Money Property Commission v flat-fee: Home sellers should know the difference
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Commission v flat-fee: Home sellers should know the difference

Flat-fee real estate services and commission-based agents remain at loggerheads over the best way to sell a property. Photo: Getty
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What’s the best way to sell a home?

It’s a controversial question in Australian real estate, where the arrival of flat-fee real estate services, most prominently UK firm Purplebricks, has ‘disrupted’ the traditional commission-based model.

Commission-based real estate agents argue they’re given an incentive to work harder to get a better sale price, while critics say they overcharge.

Flat-fee agents say they deliver the same results for a lower fee, while critics say they lack motivation to find the best sale price for vendors.

Regardless of whether you choose to use a commission-based agent to sell your home, or the flat-fee alternative, it pays to be informed.

Commission

According to Real Estate Institute of Australia president Malcolm Gunning, services with set fees “don’t hold water” as agents are not motivated to get the best price for the clients.

“I always believe you get a poor price for a poor fee,” Mr Gunning said.

While the amount of commission charged by real estate agents varies around the country, most agents charge around 2 per cent of the sale price.

Before selecting an agent, vendors should ensure they have a “fair indication of a market price” for their property, and ensure they’ve interviewed “enough agents to get an idea of a reasonable fee”, Mr Gunning said.

Flat-fee

Flat-fee firm Upside Realty opened in Melbourne in 2017, following on the heels of international flat-fee pioneer Purplebricks, which arrived in Australia in 2016.

Rather than paying a commission based on the sale price, vendors instead pay a flat fee of $8500 for their home to be auctioned, or $7500 for a private sale.

Upside spokesperson Genevieve Brock said the firm provides the same service as a traditional agent, and that the biggest benefit to vendors is the savings they make by not paying commission.

“With the flat-fee model you know what you’re going to pay from the beginning,” Ms Brock said.

Rather than receiving a commission based on the sale price of a property, Upside agents are paid a salary, and given incentives with paid bonuses based on positive reviews by clients, Ms Brock said.

“The amount vendors pay in commission has only increased as property prices have gone up, and the money real estate agents are getting has increased as well.

“With the flat-fee model you know what you’re going to pay from the beginning.”

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