This information has been provided by
Australian law firm, Australian Conveyancing Services and is applicable in Queensland
only.
When you list your property with an Agent, you will almost always be asked to sign an Agency agreement. This is a written contract and not just a ‘listing’ notice – so you need to read it carefully to make sure that you are happy with its terms.
Many clients of mine have not realized this. They can’t even remember really signing anything in particular, probably because they were so focused on the fact that they were listing their property for sale. But I have seen disputes arise between Sellers and their agents, particularly regarding commission and other payments, so you should give this agreement the importance that it is
due.
Normally the Agent’s agreement will cover the following:
The amount of commission payable – In Qld this is normally in accordance with the scale fee set by the Qld Real Estate Institute. Some States, such as NSW, have a deregulated system which allows you to negotiate the commission below the scale fee – you should check with your particular authority.
In Queensland, the scale fee is 5% on the first $18,000 of sale price and 2.5% on the balance. This fee can be negotiated down, but in practice I have rarely seen this done.
Legalmart has developed a Commission calculator based on
the Qld scale fee. CLICK on the button below. You will
then go to a pop up screen which contains the calculator.
Simply type in the sale price of your property and press
Calculate.
When the commission is payable – The commission is normally payable once you have sold the property and actually received the sale monies. The commission is usually taken out of the deposit after settlement, with any balance of the deposit being sent to you after settlement by the Agent. If the deposit is not enough to cover the commission, then the Agent will ask you for the balance from the sale proceeds.
It is a good idea to get enough deposit to cover the commission. Click on the Commission Calculator above to see see how much deposit is needed to cover the commission.
You should also be aware that there are some situations where you must pay the commission even if you don’t sell your property. You need to check your agreement to see when this could occur. For instance, there is often a clause in sole agency agreements that if someone else sells the property during the sole agency agreement (even if you sell it to a relative), commission is still payable in full. Also, I have often seen clauses in these agreements that make full commission payable in situations where you enter into a Contract, but it falls through because of the buyer’s default or ‘wrongdoing’, and you are able to forfeit the deposit. In this case the Agent has been able to rely on this clause and take the whole commission, which is often equal to the amount of the deposit. This leaves the Seller with nothing, and a house that is still not sold!
Advertising and Marketing Costs –
You should request the agent to give you a marketing plan that sets out
the type of advertising they will conduct and the time frame for that
marketing. The total cost of the marketing campaign should be included in
your agreement, along with the payment terms (eg to be taken out of sale
proceeds, or payable upfront, etc).
The sales method (eg sole agency/multi list, etc) – The method of sale, along with the time frame that you are committed to the agency should be clearly stated. For a full discussion on this topic, see my section on Sales Methods -
Pros & Cons
