Christies Beach 
What does it mean when agents say no commission?
This is a question we often get asked. People are confused how the agent gets paid if there is no commission. When someone says “no commission” they simply mean that it is a fixed fee.
In a lot of cases a fixed fee is payable regardless of whether the property sells or not. However, with a standard commission structure you will only pay this IF the agent sells the property.
Fixed fees are often advertised to sound a lot cheaper, this is similar to cut price commissions. There is an old saying that “when you pay peanuts, you get monkeys”. This is so true in an environment that is incentive based. If the sales person is only paid on results, they are both highly motivated to get you a result and skilled enough to make a living based on their ability and professionalism in creating a result.
Some people make their choice of agent based solely on cheapest fees. While it is important that the agreed professional fee is competitive for the anticipated scope of works, the truth is that the cheapest agent is in fact the agent that is able to achieve the best price for the seller.
To illustrate this: if we have 2 agents. Agent A. charges 2% and agent B charges 1.5%. The property is sold for $300,000 by agent A. Their 2% fee equates to $6000 which nets the seller $294,000. If agent B at 1.5% only achieves a sale price of $295,000 this equates to a net price of $290,575. Therefore, agent A’s superior level of negotiation skills achieves a better net result for the seller, despite working on a higher fee scale. This means that the additional $1575.00 in fees between agent A and agent B provided a return in excess of 220% on the additional price paid for agent A ‘s service.
Zero commission and cut-price commissions are often seen with agents just starting out in the industry and are still working on their negotiating skills or agents who perhaps are not starting out but are just not achieving enough sales to provide a proper income.
Every now and then we see a company pop up advertising no commission or cut-price commissions and although the majority of them don’t last too long, there will more than likely always be a place in the market for them. However, when our paths cross, we generally see a significant difference in knowledge and skills. And on many occasions, we have seen them make costly mistakes that an experienced agent wouldn’t make.
Another thing to be mindful of, is that some of these zero commission agencies charge extra for things like open inspections, either that or you have to do your own opens. Open inspections are a vital component in the selling process for experienced agents. It enables them to not only answer questions correctly but it allows them to get an experienced based feel for how serious the buyer is. There is also the risk, if you are doing your own opens that you could say something that is not quite correct under the legislation and wind up in court.
Our advice is to do your homework first. If you want to speak to someone other than a real estate agent, feel free to contact the Real Estate Institute on their free enquiry line, 1800 804 365.
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No commission?
01/03/2019
Article posted by Melissa Chaplin
