Real estate commission: a guide to who pays, how much and more
If you’re using a real estate agent to sell your property, you need to know what their fees will be. The skill and expertise you’re buying are a great investment. A good agent can help you get a much better price for your property than you’d achieve on your own. However, knowing the average real estate commission can help you create a more accurate budget and avoid any nasty surprises.
So how much is the real estate agent commission? What other costs should you be aware of and who pays for what? We spoke to Mark Wolens, a Principal at Independent Property Group, to get his insights into what your real estate commission is paying for. In this guide, we’ll also look at real estate commission structures and what factors can affect the amount of commission you pay.
What does real estate agent commission pay for?
The seller pays for the real estate agent’s services. That’s because real estate agents work directly for them and help them get the best price for their property. When you pay a real estate agent commission, you are paying for their time and skill.
But what does your real estate commission actually cover?
This includes:
- Pre-Listing & Preparation: Initial consultation & goal setting to understand the vendor's timeline, motivation, and expectations.
- Property assessment & pricing strategy: Conduct a Comparative Market Analysis (CMA). We recommend a comprehensive pricing strategy (auction, private treaty, expressions of interest, etc.). Knowing the true value of your home is an expert skill. Your real estate agent’s skill and expertise in this area can make a huge difference to the price you achieve.
- Property enhancement advice: Talk to your real estate agent about what kind of repairs, styling, staging, or renovations may boost sale price.
- Organise documentation: This includes title search, contract of sale, vendor statement (e.g., Section 32 in Victoria), building and pest inspections if pre-emptive.
- Professional photography & videography: You real estate agent can help organise drone shots, floorplans, twilight shoots, or virtual tours where relevant.
- Setting up a marketing campaign: It should be customised to the demographic most likely to buy your property. Real estate agents know who your property is most likely to appeal to and what their buying behaviours are. They can write engaging copy and highlight key selling features, and create targeted digital and print campaigns.
- Open homes & private inspections: Schedule, host, and follow up on buyer interest and feedback.
- Regular vendor updates: Real estate agents offer weekly reports with buyer feedback, online views, inquiries, and agent insights. They return phone calls and other enquiries from potential buyers about the property. They make sure every enquiry is followed up quickly. Too slow, and the person may have moved on to the next property, so time is of the essence.
- Putting their buyer lists to work to find you the right offer: Real estate agents maintain databases of potential buyers so they can match your property to people who are looking for the same type of home. Sometimes, you can sell your home even before it hits the open market.
- Negotiation & Offers: Real estate agent qualify and engage buyers to ensure they’re financially capable. They guide potential buyers through the offer or auction process.
- Negotiate the best possible outcome: Agent aim for the highest price and best conditions (deposit, settlement period, etc.). They present and explain all offers to the vendors and advocate for vendors every step of the way.
- Contract to Close: Agents facilitate the signing of contracts, ensure correct execution and terms, coordinate with solicitors/conveyancers, and keep the process smooth until settlement.
- Offer Post-Sale Support: Real estate agents assist with settlement preparation, such as final inspections, key handovers, referrals for moving services, and any last-minute hiccups.
- Ethical Obligations: Agents should be transparent, ethical and responsive, and provide vendors with realistic advice, not just “feel-good” talk. They maintain confidentiality and legal compliance at all times.
Agents do help buyers as well, of course. But they do so to further the interest of their sellers.
Agents don’t just sell your home. More often than not, it is an agent’s job to sell the buyer on the neighbourhood. It is important to choose a real estate agent who not only knows the city, but also specialises in your suburb. When it comes to property, market analysis has to be done at the granular level of suburbs. Whether you’re buying property or selling property in Canberra, rely on the experts — Independent Property Group.
Typically, real estate agents provide some or all of the following services to a buyer:
- Arranging inspections so they can check out a new property
- Adding them to their database to ensure they get advance notice of new listings
- Providing general advice about what they can expect to buy for their given budget
- Informing them about the area and the property market
How much do you pay a real estate agent?
There is no standard real estate commission, so it can vary from agent to agent. Agent rates also vary from state to state in Australia. The way in which the fee is determined also varies. When asking 'how much does a real estate agent charge?' make sure you understand the total amount that will be due before you sign a contract.
There is no legislation that determines what a real estate agent can charge. In Canberra, the average real estate commission is between 2%-3% for selling property. Fees are determined by agreement between agent and seller. Most agents have a standard fee, or fee structure, which they will tell you upfront. You can try and negotiate that fee, and they can choose whether to agree to the lower rate or not.
The seller and real estate agent each sign an agreement. The agreement sets out the responsibilities of both parties. This includes the amount of commission as well as the agreed amount for the marketing campaign.
