Sellers - agree on fee upfront

The lack of regulation on how much estate agents should be paid commission per sale has created uncertainty over what can be considered a fair fee.

The average industry commission ranges between 4 and 7.5% but is this realistic when it comes to selling a house say for R400 000 as opposed to one going for R5m?

Adrian Goslett, CEO of Remax Southern Africa, says determining a fee is a complex matter in which the seller plays a key role.

Goslett has some pointers:
  • Find an agent. This sounds simple enough, but browsing through the “classifieds or the smalls” is not advised. Referrals or recommendations are often a safer bet.
  • Don’t be shy to ask the suggested agent for credentials. How many homes has he/she sold in the past six months or a year? What is his/her track record in terms of selling the property for the listed price? In other words is the price obtained realistic as opposed to the asking price? If agents are reluctant to reveal this information, you need to ask yourself why.
  • It is also up to the seller to do his/her homework in terms of the realistic value of the house. The location here is crucial. What is the going price of similar properties in the area? This information can be obtained from the Internet, from attorneys and from services like Windeed which keeps records of all properties sold. A competent estate agent should also be in a position to provide this information.
  • Also watch out for agents who claim to have been in the business for a number of years. “The key is not to look for an experienced agent, but an experienced ‘producing’ agent,” Gosling says. An agent may have been in the business for 15 years, but may have sold only a handful of properties during that time.
  • Before deciding on a fee, ask what the agent’s marketing strategy will entail and whether or not that will include international exposure.

Goslett says according to statistics in the United States, only 9% of sellers find estate agents on the Internet. However, 90% of people will find information like the proximity of schools, malls, parks, highways etc in the vicinity of the for sale house on the Internet.

Engel & Völkers Southern Africa says the firm uses IT tools to evaluate and compile a report on the property in question and to determine how many similar properties had been sold over a two-year period. The Lightstone website can also be consulted in this regard at

As far as marketing is concerned, E&V will advertise the property under exclusive mandate in its National Guide Magazine and if warranted in its Global Guide magazine.

The firm’s agents do “price counselling” with its sellers and consult with First National Bank in getting them to accept a realistic price for the property in question.

Chairman of Seeff, Samuel Seeff, says the company abides by the 7.5% standard industry commission payable by sellers. He adds some agencies charge as much as 10% “depending on various factors and the services rendered.”

He says while agency commission, especially on upper end properties is negotiable, this is not the rule.

What has become clear in speaking to a number of estate agents is that there is no hard and fast rule when it comes to negotiating a commission fee.

Seeff elaborates: “There are instances where an agency pitching for a mandate, may well quote a rate well below the ‘standard’ commission rate, often in an attempt to ‘buy a mandate’ because their track record, infrastructure, marketing tools and ability alone wouldn’t justify mandating them …”. Others might be willing to compromise because the property in question is considered to be “high profile” and they hope to sell other properties off the back of it.

Seeff says in general top performing agencies are unlikely to accept brokerage rates much lower than 5% plus VAT.

It must be remembered that heavyweights in the industry are likely to offer a much bigger infrastructure to sellers and have a significant marketing platform. This costs money. But because clients know that these are bigger players, they are not averse to footing the commission bill.

The larger estate agencies also attract a much broader base of buyers and are able to zone in on the right buyers for a particular property.


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