Understanding Real Estate Commissions

Your expertise and ability to get the best outcome for your clients is a valuable skill. And, in most cases, it is a skill that your client pays for through a commission structure.

As a real estate agent, in addition to your salary, your earning potential is scalable depending on your commission and this can certainly be a motivating factor to reach a favourable sale price!

But what factors influence real estate commissions and what do you need to understand about them before earning your first sale?

The commission figure varies

Unlike your salary, which is a set amount each pay cycle, your commission amount will vary with each sale. This is because it is a percentage of the final sale price, typically outlined when your client first engages you or the agency you work with. In Australia, this is on average two to four percent plus GST of a property’s sale price.

Similarly, some agents will set a fixed-fee commission. Either way, transparency with your clients from the get-go will ensure the process is smooth sailing.

Check with your employer about your tax responsibilities

A commission is an exciting bonus and financial reward for a job well done. However, it may also come with tax liabilities. It’s best to check with your employer or the ATO to discuss the tax requirements around your commission payments to avoid any end of financial year lump sum repayments!

A commission represents your expertise and role in the sale

You’re paid a salary so why should you get an additional amount for doing your job? Good question. Each sale and the results you achieve for your client represent the work you do for that individual client from presenting their property in the best light, advising on any repairs required to improve the sale potential, being at open homes and negotiating with potential buyers. You are integral to your client’s successful sale.

Don’t count your chickens before they hatch

We know the possibility for additional bonus payments can be alluring. And as attractive – and welcome – a commission payment can be, we have equally seen it undo many promising real estate agents. Especially when you are establishing yourself in the industry, we encourage agents to not count their chickens before they hatch and put the same level of care, attention and detail into their 100th sale as they do their first. Play the long game and, while enjoying the rewards of your hard work, keep a level head.

Learn this and more with Global Real Estate Training

Let our team of industry experts — with first-hand real estate experience — teach you or your team the ins and outs needed to craft a successful and fulfilling real estate career. Explore our programs and book a complimentary consultation with our team today.

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