Navigating the world of real estate commission can be complicated business, regardless of which side of the transaction you’re on. Whether you’re the one shortlisting potential agents or figuring out how much to charge for your services, there are two key agent costs to consider – fees and commission.

Usually, the fees associated with hiring a real estate agent are designed to cover their costs for advertising and marketing your property, while their commission is a percentage of the sale price that they get for your property. In order to feel like you’re getting a fair deal, it is important to understand how the field works and what the usual practices are.

Here are seven real estate sales commission tips to help guide you:

1. Familiarize yourself with the local average

The average commission varies from place to place, so it is important to get a sense of what it is like in your area. Find out what percentage of the sale price of the home your friends, neighbours, and family members paid.

Also, keep in mind that marketing costs usually come on top of this, and can also vary substantially. You should expect to pay around $500 into the thousands – depending on how far you want to reach and how diverse you need the advertising to be.

2. Understand that different agents have different structures

Although the field is subject to some rules and regulations, there is not necessarily just one way of doing things. Agents have the freedom to structure their fees differently. This means that some include the cost of advertising in the commission and will quote you a higher rate right off the top.

Others, meanwhile, will use a ‘sliding scale’ or ‘tiered’ commission, which usually means a lower rate on the first lump sum that increases after a certain point. This is not necessarily sometime to be wary of, as it certainly acts as an incentive for them to work harder for a higher sale price and is thus quite common when it comes to selling very expensive properties.

3. Know that you have the power to negotiate

One of the real estate sales commission tips you should remember is the power of negotiation. When discussing the terms of your agreement with an agent, you can always negotiate. Commission structures are flexible for real estate agents, since there is no legal regulation of commission percentages for the real estate industry. In fact, it’s actually considered normal to discuss commission together.

This means that you have an obligation to ask potential agents all about their commission structure when you first interview them. Then you’ll be in a better position to compare what you’re working with and can decide on the right agent.

4. Don’t be fooled by very low commission

No one can blame you for being tempted to go with the agent offering the lowest commission, but you shouldn’t act so fast. Remind yourself that you’re looking for the best real estate agent, not just the cheapest.

Typically, when you compare cheap and expensive agents, the difference in final selling prices far outweighs the differences in agent commissions. If an agent is able to get you a substantially higher price, that means you’re going to end up with more cash, despite paying more commission.

5. Discuss marketing and advertising

As mentioned above, since not all real estate agents include marketing and advertising costs in their commission structure, it’s smart to prepare for these costs in your calculations when budgeting for the sale of your property.

This is not an insubstantial part of the process and you want to make sure you’re on the same page as your agent regarding budget and how the advertising is going to be carried out.

6. Be aware of unconditional commission

Another real estate practice to be familiar with is called unconditional commission. In some cases, a real estate contract will state that the commission payable is unconditional once the sale is complete, which is when contracts have been exchanged. These terms essentially mean that you will be liable for the commission even if the sale falls through prior to settlement.

For this reason, it’s a good idea to ensure that the buyer’s deposit is at least the figure of your agent’s commission, otherwise you could very well end up out of pocket. It’s also a good idea to have your lawyer take a look at all agent contracts prior to signing anything, in order to confirm that you’re agreeing to reasonable terms.

7. Take into account pre-sale repairs and renovations

When figuring out your budget, what you’re expecting to receive for your home, and what you’re willing to pay in commission, it’s a good idea to set a little bit of money aside for minor home repairs. Even if you’re not planning on doing major renovations before you sell, you should still invest a little in small touch-ups to ensure your property is presented at its best.