What does a real estate agent commission actually cover? I went looking for the data.

Heads up: Propa is a property marketing platform, not a real estate agency or a law firm, and we do not give real estate, legal, financial, or tax advice. This article is general information only, based on our own experience and public information. For advice on your situation, speak to a licensed conveyancer or solicitor, a licensed valuer, a registered tax agent, or your state’s real estate regulator.

I am not anti-agent. I am anti "not knowing what you are paying for".

When we were thinking about how to sell our place in Mackay, the commission numbers I kept hearing from friends and family felt high. Higher than they had been a decade ago. Higher than they were in other countries I knew.

So I went looking for the actual data. What do Australians really pay agents? What does the money actually cover? Is it negotiable?

Here is what the published research shows.

The main points

Australian agent commissions sit between roughly 1.6% and 3.5%, depending on state, per published industry sources.

South Australia is the lowest-average state (around 1.99%). Tasmania is the highest (around 2.96%).

The fee mostly covers the agent's time and the agency's overhead. Agencies do not publish a precise cost breakdown.

Marketing is usually a separate invoice, and is often the most negotiable line.

Commission is almost always negotiable. Most sellers do not ask.

Where the published data comes from

The most-cited sources for Australian commission data are:

OpenAgent (openagent.com.au), which has collected millions of agent quotes through its platform.
LocalAgentFinder (localagentfinder.com.au), which publishes commission research from its quote data.
CoreLogic property reports.
REIA (Real Estate Institute of Australia), the industry body.
Choice magazine, which has run deep investigations on real estate fees.

The figures below are pulled together from those sources. Numbers shift slightly year to year, so check the latest reports if you are pricing a sale right now.

Average commission rates by state

Published industry research from OpenAgent, Canstar and others puts the national range at roughly 1.6% to 3.5%, with rates varying significantly by state and city versus regional location.

Broad averages by state (always check the latest published figures before pricing a sale):

South Australia: around 1.99% average (lowest in the country)
New South Wales: typically 1.8% to 2.5% (Sydney lower, regional higher)
Victoria: typically 1.8% to 2.5% (Melbourne lower, regional higher)
ACT: around 2.0% to 2.5%
Western Australia: around 2.0% to 3.0%
Queensland: typically 2.5% to 3.0% (higher in regional)
Northern Territory: around 2.5% to 3.5%
Tasmania: around 2.96% average (highest in the country)

Why the variation? NSW, VIC and SA have the most competitive agent markets, so rates compress. QLD, NT and TAS are less concentrated, and agents have more pricing power.

You can plug your own price and state into the Commission Calculator to see what each rate looks like in real dollars.

What the commission actually covers

Agencies do not publish a precise breakdown of where the commission money goes. They are private businesses, and the cost structure is not something they release.

What IS broadly accepted, across published sources like OpenAgent and Canstar, is that the commission typically covers.

The agent's time and labour (sales strategy, pricing advice, open homes, buyer enquiries, negotiation, contract management)
The agency's overhead (office, software, brand, admin, training, compliance, insurance)
Lead generation and the agency's buyer database
The agent's own profit margin

The qualitative split is widely described as "most of the fee covers the agent's time and the agency's overhead", with smaller portions to lead generation, training and profit. But the precise percentage split is not public information.

Marketing (photos, videos, REA listing fees, signboards) is almost always a separate invoice on top of the commission. Typical marketing packages sit between $3,500 and $9,000 for a standard suburban home.

What the marketing fee actually pays for

The marketing line is where most of the negotiation room sits.

A typical $5,000 marketing package usually includes:

Photography and video (around $800-1,500)
REA / Domain listing upgrades ($1,500-3,500 depending on tier)
Signboard, brochures, social media tiles ($300-700)
Agent profile placement / agency promo ($500-1,000)

Two of these are worth paying for. Two are not.

The photography and the REA upgrade matter. Buyers find homes on portals, and the photos are what makes them stop scrolling.

The signboard and the agency's profile placement do very little for your listing. They mostly promote the agent for the next listing they take on.

If your agent will not break down the marketing line by line, that is a signal in itself.

Is real estate commission negotiable?

Yes. Almost always.

Industry analyses suggest agents have a "walk-away rate" (the minimum they will accept on a listing) and a "list rate" (what they quote you). The gap between those two is the negotiation room.

The most effective lever is competition. Get quotes from three agents in writing. Tell agent A what agent B has quoted. Watch what happens.

A few practical notes.

Get at least three quotes in writing, not over the phone.
Ask for the commission and marketing as separate numbers, not bundled.
Negotiate the marketing line, not just the commission. Marketing has more fat.
Ask what happens if the home does not sell in the listing period. Some agencies still charge marketing fees.

What you are NOT paying for (despite what is implied)

A few things agents sometimes imply are included that you are still on the hook for.

Legal work. That is your conveyancer. Typically $800-1,800 separately.
Property valuation. Agents give you an "appraisal" which is a marketing opinion, not a formal valuation.
Building reports, surveys, council searches. These are the buyer's responsibility in most states, but you may want to do them yourself for transparency.

So when you are comparing the cost of going with an agent versus selling privately, the agent fee is on top of all of these, not instead of them.

What private sale actually costs (for comparison)

The Propa equivalent of all of the above:

Listing (free — list and sell yourself)
Pro (monthly subscription — full platform, buyer enquiry tracking, marketer writes your copy)
Boost Packs (optional weekly advertising, Mini / Power / Mega, plus a one-off $99 setup fee) — available with a Pro subscription. This is where the Facebook and Instagram advertising lives. A separate add-on, not part of the base package.
Conveyancer: still on you, around $800-1,800
Building report (optional, around $400-700)

The maths is straightforward. On a $920,000 sale, an agent commission of 2.5% is $23,000. Listing on Propa is free, and Pro is a monthly subscription. The conveyancer is the same either way.

The question is whether the agent's time is worth the $20,000+ difference. For some sellers, yes. For others, no.

Frequently asked questions

Is real estate commission tax deductible?
For an investment property, generally yes (as a selling cost). For your own home, generally no, unless capital gains tax applies. Speak to a tax agent on your specific situation.

Do I have to pay commission if I find the buyer myself?
It depends on the agency agreement. Under a sole agency or exclusive agency, you usually do, even if the buyer came from your own network. Under an open listing, it depends on who introduced the buyer first. See our article on exclusive agency agreements.

When is the commission paid?
Almost always at settlement, out of the proceeds of sale. You do not write a cheque from your own pocket.

Can I switch agents if I am unhappy?
You can, but you need to check the cooling-off and termination terms in your agreement. Some agreements have lock-in periods.

Are commission rates regulated?
No. Commission was deregulated in most Australian states in the 1990s. Rates are market-driven.

For Buyers

For Sellers

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