Selling guide

A seller’s guide to understanding real estate agent fees

The whats, whens and hows of paying your agent.

If you choose to use a real estate agent when selling your house, you’ll need to understand how the financial side of this relationship will work.

Because real estate agent fees and commission can be confusing, we put together this quick guide so you know what to expect to pay, and when.

Let’s dive in.

How much do real estate agents charge in NZ?

It’s important to understand that there’s no blanket rule when it comes to real estate agent charges.

Each company has a different approach, so it’s important to ask cost-related questions when you’re choosing an agent. The Real Estate Authority (REA), the body that regulates New Zealand’s real estate industry, states in its 2012 Code of Conduct that an agent must present in writing details of:

  • The conditions under which commission must be paid.
  • How that commission will be calculated.
  • An estimated dollar cost of commission.

They should do this before you sign the agency agreement. We recommend you get a lawyer to check any agency agreement before you sign up.

Generally speaking, the costs of the real estate agent’s services will include an administration fee (usually around $500), vendor paid advertising, and the agent’s commission, which is based on the final amount your house sells for.

You need to understand your payment obligations before signing the agency agreement.

How much commission do real estate agents take?

Real estate agent commission in NZ generally works on a tiered basis, and will be based on the sale price of your house.

For example, you could be charged 2% upto the first $500,000 of the final price, and then a lesser percentage for the remaining value.

Remember, you don’t have to just accept the commission rates set out in the agency agreement. Often, the agency will be open to negotiations – you’ll never know if you don’t try! It’s also well worth getting quotes from a variety of realtors before making your pick – commission rates and models vary between different agencies.

Agents are also obliged to tell you if the sale method they’re recommending means they’ll be paid a higher commission from their agency. While this doesn’t impact the amount coming out of your pocket, you need to know this so you can understand why an agent might be pressing for a particular option over another. This is an important discussion, so you need to have all the facts.

How does VPA work?

As with commission, there’s no blanket rule when it comes to vendor paid advertising. These days, it’s common for agents to expect sellers to pay the entire cost of vendor paid advertising up front, though sometimes the agency will put some money towards this too.

The amount you’ll spend on VPA will be determined by a number of factors, including:

  • The marketing channels you and your agent agree to use.
  • Whether you choose to use video as well as photography.
  • If you want to use professional home stagers.

In some circumstances, you won’t pay the VPA until the end of the sale, but make sure you get clarification of all the relevant terms and conditions before you sign an agreement.

Understand what the agent expects you to pay in terms of vendor paid advertising.

When do you pay a real estate agent?

You’ve guessed it….when you pay your agent will depend on the agreement you have with them, there’s no set schedule for doing this.

Of course, estate agent commissions aren’t paid up front as the amount they receive is dependent on how much your home sells for. Often, you’ll pay the agent’s commission when the property sale goes unconditional.

How much do real estate agents get paid?

Remember, the amount you pay doesn’t go directly to the agent. A certain percentage of their commission will go to the agency, rather than the individual realtor.

According to Trade Me Jobs salary information, employees working in residential sales and management can earn between $50k and $115k, with a median annual salary of $85k*

*Data is for full-time roles listed on Trade Me Jobs in the six months to April 2020.

The range represents the 5th and 95th percentile.

*We hope this article has provided some helpful information. It's based on our experience and is not intended as a complete guide. Of course, it doesn’t consider your individual needs or situation. If you're thinking about buying or selling a property, you should always get specific advice.