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Picture this – you’ve put your property
on the market, advertised it,
considered offers, negotiated with a
buyer and signed a contract. Settlement
day comes and you’re daydreaming about
the big, fat cheque that’s on its way.
Then you remember that a chunk of that
cash is going to the agent in commission.
They’ve done their job – hopefully well –
and deserve to be paid. But the amount you
hand over is open to negotiation... right?
In theory, experts agree it is. Each state
and territory has its own legislation on
how the commission should be calculated,
held and dispersed. All allow the seller and
agent to negotiate on the amount.
When you’re talking about property,
whether it be your home or an investment,
it may seem worthwhile to drive a
¿ HOW COMMON IS IT?
The sale commission paid to an agent
depends on the state or territory you’re
in, but it’s usually around two to three per
cent of the sale price. It could be higher if
marketing or other costs are bundled.
An agent’s fee is often negotiable and
some are happy to sit down and work out
a deal with the seller, according to author,
investment adviser and mortgage broker,
The lack of consistency around a
standard commission charged is a likely
reason that many investors have a crack at
negotiating it, she believes.
Micahel Yardney, founder of Metropole
Property Strategists, says it’s fairly common
for sellers to try to haggle.
Why? For those selling a home, it’s their
pride and joy, and by far their biggest
asset, Yardney explains. For those with an
investment property on the market, it’s a
tool designed purely to deliver a return.
For either seller type, he believes it’s
natural to want to save on the costs
associated and to keep more of the
proceeds for themselves.
So, haggling can be common. But what
sort of commission are we talking? How
much does it cost to sell your property?
Real Estate Institute of Australia
president Peter Bushby says the
deregulated nature of agent commissions
means there’s no one ‘going rate’ and
the charges can vary, depending on the
property, agency and state of the market.
“(It’s) a free market where it’s up to the
parties to establish a workable price for the
service,” Bushby says.
Say you’re paying around three per cent
of the sale price, which tends to be what
most sellers fork out, the amount isn’t very
big in the scheme of things. For a property
that goes for $300,000, that’s a commission
to the agent of $9000.
“However the agent doesn’t get all
of this,” Slack-Smith says. “The actual
principal of the agency where they work
would get 50 to 70 per cent.”
Yardney is fairly definitive when he
declares that the cheapest agent is rarely
the one that’ll get you the best price
for your property. In fact, he’s certain
that’s almost never the case. But if
you’re determined to get a better deal,
he suggests negotiating in a respectful
manner. At the end of the day, you need
to keep your agent on side and in your
corner. It’s a fine line between bargaining
It’s important to be realistic. Keep in
mind the agent’s cut of the commission
and act fairly. And be smart, he says. Even
if you’re successful in shaving a bit off the
fee, that’s no guarantee of the quality of
service you’ll receive, Yardney says.
“Picking an agent based on their
commission probably isn’t a good idea. For
one, agents only get paid if they sell your
property and they’re driven by incentive
and money. If you’re hounding them on
cost from the beginning, they might not
be motivated to work hard.”
Author and property lecturer Peter
Koulizos agrees. While he has heard
stories of sellers successfully negotiating
an agent’s commission, he doesn’t do it.
“I believe you should pay a person what
they’re worth and I’m more interested in
the service that’s being provided. If they’re
going to make an extra effort, having
inspections several times a week and
upping the opportunities for exposure to
the market, I’m happy to pay them what
they think they’re worth.”
It’s never wise to overpay for services,
he points out, but if you work an agent
down too much and they’ve got other
listings that’ll deliver a higher pay day,
don’t be surprised if yours doesn’t get as
“Say you save an extra $1000 on the
When it comes to selling property, everyone wants the best price for the lowest
possible expense. But how open to negotiation is your real estate agent likely to be?
Experts reveal the pros and cons of haggling on costs and strategies to do it well.
FEATURE // HOW TO NEGOTIATE ON COSTS
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