Choosing between a real estate agent that charges a flat fee, and one that takes a commission off the selling price of your house can be a tough choice. On one hand, the commission is an incentive for the agent to worker harder to sell your house and get a better price for it. On the other hand, flat-fee agents can offer the same service for a lower fee. Whatever you choose, here’s what you need to know.
Flat-fee
A flat-fee agent does the same work as a commission-based real estate agent, but they only charge a set amount. An agent that charges a flat fee will tell you upfront what the price of their services are, regardless of the selling price your house may fetch. The positives here are that you know what you’re going to get right from the beginning. Some real estate agencies also charge the flat fee in two parts, a deposit when you sign up with them, and the balance paid in full once the property is sold. This can vary agency to agency.
Commission
An agent that charges a fee via commission takes a percentage of your homes total selling price. However, agents can charge different percentages, so shop around for a while before selecting your agent, and make sure you have a good idea of what your house is really worth. The idea in this structure is that the agent is pushed to achieve a higher price for your home, because it will get them a higher commission. Given how much house prices in Australia have risen in recent years, many agents are making a pretty penny on sales commissions.
What’s the difference?
If you live in Sydney, NSW, where median house prices sit around $1 million, and you hire an agent charging the average NSW agents fee of 2.46 per cent, you could be shelling out up to $25,000 to your estate agent in fees. Whereas if you paid a fixed rate, in Australia agents charge somewhere between $7000 and $10,000 dollars, you could save yourself a pretty penny.
The outcome?
Evaluate your situation, shop around for agents, get quotes and get a good idea of what your house is worth on the current market. Only then can you determine which type of agent is best for you, and which type of fee best suits your circumstances.
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