One of the biggest costs when selling your home is the real estate agent’s commission. Commission is a percentage of the total sale price that compensates the agent representing you and the buyer’s agent. Understanding commission rates can help you pick the best agent while budgeting for this large expense.
The standard real estate commission on the sale of a home is between 5% to 6% of the final sale price. For example, if you sell your home for $500,000, a 5% commission would amount to $25,000 paid out of proceeds.
This commission is typically split between the listing agent and buyer’s agent. The listing agent representing you may get 2.5% to 3%, while the buyer’s agent would receive 2% to 3%. Arrangements can vary, but 60/40 splits are common.
Some key factors impact the commission percentage:
- Location: Commission rates are competitive depending on area. Hervey Bay real estate commissions may differ from Sydney or Melbourne.
- Property value: Luxury homes or higher priced properties may have lower commission percentages. Agents may negotiate lower rates for higher sale prices.
- Level of service: Full-service listings get higher rates than MLS-only or limited service listings.
- Experience: Newer agents tend to charge lower commissions as they build their business.
- Market conditions: Commissions may be lower in buyer’s markets when homes sell faster. In competitive markets, rates often stay higher.
Agents also charge fees for services like staging, photography, and marketing. Understand all costs the agent expects you to cover ahead of listing.
As a seller, you can try to negotiate a reduced commission rate, particularly if you are working with a new agent. However, experienced top-producing agents likely won’t cut rates too low, as their services warrant higher pay.
The ultimate priority is getting the highest offer and best terms on the sale. A skilled agent earns their commission by achieving top dollar for your home. Just balance commission costs with the agent’s track record and offerings when selecting representation.