doing this. For a fee far less than you would pay an agent, they list your property on the biest property websites in Australia. These websites have worked hard to get targeted traffic (the kind of traffic that is ready to buy so long as they find what they are looking for).
The problem, however, is that these websites don’t allow people who don’t have a real estate agent license. That is why you need a For Sale By Owner website. These are set up by people who have a license and they do the listing on the bigger websites for you. They charge a lot less than real estate agents do and they are also very effective in finding buyers and tenants fast; the level of exposure means that it won’t be long before you are contacted by prospective buyers. They also come with an added advantage – you take control of the process. You interview all prospects yourself and you also negotiate price yourself. This gives you the kind of control that your real estate agent takes away from you.
If you have made up your mind to sell your property, find out how much you would have to pay a real estate agent and compare it to what you would have to pay a For Sale By Owner website before you make a decision.