When asking “how much does it cost to sell a house?”, the main thing that comes up is real estate agents’ fees. So let’s break it down. First, there’s marketing and then the agent’s fee or commission.
1. Marketing costs
The seller covers the cost of promoting their property, through advertising and other marketing channels. An agent will recommend a campaign, which might include a board out the front of the house, listing on realestate.com.au, photography for the listing, the creation of a floor plan, copywriting and press advertising. In 2020, the average marketing campaign in the Melbourne market costs between $6500 and $8000, while in Sydney, it can range between $4500 and $10,000.
2. Agents’ fees and bonuses
There are two types of real estate agents’ fees. There’s a flat fee, where the agent and seller agree on a fixed fee for the sale of the property and no matter what it sells for, the agent’s fee is set. Then there’s a percentage of sale fee, where the agent gets a certain percentage of the final sale price. The percentage of sale fee, or commission, can range from 1% to 3%, but is influenced by a number of factors, such as the property value and the competition for business among agents.
Bonuses are also increasingly being used across the country. These are effectively incentive bonuses, where the agent and seller agree on a percentage-based bonus if the property makes above the agreed reserve. It may be, say, 10% of the amount above the reserve. For example, a property expected to sell for $1 million, being sold by an agent on a 1.5% ‘percentage of sale’ fee and 10% ‘bonus’ fee, that goes for $1.1 million, nets the agent $25,000. This is made up of $15,000 for the percentage fee (1.5% of $1 million) plus a bonus $10,000 (10% of the $100,000 above reserve).
Make sure you discuss all fees with the agent before signing.