Agents Commission

[Francesca C]

Hi Everyone

I dont know how to set up a survey however was wondering: how much commission you all pay to agents when selling a property?

I usually got 3.3% including GST and negotiate less for land

 

[wylie]

In Brisbane it is generally the rule that you add $18,000 to the sale price (because the commission on the first $18K is higher) and divide the total by 2.5% and I think GST is added on top of that. (This is from memory, hope I got it right.)

Of course, some agencies do charge less and there have been many posts about this if you do a search.

 

[urban cowboy]

correct wylie...

Qld commissions are capped at 5% of 1st $18,000 and 2.5% of the balance.

i.e. (sale price + $18k)/40 +GST.

cheers
UC

 

[wylie]

Hi Urban.

Just speaking to a new agent today in the Moorooka area and he said things are slowing down. Have to say though that he has only one sale under his belt because he is very new.

Are you finding things slowing down at all over your neck of the woods?

 

[BenG]

I was agent in Sydney a few years back but still think that commision is between 2 and 3percent

 

[shuggy]

An agent in Brunswick, Melbourne recently told me his standard fee is 2%.

... or he said we could negotiate an incentive structure... he suggested 1.5% up to $550k, then 10% of anything over this.

I've attached a spreadsheet to show the difference between paying:

A) 2% flat commission,
B) 1.5% commission to $550k, then 10% of anything over that,
C) 1.5% commission to $550k, then 2% of anything over that (i don't think he'll like this one!)

I've based the selling range from $500k to $590k but you can enter your own figures and use the same formulas.

I think my figures are correct. Please advise if anything needs editing.

You'll notice i've also tried to work out my net balance after paying CGT but i'm not sure if using a figure of 28% for tax is ok.

Of the 3 options, i think B) looks the best as you pay less commission than a 2% flat fee unless it sells for above $580k.

 

[dingo pro]

Hi Everyone

I dont know how to set up a survey however was wondering: how much commission you all pay to agents when selling a property?

I usually got 3.3% including GST and negotiate less for land

Hi Fran, It varies considerably. My inlaws OR outlaws as I call them are currently selling a house in Landsdale for mid $500's and the agent is working for a flat $10k PLUS marketing expenses. (He is with the Professionals and although it has been on the market for some time he appears to be doing a reasonable job with many home opens etc.)

I have just put a house on the market with battlexe approval in Armadale and the agent tried to charge 3.8% which was what I had worked out when he showed me their "STANDARD PAYMENT STRUCTURE". I told him to get stuffed but as he was a good agent I went back and negotiated 3% with him paying all advertising etc. It has appeared in the homebuyer , and the weekend papers at his expense. If his contract elapses and it hasn't sold I dont pay a cent if I dont renew with him OR if it sells.

be careful not to negotiate too hard because if you screw them down on commission and they have many similar properties on their books they wont be grabbing yours first when a potential buyer comes along.

I have also in the past orddered a tiered scale where if they get $X I pay them 2.5%, if they get $Y I pay them $3% and if they get $Z I pay them 3.5%. the same incentive can be given for time frames although again be careful that it doesn't become a disincentive.

Also bare in mind that agents were taking as low as 2% during the WA property boom as they were selling them very quickly and couldn't get listings. Times have changed.

Regards

Dingo pro

 

[Francesca C]

Hey Dingo

I got the 3.3% as a fare figure from one of our mentors :> and use it on my static calculations.

I dont like flat fees, you still want the agent to get a high price for you.

Totally agree you should not under cut people and screw them down... you get what you pay for.

It does depend on what they are selling.. and how much of it.. I recently negotiated 2.2% but that was only because it was vacant land and I told the agent there was half the work involved (no home opens)

Ok I am going out now, need to get a life and get off the forum, its become addictive.

 

[dingo pro]

have fun. dont do anything I wouldn't do

 

[urban cowboy]

Hi Urban.

Just speaking to a new agent today in the Moorooka area and he said things are slowing down. Have to say though that he has only one sale under his belt because he is very new.

Are you finding things slowing down at all over your neck of the woods?

yes and no...

it is a bit slow, but its because nobody is coming onto the market...there are enormous numbers of buyers out there, but no-one wants to sell. Means that prices are still going up, but makes it hard to track numbers etc.

if more people came onto the market right now, i think we would have to be strapping ourselves in for another price surge - the demand is incredible.

cheers
UC

 

[Kevin Hockey]

Hello all,

Just a commercial plug first up.

You don't have to pay traditional agents commissions. Go Gecko provides a capped commission of $5950 incl GST for properties sold over $300k (only $4950 for under 300k).

We have just opened another 6 offices prior to xmas and have many more in the pipeline. So far in Brisbane, Gold Coast, Canberra and NZ but coming to a location near you....

