How exactly do property or real estate agents make money?


When you are getting a real estate agent to help you sell a property, something that worries people is deciding the factors and the costs. The two-agent costs that need to be considered are commission and fees. The fees that are involved when you hire a real estate agent covers the costs for the marketing and the advertising. They take a commission which is a certain percentage of the sale price that they get when the home sells.
The amount of commission will change between states and regional areas vs metro etc. The lowest you are looking at is around 1.5% and the highest is reaching 4%. It often goes on the 2% to 2.5% of the sale price for your home. If your home is over 500,000 then you are looking at over $10,000 for fees. Marketing costs will come on top of this and can start at $500 to a few thousand. This will depend on how diverse the advertising needs to be and how far you are trying to reach out.
Not all agents structure their fees in the same way. Some may include the advertising within the commission and then quote a higher rate whereas some will use the sliding scale or a tiered commission like a 2% on the first $800,000 anything over will then go to 5% this is an incentive for those to work harder to a bigger sale price. It is important to remember that the commission structures are flexible, and negotiation is quite common since there is more legal regulation of the percentage of commission for the real estate industry.

It is important that you ask the agents what their commission structure is when you have an interview with them. Compare the difference between others which can help you to find the right agent.

Negotiating the fees 

Once you have researched the potential agents you then need to interview the top 2 or 3 agents.
Start by asking the agents what their commission is and explain you are wanting to compare as if the agent wants your business then they may offer a good deal, so you choose them. Think about asking for a sliding scale rate this idea is to incentivise with the agent to give you a better selling price.

If your home is worth more than the average home is then you may be able to negotiate on a commission price, but you are going to have to work hard for this. You always have the option to sell your home through low commission real estate agents or do it yourself without an agent. Ensure you get everything in writing to ensure they haven’t added any hidden prices.

House for sale

Sometimes the fees chargeable from the agent mostly depends on the credibility of the realtor in the market. He/she may be someone who is well versed with every facet of the real estate market with powerful contact and in possession of the latest real estate tech gadgets that keeps him one step ahead in the game. In such cases, one needs to be prepared to bear the additional charges of having the perfect realtor by their side where a profitable sale or purchase of property is guaranteed. For example, there are many realtors now in the Australian market that have easy access to gadgets such as an SOS watch, or a GPS alert system that is synced with all the connections the agent possesses around the area. This gives him access to the best of deals and offers that he can get before it is publicly listed on any website or traditional media.

Extra fees and cost tips that agents can get

Unconditional commission

It is common to see a real estate contract state clearly their commission and that it is unconditional once the sale of the home is complete. Bear in mind you are still liable for commission even if the sale falls through right before settlement. Ensure that the buyer’s deposit is the figure of the commission or somewhere close to ensure you don’t end up too out of pocket.Counting wealth

A real estate contract should state that the commission payable is total once the sale is complete, which is when contracts have been exchanged. This means that you still have to pay the commission even if the sale falls through prior to settlement, so it’s recommended that the buyer’s deposit is the figure of your agent’s commission fee, so you don’t end up paying too much out of pocket. However, as mentioned earlier, an agent with the right knowledge about the volatile real estate market and access to the right GPS alert systems may just cost you a bit more, but you’ll definitely have guaranteed return on investment.


The GST figure is sitting around the 10% mark. It is required for every real estate transaction and this is added to any commission that is being charged.

Auctioneer fees

Selling the property at auction will see you made to pay an auctioneer’s fee, most real estate agents are not fully registered auctioneers, so the cost is listed as sperate to their fees. An auctioneer’s fee will start around the $400 mark.

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