There were some discussions on Sales Commissions on this forum but they were over 10 years old so I thought I would start a new discussion.
I am about to put my $1.4m property on the market in Brisbane. A Real Estate agent is kidding himself if he thinks I am paying him 3.5% to sell my property ($49,000).
What is a more reasonable price for a sale of a house at this value? Considering they are having 10-20 onsite meetings, using advertising that I am also paying for and we will be done and dusted in a number of weeks. The effort doesn’t equal $50k, more like $15k.
This is why they are all driving BMW’s…
Thoughts?
Hi Vyaw,
Back in the day (pre-GST days – circa 1990’s) the word in Brisbane was “Add $18k to the Sale Price then take 2.5% of that total”. The wording went something like “That is the maximum amount an RE agent can charge for a property sale”. Naturally enough, the maximum became the norm over time. Even though the word was “you may negotiate” we didn’t find many RE agents that would.
I thought at 2.5% they should be happy, as, with any/every lift in values they would get a pay increase (nice work if you can get it). Back when we started buying, the house prices were around $100k, so 2.5% wasn’t too onerous at all ($2500 commission). The year 2000 saw GST introduced so (naturally) the 2.5% became 2.75%. From the 1990’s through to 2010 though median values in Brisbane hiked up several times – from $100k to around $450k so they were being well paid still at their 2.5% (with the extra 0.25% as the GST going to the Govt).
Even in those times I’d thought that those selling higher priced houses should/could negotiate a better deal as it takes almost as much for an agent to sell a $500k house as a $1500k one, surely. Why should an agent get 3 times as much for fractionally more work?
And now, you say they want 3.5%? Some of that will be GST but even their 3.18% slice is a huge lift on 2.5% – let’s see, that’s a 27% increase on “the old norm” AND they have that “higher value sale” advantage too. So, I’m with you – I can’t see how they deserve such a large slice. And aren’t their costs today lower than ever, with the Internet advertising and all? They want it all – did they boost their percentage to make up for recent falls in value? If not, WHAT is their justification?
And what do the REIQ say about it – ask them “what happened to that maximum percentage rate?” Has the law been changed? Or do the Agents know you’ll likely need to wear a 10% drop in asking price, and they want their commission to be more plumped up to avoid taking the hit along with you????? Cheeky blighters…. whichever excuse they come up with.
It may be worth ringing around – like, check with Gecko – do they still do a “flat rate to sell”? It’s worth spending a bit of time to gather facts to offer to any agent who is pushing a 3.5% rate !! Like with Bunnings – have them match any “lower rate you find”. :) Good luck,
Benny
I think a sliding scale is still suitable. The higher they get the more they get.
1% is more aligned. $14k to sell my house ($1.4m), for 3 weeks work.
Am I the only one that thinks this is a more fair figure?
Personally as a Licensed Agent i wouldn’t allow my team to take a listing at 1% plus GST as i value their time a lot higher than that.
I have 2 full time sales agents working out of our Noosa office and 5% of the first $18,000 and then 2.5% is standard even on the higher priced properties ($10M upwards).
If you find someone who is prepared to take the listing at 1% and you are happy with them go for it.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
but Richard, $50k for 3 weeks part time work for 2 agents? Come on.
For $50k, I would expect 4 dedicated people for 3 weeks.
Hi Vyaw,
Well, it looks like the 2.5% (add GST to that, so 2.75%) IS still the norm in Qld eh? So that would save you $10k if you run with an agent who isn’t wanting to stiff you for 3.5% like the one you first tried.
Benny
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