Fees and commission
Flat Fee vs Percentage Real Estate Commission
The two models are simple enough. A flat fee is a fixed dollar amount, whatever your home sells for. A percentage commission rises with the sale price. What is less simple is which one actually leaves you better off — and the answer changes with the price your home achieves.
The short answer
Neither model is automatically cheaper. A flat fee costs less in dollars on an expensive home and more on a cheap one, and it usually excludes marketing. A percentage commission rises with your sale price, which means the agent earns more when you sell for more. Which is better depends on your price point, the marketing arrangements, and what the agent actually does.
The one calculation that matters
Because a flat fee is fixed and a percentage commission scales, the two models cross over at exactly one sale price. Below it, the percentage commission costs less. Above it, the flat fee does. That crossover point is the whole comparison in a single number — and it is easy to work out once you know both figures.
Everything else — how the marketing is charged, what the agent actually delivers, and whether the sale price holds up — sits on top of that arithmetic. But start with the arithmetic, because it is the part nobody can argue with.
Where the two models cross over
Using an illustrative flat fee and our published starting rate, this is the sale price at which the two cost the same.
- Flat fee (illustration)
- $9,000
- Our starting rate, including GST
- 1.10% of the sale price
- Sale price at which the two are equal
- $818,182
- Below that price
- The percentage commission costs less
- Above that price
- The flat fee costs less in dollars
The flat fee shown is an illustration, not any agency's price. This is arithmetic only — it does not account for marketing, which a flat fee commonly excludes and which we charge separately at cost, nor for any difference in the sale price each model achieves.
The same sale price under both models
A flat fee of $9,000 against percentage commissions at three rates, including GST.
| Sale price | Flat fee of $9,000 | 1% + GST | 2% + GST | 2.5% + GST |
|---|---|---|---|---|
| $600,000 | $9,000 | $6,600 | $13,200 | $16,500 |
| $750,000 | $9,000 | $8,250 | $16,500 | $20,625 |
| $900,000 | $9,000 | $9,900 | $19,800 | $24,750 |
| $1,100,000 | $9,000 | $12,100 | $24,200 | $30,250 |
| $1,300,000 | $9,000 | $14,300 | $28,600 | $35,750 |
Illustrations only. The flat fee is a round number used to show the arithmetic, not a quote from any agency. Our starting rate is 1% plus GST, and it is not available on every engagement — your rate is confirmed in writing.
The incentive difference is real
It is worth being straightforward about this, because it is the argument that matters most and the one least often explained plainly. On a percentage commission, the agent's income rises when your sale price rises. On a flat fee, the agent's income is the same whether your home sells for $700,000 or $760,000.
That does not make flat-fee agents dishonest, and it does not mean a percentage agent automatically works harder. It does mean that on a percentage fee, your interests and your agent's are pointed in the same direction on the single most important number in the transaction. On a flat fee, they are not — and you are relying on professionalism alone.
The counter-argument is equally fair: a flat fee is predictable, and if you are confident about your price and your buyer pool, predictability has real value.
When each model tends to suit
| Flat fee | Percentage commission | |
|---|---|---|
| Best on | Higher-priced homes, where a fixed fee is cheaper in dollars | Homes where competition or negotiation could lift the price meaningfully |
| Marketing | Often excluded, so check what is charged on top | Usually separate as well — confirm it either way |
| Price certainty | High — you know the cost upfront | Lower in dollars, because the fee moves with the result |
| Agent incentive | The same regardless of the price achieved | Aligned with achieving a higher price |
| The real risk | A lower sale price costs you far more than the fee saved | A higher fee on a result that does not justify it |
How to decide for your own property
Work out the crossover price for the fee you are being quoted. If your realistic sale price is comfortably above it, the flat fee is cheaper in dollars and the question becomes whether you are giving up anything in the result. If your realistic price is below it, the percentage model is cheaper and the flat fee is a worse deal on arithmetic alone.
Then ask the question that sits underneath all of it: what has this agent achieved on comparable homes, and how? A fee is only ever a percentage of a number you have not achieved yet.
Sources and references
- William Whyte Property — Real Estate Agent Fees (williamwhyte.com.au/real-estate-agent-fees), the published fee position used throughout this article.
- Estate Agents Act 1980 (Vic) — a vendor must sign a written authority before an estate agent can act for them.
Flat Fee vs Percentage Real Estate Commission — frequently asked questions
Is a flat fee cheaper than a percentage commission?
It depends entirely on your sale price. Because a flat fee is fixed and a percentage scales, the two cross over at one price. Above that price the flat fee is cheaper in dollars; below it, the percentage commission is. Work out the crossover for the figures you are quoted before deciding.
Does a flat fee include marketing?
Often not, which is the most common misunderstanding in flat-fee comparisons. If marketing is excluded, add the campaign cost to the flat fee before comparing it with a percentage quote — otherwise you are comparing two different things.
Which model is better for the seller?
There is no universal answer. A flat fee gives you cost certainty. A percentage commission aligns the agent's income with the price you achieve. The honest test is whether the agent can show recent comparable results, whichever model they use.
Can a flat fee agent still negotiate hard on price?
A professional one can and does. But it is fair to note the difference in incentive: on a flat fee the agent's income does not change with the final price, whereas on a percentage commission it does. That is worth weighing when you decide which model suits you.
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William Whyte Property · 261 Thomas Street, Dandenong VIC 3175