HOW MUCH REAL ESTATE COMMISSION SHOULD I PAY?
Real estate commission generally ranges from 2.5% to 3.95% of your sale price up to the first $350-$400k then 2%-2.5% on the remainder of the sale price. There are a few variations either side.
To work out how much it might cost to sell your house, we have used the above percentages and applied them to various sale prices below as examples.
Beneath these examples, we provide some solid advice about negotiating commission and fees, how to avoid unnecesary expenses and achieve a prime sale price.
How much does it cost to sell a house?
The following examples are based on the first $350,000 at either 2.5% or 3.5% and anything over and above $350,000 is based on 2%.
350,000 sale price - 2.5% commission = 8,750 | 3.5% commission = 12,250
450,000 sale price - 2.5% commission = 10,750 | 3.5% commission = 14250
550,000 sale price - 2.5% commission = 12,750 | 3.5% commission = 16,250
650,000 sale price - 2.5% commission = 14,750 | 3.5% commission = 18,250
750,000 sale price - 2.5% commission = 16,750 | 3.5% commission = 20,250
850,000 sale price - 2.5% commission = 18,750 | 3.5% commission = 22,250
950,000 sale price - 2.5% commission = 20,750 | 3.5% commission = 24,250
$1.5M sale price - 2.5% commission = 31,750 | 3.5% commission = 35,250
$2M sale price - 2.5% commission = 41,750 | 3.5% commission = 42,250
Additional to commission fees there will also likely be advertising fees which varies widely.
Important Tip: Ensure real estate agents are proven competent prior to requesting property appraisals: then negotiate - not the other way around.
Need help selling your house during the pandemic? We can help, call us now on 0800 789 532
Are real estate commission fees are negotiable?
When selling a house, all of the following are negotiable:
- real estate commission
- marketing and advertising fees
- the term of your agency agreement
- the marketing and advertising plan
- and of course the sale price
Don't however base your decision entirely on a percentage fee. An unsuitable real estate agent can cost you more in the sale price than you would ever pay in commission.
Real estate commission and fees are charged the same whether you use a competent agent with substantial real estate experience or use a newly qualified, inexperienced, real estate agent although their portion of the commission may vary.
It has been well proven that competent real estate agents can negotiate optimum sale prices with buyers whose situations are not always straight foward.
In the Covid-19 era especially, the capability of a real estate agent to 'project manage' a property sale for you, has never been more important.
To be sure, request a shortlist of vetted real estate agents so you can review and compare agents first.
How much do real estate agents get paid?
Before you start negotiating with a real estate agent, be aware that each real estate company has its own structure for this.
Generally however, individual agents receive around 50% of the total commission charged. The remaining 50% goes to the agency, although sometimes senior level real estate agents receive a higher percentage.
When is the best time to negotiate commission and fees?
Negotiating real estate commission can be confronting. We believe that the best time to discuss this with an agent is after they have presented their comparative market appraisal so you know exactly what you will get, for the commission they will charge you. They are generally less affronted at this stage having already invested time into the property appraisal process for you.
Some real estate agents do not have the delegated authority to negotiate real estate commission with vendors and others simply refuse to negotiate.
When is real estate commission paid?
Real estate commission is almost always paid once a sale and purchase agreement has gone unconditional and the deposit has been paid.
Other real estate fees, such as agreed advertising costs, can be paid either up front or negotiated with your real estate agent to be paid on completion of the sale. Additionally, some real estate agents offer complementary advertising and marketing services.
Your property lawyer should summarise all incoming and outgoing transactions so you will be clear about these.
How to prevent unnecessary real estate expenses
These 10 tips for paying the lowest real estate fees and expenses are a real money-saver and structured simply by outlining common problems, what you can do to avoid them and solutions. It also includes how to add 10-15% value to your expected sale price and how you can influence more buyer inquiry.
The higher the volume of home buyer inquiry, the more likely your real estate agent will be in a position to generate multiple offers. This in turn can influence a higher sale price.
Choosing the right real estate agent can save you a small fortune
You can influence the amount of potential buyer inquiry your listing will get based on your pre-market decisions. Never underestimate the importance of these decisions.
Agent Finder NZ has been vetting the most competent real estate agents for hundreds of Kiwis nationwide since 2009 so let us help you too and it's a completely free service for all home sellers.
If you need other information or would like a shortlist of vetted real estate agents, get in touch or call 0800 789 532
Article Updated July 30 2020 | About