NEGOTIATING REAL ESTATE COMMISSION AND FEES

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Every real estate company has its own structure for charging commission fees and other sales and marketing costs.

All of these are negotiable. But it is important to do this negotiation before signing any agency agreement with an agent or company.

Also, it is important to know that real estate agents are obliged to provide accurate market appraisals upon which the cost estimates and commission fees can be accurately determined and planned for.

The safest option for getting accurate appraisal information is to engage a vetted real estate agent or a registered valuer.

 

Collate all costs and information before negotiating commission fees

You can't sell a secret, so advertising is necessary to expose your property to the broadest buyer markets and qualified buyers. 

Real estate agents are obliged to provide you with an itemised summary of advertising expenses recommended which you need to sign off. Check these and any amendments.

Check out the graph in this article which demonstrates a typical pattern of interest for most sellers.

 

Costs of selling a house can vary but they generally include:

  • Commission – payable only on an unconditional sale.
  • Auctioneer fee (if relevant) – mostly payable up front and at the time of signing a listing authority.
  • Administration fee – usually $500 payable with the commission.
  • Photography – around $200 - $300 for still images. Some real estate companies provide complementary professional photography but be sure to establish that you own the photos should you need them again.
  • Video production – prices vary considerably and are payable directly to the videographer via an invoice addressed to you or to the agent. The agent must disclose any commission added but most just pass the actual fee on.
  • Full market valuation – upwards of around $700 payable directly to an independently chosen registered valuer via an invoice addressed to you. The valuation must be addressed to you.
  • Advertising – can range from around $600 to $10,000+ although $1000-$2000 is common. Advertising is payable directly to the advertiser via invoice addressed directly to you or your agent. Ask to see the invoice as mark-up by an agent must be disclosed to you.

 

Real Estate Agents' obligations to vendors

Once an agent has visited the property you are selling, they are obliged to provide you with the following in writing:

  • a comparative market appraisal
  • a recommended method of sale
  • a marketing and advertising plan
  • a summary of all expenses itemised

The research and production of all this information up front should be provided at no cost to you.

Be absolutely clear about all of the costs involved in the sale of your property. Understand whether costs are GST inclusive or exclusive.

 

Incentives that may be offered

  • Some real estate agents will refund the cost of marketing from the commission paid on an unconditional sale
  • Some real estate agents will provide most of the marketing expenses complementary
  • Some real estate agents might negotiate commission on a quick sale
  • Some real estate agents pay for 100% of marketing but be clear about exactly what it entails and whether it will be sufficient to get your property noticed

You might find this article will help to negotiate commission and fees with a real estate agent. 

 

Selling a house tips and tricks

Incorrect property appraisals and/or the unrealistic price expectations of vendors can ruin the sale, your relationship and the overall strategy to sell your property.  Be sure that you and your agent are on the same page about price  before you engage their services.

  • If the agent's estimate in your appraisal seems too good to be true, it might be. 
  • All the expenses can be included in the negotiation process.

  • Be careful not to jump over pounds to save pennies.

  • The hidden or unforeseen costs of a poor real estate experience or a low sale price can have far greater financial impact than the commission cost alone.

  • An unsold property at the end of a real estate agency contract is something to avoid but unfortunately it happens, mostly unnecessarily. Plan ahead and choose your agent carefully.

  • Ten years of data has enabled us to determine properties most at risk of not selling.

 

How to avoid loss, offset costs and optimise your sale price

  • The all-inclusive costs of selling a houses can be expensive so when investing in the process, consider the opportunities and pitfalls and ensure you do everything right the first time around.
  • The cost of selling a second time can end up being much more than what you were trying to save in the first place.
  • If how much money equity you are left with is your priority, then focus first on selecting the right real estate agent. The monetary value of a vetted real estate agent with strong marketing and negotiation skills can far outweigh the cost of commission.  
  • Focus on what you can do to elevate buyers' perceptions of your home rather than bicker over a percentage point. 
  • Ensure you know how to avoid paying double commission.
  • Negotiate real estate commission and other expenses with your agent but not at the expense of competence.

*All estimates and figures in this article are written as a guide and general information only. Each real estate company has it's own cost structures to sellers.

For guides, more information or advice, Get In Touch with us first or call 0800 789 532. It's a free service.

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