Selling your home requires the appointment of a real estate agent. It is important to interview up to three real estate agents during the interview and selection process, preferably meeting them at your property. Each agent will explain their selling process, sales strategies and fee structures – allowing you to determine who is the best agent to sell your property.
How much commission do agents charge?
Real estate agents receive a % commission on the total value of the property sale price. This percentage will vary from state to state, depend on the property value and prevailing market conditions. While 1.5% to 3% real estate commission fees on the property sale price can be used as a general guide, when auction clearances and property sales volumes are down, real estate agents often lower commission structures. This may include a tiered commission rate based on achieving certain selling prices. This incentivises real estate agents to achieve the maximum sale price of your property and does not penalise you if the sale price falls below a minimum reserve price that you set.
Can agents charge a commission bonus?
For high end luxury properties, real estate agents often settle for commissions lower than 1.5%. Real estate agents negotiate for a living and so be sure to ask if they would be willing to be flexible on their commission structure. It is a delicate balance between incentivising the agent with the right commission. Remember, the lowest commission for selling your home offered by an agent does not always guarantee the highest selling price. Some real estate agents may want to lower the commission yet be rewarded with a bonus if they achieve a sale above a certain reserve.
When do I pay the real estate agent commissions?
It is typical that when signing the property contract of sale that 10% of the agreed property sale price is payable which the real estate agency deposits into their escrow account. Newly built properties may accept 5%. Upon settlement of the property, when funds are paid in full, the real estate agent typically receives their commission from deducting commission and fees from the escrowed funds. The balance of the funds are paid to you on settlement.
Understanding Marketing Package Fees
Most agents will have several property selling marketing packages for you to choose from. These include a mix of photography and copywriting and floor plan, signboard or flyers and listings on Realestate.com.au and Domain. It is important that you ask upfront what the marketing package entails and the benefits of each package. These fees are in addition to the real estate commission and often are required to be paid upfront. Depending on the agent and type of property, you may be able to pay the marketing package fee on settlement of the property. Be sure to ask your agent during the interview stage if marketing package fees can be paid out at the time of settlement. This will relieve the upfront cost which can often run into several thousands of dollars.
Do I need to style my property?
On average, real estate agents will often say that ‘styling your property’ with the right furniture, artwork and soft home furnishings (rugs, cushions, etc) will achieve a higher selling price. Stylists create a mood and theme of your home whether it is for executives, family, couples or even a beach feel. Styling your home can range from $5,000 to $8,000 so it is a considered purchase and something to be discussed with your agent during the screening process. One tip is to think about what furniture your new home will require and buy it as part of the styling. The benefit is that the furniture is used to help sell your existing home while being able to be used in your new home. Be sure to speak with your home stylists about this in advance.
Real Estate Auction Fees
Most real estate agent proposals to sell your home will include real estate auction fees. However, it may be that your property sells prior to auction and while some agents may discount this fee, it is not common to do so. Auction dates bring forth pre-emptive offers and agents have to book auctioneers in advance so their costs are fixed ahead of time.
Lender Discharge Fees
While not a fee charged by real estate agents, selling your home will often incur a discharge or early exit fee on a mortgage that your bank or lending institution will change. It is important to speak to your mortgage holder and understand the discharge process as your solicitor will require bank account details where funds need to be deposited too as well.
Conveyancer and Solicitor Fees
And of course, the solicitor. You will need to engage a solicitor who can act as the conveyancing professional during the property sale process. Their job is to review the contract of sale, ensure all property titles are checked, prepare stamp duty costs, reconcile pro-rata cost for utilities and most importantly, attend the settlement to ensure funds are exchanged on the appointed date and time. Your solicitor will advise you of all the settlement funds, expenses and payments required. Be sure to ask for a statement at the close of the property transaction.
Finally, if you have any concerns at all about charges or commissions, you should check that the agent is a member of their local Real Estate Institute of Australia, which requires them to abide by a specific set of guidelines and conduct.