Advertising costs when selling a property – are they optional or necessary?

When you are looking to sell your home, it can often be an emotional process. Often time’s homeowners believe that their home is worth more than it actually is because of the emotional ties that they have to the property. Aside from being an emotional rollercoaster, selling your home can also be extremely stressful and expensive. Often homeowners are forced to review their finances, and make the move happen for as little as possible. One of the most expensive costs when moving, aside from purchasing the new property, are the real estate agents fees and commission.

Throughout the country, real estate fees and commission rates vary, depending on where you are, with Tasmania having the highest with an average real estate commission rate of 3.26%, and South Australia having the lowest average real estate commission rate at 2.07%. Today, the national average is sitting around 2.22%.  Due to the fact that commission levels vary state by state, it is important to note that these levels are only averages, and that as of December 2014, these rates were deregulated, giving real estate agents complete control over what they decide to charge their clients.  While the idea of rates being deregulated, and completely up to the agent themselves might seem slightly daunting to some people hoping to sell their home, the fact that the rates are up to the discretion of the real estate agent means that there is often more room for negotiation.

If you decide to negotiate in hopes of getting a better deal with your real estate agent, it is important to note that often times, as opposed to necessarily lowering their percentage rate, they will suggest these alternative fee structures.

Fixed Rate

A fixed rate fee structure is an agreed upon amount which you agree to pay your real estate agent no matter how long the sale takes, or how much lower the sale prices ends up being. This fee structure offers people who are looking to sell their home, and move on a set budget the freedom of knowing exactly what their real estate agent is charging, without waiting to find out the final sale price. One major drawback of fee structure is that the real estate agent does not have what many view as a commission incentive to sell your home for more money. With a commission, a smaller sale means a smaller paycheck; whereas, with the fixed rate structure, it does not matter what your home sells for, the agent gets the agreed upon amount.

Tiered Percentage

A tiered percentage fee structure is another popular method of negotiating a real estate agents fee. This structure operates on a sliding scale, which unlike the fixed rate structure described above, often encourages real estate agents to push for a more profitable sale. A tiered percentage structure works like this: You and your real estate agent might agree upon a 2% commission rate for a sale of $480,000 or under. After that point there would be another agreed upon amount for any additional profit. Now say your house were to sell for $500,000. In the end it would end up working out something like this:

$480,000 x 2% = $9,600
$20,000 x 10% = $2,000
$9,600 + $2,000 = $11,600

Meaning that on your $500,000 sale, you would be paying a real estate commission of $11,600.

Another thing that many homeowners that are looking to move do not realize, is that no matter how you work out your real estate commission and fees, you have to pay GST on top of that, increasing the price approximate 10% more. Moving is not something that can be done without taking the time to plan, and sort out all of the details.

This is why many professionals suggest doing your research, and shopping around. Talk to different real estate agents about their commission rates and fees, and make sure that you find the agent that is right for you. Real estate is a huge investment, and not one to be taken lightly. Even if you are only able to save yourself 1% in real estate commission fees, you will be coming out ahead, and saving yourself a lot of money.

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