Australia Markets open in 8 hrs 2 mins

The truth about real estate agents commissions

Selling up? One decision could save you thousands

Over the past year, with a few regional exceptions, the Australian real estate market has been on the slide. Falling prices eat into your equity, but there’s another decision that can do the same.

Choosing to sell through a real estate agent using an old-fashioned commission structure will cost you thousands.

Depending on where you live and the agent, the commission could be anywhere between 1.5% and 3% of the selling price. So at the top end, sell a home for $1million the agent walks away grinning with $30,000.

Let’s examine that $30,000. What is the agent actually doing to earn it?

 Back when commissions were introduced, and the internet hadn’t been invented, a real estate agent carried a magic little black book of potential buyers. Other buyers were wooed by glossy pics in the local newspaper or even went searching the windows of the agent’s office.

Today 7.7 million Australians search or domain every month; that’s where buyers come from. Times change, but not the old-fashioned commission collector, because he’s on a great wicket.

In fact it’s been a stellar run. For example, a Sydney agent charging the same commission between December 2011 and December 2017 saw his cut increase 78%. That’s how far prices rose during the boom. Imagine not working any harder or smarter and seeing your wages increase 78% in six years!

What’s that mean in cold hard cash? At 3% our commission collector in Sydney has gone from collecting $16,980 per average sale to $30,225. Nice earn if you can get it.

Fortunately there is a more up-front, fair and transparent way. Enter Purplebricks, the pioneers of flat-fee real estate in Australia.

Like their commission collecting counterparts, Purplebricks charges upfront fees for marketing and admin. We’re talking signboards, copywriting, photography, floor plans etc. And with Purplebricks you get a premier listing on, a listing on domain and your agent hosting open houses and negotiating. In other words doing what you’d expect.

What you wouldn’t expect is a revolutionary online platform where you can track how your agent is performing; it lets you see offers in real time as they come in! No more taking your agents word for it. No more waiting by the phone.

Then when you sell, you pay a fixed fee. So from the start you know what you’ll pay.  No more dashing for the calculator to find out what’s let after the commission collector takes a massive cut.

Across Australia you get all of that for a fair fixedfee of $8,800. That’s the total including the marketing. You even have the chance to defer your up-front marketing costs and pay the lot in the end.

What you don’t get is expensive offices, outdated marketing methods and other addons that do nothing to help the sale of your home.

You get an experienced agent many used to work under the old model.

They’ve joined Purplebricks because they know it’s a game changer.

So the simple equation for the average Sydney home is $8800 (including gst)with Purplebricks versus $30k with the commission collector, where you also add on your marketing costs which could be anything from $2,000 to $10,000 or more.

But we know it’s not that simple. The next question, does paying a commission get you a better price?

No one can promise they will definitely sell your home for more than their competition. If they do, they’re lying. But some food for thought. More than 90% of people who have sold with Purplebricks would use them again.

In Australia, Purplebricks have sold in excess of $3billion in property, saving their customers more than $51million in unfair commissions.

As for research into the long term success of flat fee agents, the University of Amsterdam has a specialist real estate research unit that collects data from all over the world.

Last year, it published analysis of sales in the Netherlands over a 25-year period. During that time fixed-fee agents were introduced and on average the fixed-fee agents sold homes quicker and for 2.7% more than their old-fashioned commission collecting rivals.

As we say, food for thought, so bon appetit!

For more information: Purplebricks