How Much Commission Does a Real Estate Agent Make On a Million-Dollar Sale?
Real estate agents earn a pretty big commission check on a $1 million or $10 million home. For instance, with a typical commission rate of 2.49% – the national average as reported by Minty Real Estate's recent data – both real estate agents could earn $24,900 for selling a $1 million home, and an impressive $249,000 for a $10 million property.
But, are the high real estate agent commissions justified? Properties valued at or over a million dollars often attract fewer buyers, leading to longer sale times, sometimes twice as long as average homes. In the case of luxury homes, finding a buyer might take six months or more.
This is where the expertise of an agent becomes invaluable. Agents skilled in marketing luxury properties have a network of potential buyers, the necessary marketing acumen, and experience to achieve the desired results.
Also remember that commission rates are completely negotiable and can vary depending on the market. For properties worth $1 million or $10 million, negotiating a lower rate is often more flexible due to the large commission agents stand to earn even at a reduced rate.
Alternatively, consider working with a discount service like Minty Real Estate. Minty offers a pre-negotiated listing agent rate of 1.5% (incl. GST)– savings you thousands of dollars when you sell. On a $1 million property, this could mean a listing commission of $15,000 as opposed to the standard $28,300 at a 2.83% rate, saving you over $13,000.
💰Find your perfect agent, save big when you sell your $1 million home!
What is the commission on a $10 million dollar home?
The commission for selling a $10 million home is higher for the the total dollar amount despite potentially lower commission rates.
For instance, a 2% commission rate on a $10 million sale would result in $200,000 for the real estate agent. This amount is more than what an agent would earn from a 3% commission on a $1 million home sale, which would be $30,000 – a difference of $170,000.
Factors influencing commission rates for high-value properties like a $10 million home include the agent's experience and their network of prospective buyers, the current state of the real estate market in the home's location, the property's appeal and the likelihood of a sale, and any unique features of the home.
It's also important to remember that commission rates are negotiable. An experienced agent may be willing to negotiate lower rates for higher-value properties, leading to more favourable terms for sellers of such luxury homes.
Selling a $1 million home in 2024
For a swift and profitable sale of your million-dollar home, enlisting the services of a real estate agent is crucial. The luxury real estate market is challenging due to the limited pool of qualified buyers and the high expectations accompanying such significant investments.
In most Australian cities, it's essential to partner with an experienced real estate agent with a track record of successfully selling homes in the $1M+ range. They have the expertise to market your property and have the necessary local connections to attract the right buyers.
📊 Market snapshot: Understanding the Luxury Market Dynamics
- Resilient luxury market. Despite a general slowdown in the Australian market for home sales, reaching a 13-year low, the luxury market has been booming with increased inventory and rising prices.
- Record-high prices and growing inventory. The median price of luxury homes hit a record $2.1 million, up 9% from the previous year. The luxury market also saw a 2.9% increase in active listings compared to 2022.
- Cash purchases prevail. A significant 42.5% of luxury homes sold in the third quarter were bought with cash, reflecting the financial resilience of high-net-worth buyers amidst high mortgage rates.
>> How much it costs to sell in 2024
How top agents sell a $10 million homes
When selling a home in the $1-10 million range, it's not as simple as listing it on realestate.com.au and waiting. Top real estate agents bring their years of expertise and marketing acumen, crafting strategies tailored to attract a niche group of potential buyers.
Your agent's commission isn't just for their time; it's an investment in their deep understanding of the market and their ability to draw attention to your listing. They're your ally in garnering interest and navigating negotiations to secure the best possible deal.
Here's a glimpse into the strategies employed by agents to sell luxury homes:
Luxury marketing tools
In luxury home marketing, advanced visuals are essential. Top-notch photography, drone imagery, and 3D tours are popular, offering a comprehensive and captivating view of properties.
These techniques highlight the home's best features and provide an immersive experience for potential buyers, including out-of-town buyers who may not be able to view the property in person right away.
The strategy extends to visual storytelling, where striking images and videos get paired with engaging, informative copy. It can create a narrative that connects buyers to the property emotionally and intellectually.
Additionally, a targeted media strategy focusing on high-net-worth individuals in crucial. Tailoring this strategy to reach various demographics can help marketing resonate with the right audience, paving the way for a successful sale.
👀 What about open houses?
Luxury homes often forgo traditional open houses due to the risk of attracting more casual lookers than serious buyers. Instead, private showings are more common, aligning with sellers' preferences and the property's exclusivity.
Understanding buyer's requirements
Understanding the luxury buyer is a critical aspect of high-end real estate marketing. This process involves targeted marketing strategies that focus on a high-end clientele.
Recognising and accommodating luxury home buyers' unique needs and preferences is paramount. These buyers often have specific requirements and expectations that differ from the average homebuyer, and addressing these can influence the success of a sale.
Confidentiality is also vital in these transactions. Protecting sensitive information, often through non-disclosure agreements, ensures that buyers' and sellers' privacy and interests are safeguarded. This approach builds trust and enhances the buying experience for high-net-worth individuals.
Pricing the million dollar home right
This is a critical step in the selling process. This becomes even more crucial in the luxury real estate market due to the limited pool of potential buyers.
About 70% of recent home sellers sought a professional evaluation of their home's value before selling, a practice that is recommended for luxury properties. Tools like a comparative market analysis (CMA) or pre-listing appraisals help set accurate prices.
When setting the price for a million dollar home, it's important to consider a few main things: where the home is, how big it is, what condition it's in, and if it has any special features. This helps ensure the price isn't too high, which can stop the home from selling quickly.
It's also key to match the price with the seller's wants - a fast sale or the most money possible. Getting the price right helps find the best buyers and ensures the sale goes well.
How to save on a $1 million (or $10 million) sale
Negotiate a lower real estate agent commission
Saving on a high-value home sale, whether $1 million or $10 million, can be achieved by negotiating a lower realtor commission. Given the high sale price, you hold more leverage in these negotiations.
Studies say that only 22% of recent home sellers negotiate reduced fees. But these figures encompass all home sellers, not only those in the luxury market. So, your chances might be better in the high-end segment.
>> Learn how to sell with a top local agent at a pre-negotiated 1.5% commission
Several factors influence your negotiating power. The value and appeal of your home are significant, as well as the current state of your local market, including inventory levels. Additionally, the time of year can play a role.
Understanding these elements can help you negotiate a lower commission, leading to large savings in a high-value home sale.
Use a discount agency
A few discount agencies sell million dollar homes, which can be a savvy move when selling a luxury property. These services leverage licensed real estate agents who offer the same services as traditional agencies but at a lower commission rate. This approach can yield significant savings, especially in high-value real estate transactions.
These agents typically accept a pre-negotiated rate of around 1.5%, compared to the usual 2-3% listing commission. Despite the lower rate, agents can still earn a large commission due to the higher sales price of luxury properties.
Choosing a discount brokerage doesn't mean you'll receive discounted or limited service, either. You'll have access to agents who specialise in or have considerable experience with luxury homes. This ensures you receive expert guidance tailored to the high-end market.
If you're ready to sell your million dollar home, sell with Minty for a 1.5% (incl. GST) commission fee! And, if you buy your next home through Minty, you could qualify to get cash back after settlement.
Minty is 100% free for home sellers and there's no obligation to commit to an agent if you aren't satisfied with your matches.
