by Neil Jenman

Article written and provided by Neil Jenman from . To see the original source of this article please click here. Neil Jenman is Australia’s trusted consumer crusader. He can support you, all the way, from choosing an agent who will get you the highest price guaranteed to when your removalist comes! You get an unprecedented level of total support. All for free. To find out more visit

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When it comes to paying commission (and costs) to agents for selling homes, most sellers get it wrong.

Here are the 7 factors you should know regarding commission.


No matter what agents may tell you, no matter how convincing they seem, the ‘Golden Rule’ for paying agents is this: “Never pay any money for any reason until your home is sold and you are happy with both the price and the service.”

Sellers who pay in advance are not giving agents any incentive. And this includes those absurd – and needless massive “marketing costs”. All costs should be included in the total commission. And all commission should be paid only when your home is sold.


This is one of the biggest traps. It’s often caused by ads saying ‘Compare Agent’s Fees’, the inference being that cheap agent are the best agents. The reverse is likely true. You see, if an agent can’t negotiate a good fee for themselves, they are unlikely to negotiate a good price for your home.

Frank from Kew nearly fell into this trap. When selling his home, he pushed the agent down to 1.2% commission. But when he saw the price the agent wanted him to accept for his home, Frank nearly had heart failure.

He then hired an agent who, while charging more than double what the first agent charged (2.5% instead of 1.2%), Frank got at least half a million dollars more for his home.

Cheap agents can easily mean cheap prices.


Don’t worry about how much the agent gets, worry what you get. If you get a good price for your home; indeed, if the agent is a great negotiator and impresses you with their skills and you get tens – even hundreds – of thousands of dollars more than you expected, perhaps the agent deserves a good fee.

And remember, you are paying nothing unless you are happy, so don’t worry.


You don’t negotiate the price of your home until you find a buyer. The same should apply with the commission. Sure, you can consider the agent’s expected commission when you sign-up with the agent. But always write the words, “Agent agrees that commission is negotiable until the home is sold.” And then, if the agent asks you to lower your price (which often happens) you can ask the agent to lower their commission.

If you cut the agent down in their commission at the start, you have nothing left to negotiate at the end. It’s amazing how much better agents negotiate when their money is on the line.


The most important word with agent’s commission is “justify”. Sure, most agents get paid a massive amount of money. Work it out on an hourly rate and you’ll be horrified. But leaving your resentment aside, ask yourself this question: Is the commission justified?

If you are unsure, maybe it’s not. Alternatively, you can ask the agent: “How can you justify so much commission?” Many will splutter and then reduce their commission. But remember this must be happening at the end, when the buyer is found, not at the beginning when you are signing up to sell.


Have a good look at any agreement an agent asks you to sign. Never sign it on the agent’s first visit. Tell them to leave their agreement with you. And then read through it carefully.

You’ll be amazed how often you can be expected to pay the agent their full commission even if they don’t sell your home. Or even if someone else sells your home. Or if your circumstances change. Or if a close friend buys your home.

Remember, these selling agreements (that agents call “standard”) are legal contracts. They have been designed by lawyers to protect agents.

Who protects you?

Only you – or, if you want to send the agreement to Jenman Support, we can soon help you cross out all the nasty clauses. We call them “thief clauses”.


How much is fair to pay an agent. Well, again, it comes back to how well the agent has helped you. Assuming you have an excellent agent who offered you what ethical agents offer – no charges until sold. And assuming your agent truly has achieved the highest price, a fair commission could be between two and three percent.

Be careful, however. One of the best ways to know if your commission is fair is by asking how you feel about the agent and the process. Listen to your instincts.

When Frank (mentioned earlier) sold his home for $3.1 million, he was delighted to pay his agent 2.5 percent. His first agent could have asked him to accept $2.2 million, a difference of $900,000.


The biggest cost of selling a home is not commission. It’s the amount homes are undersold.

Ask any buyers who’ve recently bought a home: How much more would you have paid? Most admit they’d have paid much more.

Just recently a friend of this writer bought a home and paid $375,000 less than she was willing to pay. When asked why she didn’t pay more, she gave a common answer: “I didn’t have to. I made an offer, and the agent contacted the sellers and my offer was accepted.”

So, the biggest hint when worrying about how much commission to pay is not to worry. Instead put your focus where it belongs, upon what you get.

Find an agent who’s a good negotiator – one who can lift the buyers up not push you down – and such agents are likely to be worth a good rate of commission.

But remember: Don’t pay anything until your home is sold and you are satisfied.


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