It also gives the agent exclusive rights to sell the property for a set period of time. That means that the seller can’t engage another agent during that time. It also means that even if the seller sells the property themselves, the agent will collect their commission. If your agency agreement is current and a friend approaches you and asks to buy your house, you will still need to pay the commission.
Who pays real estate commission?
Standard practice is that the seller pays the real estate commission. The commission cost is usually wrapped into the property’s sale price. In cases where the buyer and seller both have their own agent, the commission will need to split between them.
Who pays agent fees when selling a house? Who pays agent fees when buying a house?
In the majority of sales transactions, the seller is responsible for paying the real estate agent’s commission. This is usually a percentage of the final sale price. The commission is agreed upon in the listing agreement signed between the seller and the agent. While the commission is paid out of the process of the sale, it can be argued that the buyer “pays” it as part of the purchase price.
Real estate commission structures
-
Flat fees
The agent and seller agree on a fixed fee, which is paid on the sale of the property. No matter what the property sells for, the fee stays the same. Some people prefer this model because of the certainty. They can calculate their costs more accurately and budget accordingly. Others worry that a flat fee doesn’t incentivise the agent to try and achieve a higher price.
“At the end of the day, we’re a performance-based industry,” says Mark. “Tying the commission to the sale price does give the agent more of a reason to achieve the best result they can. That said, good agents will do their best, regardless. And some owners feel more comfortable knowing what it’s going to cost them at the end of the day so they can work out their budget.” -
Percentage fees
Here, the agent gets a percentage of the final sale price. The higher the final sale price, the higher the commission. The real estate agent commission percentage typically varies from as little as 1% to around 3%. Most Canberra agencies charge between 2% and 3%. The average commission for a real estate agent is around 2.5%. -
Combination fees
You may also see a two-tiered fee structure. These use a combination of percentage fees and bonus fees. A bonus fee is an incentive bonus. The agent and seller agree on a sale price which acts as a threshold. If the property sells for more than that, the agent gets a bonus. That might be an extra percentage of the entire sale price, so that instead of getting 2%, the agents gets 2.5% over a certain price. Alternatively, it might be a higher percentage of the amount above reserve.
Case Study
Jennifer and Ian own a four bedroom home in Calwell. Jennifer has accepted a job overseas and they have decided to sell. They want to make sure that their agent works hard to achieve the right sale price for them and are trying to decide which structure will net them the most.
They get a few appraisals, which estimate that their home is worth between $800,000 and $850,000.
In the end, the pair decide to go with an overall incentive bonus. The home sells for $820,000. They pay a 2.5% commission since the agent achieves a price over the threshold. This totals $20,500.
How to negotiate your real estate agent’s commission?
Balancing affordability and value is key to making the most out of your agent’s commission.
First and foremost, do your research. Know the average real estate agent’s commission rates in your area (1%–3% in Australia). You can compare agents' rates, services, and success records. Choose quality over cost — an experienced agent might secure a higher sale price.
Discuss fee structures with your agent in detail. Consider flat fees for predictability or try the pay-what-you-feel model with Independent Property Group. Clearly state your budget and expectations before finalising the agreement.
What affects how much you’ll pay?
Factors that influence the real estate commission include:
The price of the property
Mark explains: “You’re more likely to see a higher percentage if the property is fairly cheap, so that the agent is still compensated for their time and effort. For high-end prestige properties, a lower percentage is more common. The actual dollar amount that the agent gets is still higher than what they would receive for another property.”
Where you live
High-density urban areas, including the Inner North and CBD, inner South and Gunghalin, will drive down the average commission. This is because there is more competition from competing agents than in our suburbs locations, like Belconnen and Tuggeranong. These desirable locations are also more likely to command higher sale prices, so agents can afford to lower their percentages a little.
The experience of the agent
A new agent might be more likely to drop their commission in an attempt to drum up business. Once they’ve got a few wins on the board, their commission might go up to reflect that. When you choose an agent purely because their commission is low, you might be choosing someone who lacks the necessary experience to get you a great result.
Ultimately, it comes down to the agent’s ability to negotiate a high sale price. That’s what you’re paying for. Look at their past results and especially their individual results. The volume of sales alone won’t show you whether they’ve accepted a lower sale price to get the sale done fast. You want someone who will focus on getting the highest price for each property even if it takes a bit more work.
Thinking of buying off the plan?
Sign up to our VIP mailing list for info on off-plan properties before they hit the market and our top buying off-plan tips.
Ready to take the first step in your property journey?
Send us an email or fill out the form and we'll be in touch to get started.