Our offices have been going ballistic since the New Year. I operate the Redcliffe office and whilst I have been away on hols I know they are on track for a new record month. Across the board our agencies have been very busy.

I haven't noticed anything slow down but maybe I'll find out different once I get back to work next week.

Excessive commissions are being aggressively challenged and old traditional methods are coming under great pressure where ever our offices open. We are offering homeowners a genuine alternative to traditional real estate and saving homeowners many thousands in the process.

End of commercial

Kev
www.gogecko.com.au

 

[BayView]

Hello all,

Just a commercial plug first up.

You don't have to pay traditional agents commissions. Go Gecko provides a capped commission of $5950 incl GST for properties sold over $300k (only $4950 for under 300k).

We have just opened another 6 offices prior to xmas and have many more in the pipeline. So far in Brisbane, Gold Coast, Canberra and NZ but coming to a location near you....

Our offices have been going ballistic since the New Year. I operate the Redcliffe office and whilst I have been away on hols I know they are on track for a new record month. Across the board our agencies have been very busy.

I haven't noticed anything slow down but maybe I'll find out different once I get back to work next week.

Excessive commissions are being aggressively challenged and old traditional methods are coming under great pressure where ever our offices open. We are offering homeowners a genuine alternative to traditional real estate and saving homeowners many thousands in the process.

End of commercial

Kev
www.gogecko.com.au

Finally!

Why should agents, who mostly do the same work for every property in every price range, continue to keep getting pay rises every year due to the cap growth of properties?

I know they also cop a pay decrease if the market drops, but long term it is all good. But they still win; there are lots of desperate sellers in bad times.

Hope it goes well for you Kev.

 

[Gools]

Hello all,
Go Gecko provides a capped commission of $5950 incl GST for properties sold over $300k (only $4950 for under 300k).

Kev, just out of interest, what incentive is there for you to get the best price possible for the vendor when you are charging a flat fee?

 

[Kevin Hockey]

Kev, just out of interest, what incentive is there for you to get the best price possible for the vendor when you are charging a flat fee?

Great question.....

Any good agent knows the best way of ensuring long term success is repeat and referal business. That's the greatest incentive.

Secondly, owners choose what price they will accept, buyers choose what they'll offer.

Most of all, lets consider what a salesperson really earns from an owner receiving 10k more for their property. Lets take a 400k sale with an agents comm of 2.5%.

At 400k the agency will receive 10k plus GST. Lets say salesperson earns 50% which is most common, it might range from 40-55%, means they get $5,000. Take out tax, say 40% and salesperson ends up with $3000.

Now consider 410k, agency gets 10,250, salesperson $5125 less tax and they get $3075.

If earning higher commission was the basis in which salespeople were motivated to achieved higher prices do you really think a salesperson would risk $3000 to earn an extra 75 bucks. Change the numbers, but would they risk $3000 for $200.

The only motivator for salespeople to achieve higher prices is pride in their role and commitment to their client. Some traditional agents have this, but most don't, hence the basis I believe for the industry issues.

At Go Gecko we have 6 values we all share. One is client first, and we live it. We know this is where traditional agents will attempt to attack us so we go out of our way to prove ourselves. Also owners do spend more with us in marketing their home, because they can and choose to, which ensures higher buyer enquiry, greater competition and finally often record prices. We achieve a Premium price in most sales.

Hope that helps

Kev
www.gogecko.com.au

 

[shuggy]

We have just opened another 6 offices prior to xmas and have many more in the pipeline. So far in Brisbane, Gold Coast, Canberra and NZ but coming to a location near you....

A pity they're not in Melbourne as i'd consider using an agency like this. Kevin, i'm guessing that gogecko is a private treaty method of sale, not an auction.

Do you have a service to sell via auction? I think it would be a great idea to be able to hire an auctioneer for say, $500 and do all the marketing yourself.

Do you hold open for inspections once it's listed for sale or only by appointment. Or is this something the vendors organise?

 

[Kevin Hockey]

Hi Shuggy,

We do everything the other agents do. Open homes, Auctions, realestate.com.au, domain etc etc.

We are the same as traditional real estate except we provide a commission which is capped. Our businesses are very profitable by providing consumers a clear choice within their marketplace, a clear point of difference and a simple business model to work with.

Our franchisees currently choose Private Treaty primarily to sell property. Our business is to provide homeowners and buyers clarity and an open process they can more easily understand. Maybe our franchisees are choosing not to Auction because it may dilute that message. Probably it is more about Auctions not being as popular here as they are in Melbourne though. There is no policy on how properties should be sold, if Auction works for an office they are free to do so.

We already have franchise enquiry for Melbourne as well as most other capital cities in Australia. It is in our plan to open in Melbourne soon.

Kev
www.gogecko.com.au