What are the commission rates of property agents?
When it comes to marketing your property, one of the key considerations will always be the rates which the agent is charging. There are 3 levels of professional fees or commission rates commonly charged by property agents when you engage them to sell your property. Let’s dive deeper to get a better understanding of the 3 different rates.
Lowest tier – 1% commission rate
Probably the cheapest you can find in the market. Now we all know one fact. Cheap is not always good. If the agent is charging you 1%, this is probably that the agent is working on a volume type of business model. Meaning to say that your unit is just probably one of the many units that he or she is marketing. Having another unit to market and placing it in the portals makes the agent look good with more units for sale.
Another possible reason is the lack of listings, just compete on pricing and just charge the cheapest and surely, will get the listing type of agents.
The service will probably be similar to what a 2% will be charging. The focus will be on selling the unit fast. That sounds good. Save 1% and sell fast, sounds all good to any homeowner. But at what price? Or at the first offer? Is the first offer within the market pricing or better than the market price?
The business model will be more of a speed closing type.
Willingness to co-broke will be lesser in view of the lower commission fees. Lesser co-broke means lesser outreach.
The Premium 3%
The 3%-4% agents are probably the ones that have added perks like home staging and video tours and presentations all thrown in. Likely to be able to do what the 1% agents are doing but with added perks as mentioned. They understand the social media game and are likely to have a strong follower base. The outreach can be far and beyond the traditional property portals. Too much social media outreach may turn the tables against the sellers as it may seem to be more of a branding exercise for the agent rather than for the benefit of the homeowner.
The Standard 2%
This is the usual standard practice. The business model is probably the safer bet. Having enough to foot the marketing bills and enough to co-broke. This is definitely a win-win situation for all parties involved. This means optimum outreach to achieve the highest possible sale price. Sometimes, an added incentive or tiered commission fees model may work in the favour of both sellers and agents as well. But take note of over-incentivising, for this may not work in the seller’s favour.
So how do I choose?
As for sellers that are reading this choosing between what commissions to pay, it would depend on what you want to achieve. Always remember that compensation drives behaviour. You pay peanuts, you get monkeys. You would want to achieve the best results and compromising on fees is definitely not recommended. Pick your right fit agent that gives you the feeling of trust. Work out a marketing strategy for marketing your unit. This will guarantee and win-win situation. We only own a few properties in our lifetime and working with the right person makes a big difference. You would want to take note of the right motivations and the motivations are in line with your objectives.
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