Estate Agents' Commission Explained

Category News and Advice

With countless property websites out there, many people are opting to privately sell their homes, thinking that the property will sell itself, and ultimately, avoid paying a real estate agent commission. 

An agent that offers you a low commission rate may not be able to provide as wide a range of services and exposure that a larger agency with a higher rate may provide.

However, what a number of sellers do not understand, is exactly what it is that an agent will do for the sale of their property and why going the agent route will result in a more efficient sale process. 

This is according to Chris Cilliers of Lew Geffen Sotheby's International Realty, who explains what an estate agent does for their commission and what the seller will get in return. 

Determining the commission percentage

The average estate agent's commission usually ranges up to about 7.5 percent, however, there is no regulation in South Africa as to how much commission an agent should be paid per sale. 

Cilliers says it is best to see the commission and services of a realtor as an investment rather than a cost. She says in most cases it will lead to a faster sale and better price for your house. 

The fee should be clearly discussed at the start of the marketing campaign, he says, as the agent's fees do vary according to certain circumstances. Cilliers advises that it is never a good idea to choose your estate agent based on the commission rate that they charge. 

She says an agent that offers you a low commission rate may not be able to provide as wide a range of services and exposure that a larger agency with a higher rate may provide. "Agents are paid for performance and the performance criteria is to broker a sale between a seller and a willing and able purchaser." 

Valuing your home

An agent's commission is based on a percentage of the selling price of the property and, therefore when a property is sold at less than the asking price, the agent's commission is automatically reduced as well. 

When an agent is asked to come and value your home, the Estate Agency Affairs Board requires that the agent must provide the seller with a marketing plan specifying exactly how the property will be marketed and which services will be provided. 

It is unfair to try and negotiate the agent's fee at this stage as the seller should first experience the service that the agent has promised and then make the decision about the professional fee. 

It is also important to point out that a seller often insists on marketing a home at the price that they choose, irrespective that the agent's market valuation is less. In these cases the seller often wants to penalise that agent when he has to drop his price to sell the house irrespective of the fact that he disregarded the agent's advice about pricing in the beginning. 

Marketing your property

In return for the commission, you will get an extensive marketing campaign for your property. Professional photos will be taken and posted on the realtor's website; adverts will be placed in various newspapers, property websites and magazines, which does carry a cost. 

Cilliers says the way your property is displayed is important for a successful sale. Professional photos ensure that a property is presented to the market in the best possible way. Photographs taken on a smartphone or a small digital camera do not do justice to even the most modest property, she says. 

The market has evolved beyond just putting up a For Sale sign and holding an open house. An agent who understands all media platforms, web based applications and social media, and one that has the backing of a team of web and marketing specialists is valuable in marketing your property. 

The contacts

Sellers also forget that when they employ an agent and agree to a professional fee, they are tapping into years of experience and large databases of buyers that have taken a massive investment in time and money to develop. 

Using the analogy of the medical profession, a patient would be willing to pay a higher fee to a surgeon with years of specialist experience than they would to a GP whose knowledge and experience in a particular medical field may be limited. 

Paying a commission to an experienced and active agent also means you will be plugged into an extensive database of contacts and active buyers, both locally and internationally, which means the property will be marketed across borders, says Cilliers. 


Selling a home is a stressful experience and if it was so easy for a person to sell their own home, there would be a lot of estate agents out of work. 

Buyers often find it uncomfortable to tell a seller that they dislike his house, so everyone says that the house is wonderful and they will be in touch. The buyer knows the house is not for him but the seller waits in hope for the offers to arrive.   

"An estate agent should have the ability to offer the seller support and guidance through the whole sale process, which involves dealing with complex legal documents." Cilliers says as this offering is not tangible, it is often not offered in the negotiation process, however, it remains an important factor. 

Author: Property 24

Submitted 26 Apr 19 / Views 401