Cost of Selling

REIWA tells us Perth’s median house price has hit $800,000, a $100,000 (about 15%) rise since this time last year. Recent “catch up” price rises have been rapid. In 2020, the median house price was $478,000. Sales volumes continue to increase too, with about 60,000 sales across Perth in 2024 and tracking at 46,000 so far this year. In contrast, in 2019, there were only 32,000 sales across the year. Queues at Home Opens are common, supply of quality homes for sale continues to fall (only 2,905 listed on reiwa.com last week) and average time on market has retreated to a mere 10 days. Six years ago, it took an average of 55 days to sell a property.

the agent’s job is not done at the completion of the sale

In these market conditions, competition amongst agents increases and downward pressure on fees for service often results with desperate agents offering lower fees or other inducements to secure listings.

The cost of a proper real estate service is relatively substantial in dollar terms albeit small in terms of a percentage of the selling outcome. Sellers, despite being pleased with the sales outcome, can sometimes feel aggrieved that their agent’s fee is disproportionately high where the sale is negotiated after only a day or two on the market.

The idea that the agent “got a big fee for a few days’ work” is flawed thinking. Would the seller have preferred to have endured dozens of Home Opens, risk their property stagnating on the market and underselling for the sake of feeling better about their agent earning their commission? Surely not.

A key point is that the agent’s job is not done at the completion of the sale contract; they are obliged to see the deal through to settlement and carry much of the risk through to that point and beyond.

Before the agent is appointed, they have developed a range of skills, experience and expertise that they apply not just at the point of negotiating the actual sale. Advice around preparing a home for market, growing and maintaining a database of qualified buyers, marketing acumen, negotiation and communication skills and in-depth market knowledge are all part of what sellers pay for. Clients are also paying for the resources sitting behind the entire agency.

In appointing your preferred agent, you are buying expertise, a suite of skills. You are not buying an agent’s time to write the sale contract. In my experience, choosing your agent based on the cheapest fee offered usually results in poor communication, ineffective service, bland marketing and a low selling price.

Sellers ought to settle on the agreed fee at the point of listing and remember that the agent’s job is to achieve a sale for the highest price the market will bear. How long that process takes is irrelevant relative to the agreed fee.