The truth behind agent commissions

Are they an incentive or a scam?

Let’s face it, agent commissions are supposed to act as an incentive for real estate agents to achieve a higher sales price. And considering they’re the single biggest expense associated with a sale, you’d want to hope that’s the case.

Only it isn’t.

In 2026, most agents charge between 2 and 3 per cent of your sale price, with the national median sitting around 2.65 per cent. On an $800,000 home, that’s roughly $21,000 of your equity.

Your agent will personally see a fraction of it.

The thing about real estate agents is they’re very good at convincing you they are your best option. They are sales people, after all. But there are a few things you probably don’t know about the structure of real estate commissions. If you knew, you might think twice before hiring your next agent.

So, let me enlighten you.

Most agencies take a portion of the commission

You think you’re incentivising your agent to work hard on your behalf by paying them commission, but when you crunch the numbers and see where the money really goes, you can see there’s very little incentive for the agent.

Take that $800,000 sale at a round 2.5 per cent: a $20,000 commission. (Rates vary a lot by postcode and state, so we’ve broken down real estate agent commission by state if you want the number for your market.) What you may not realise is that in many agencies, up to 60 per cent of that money can go to the agency itself. The remainder is then split between the listing agent who originally performed your market appraisal and the agent who sells your house. You’re still out $20,000, but your selling agent may be looking at $4,000 at best. If the agent manages to sell your house for $10,000 more, he or she could walk away with little over $50 extra. Unfortunately, this is why many agents are focused on making a quick sale. Because with these figures, why should they bother putting in the effort to get you more?

Some real estate agents make nothing from commission

So what’s revealed above is bad enough. Unfortunately, it gets worse. Many real estate agents are paid a weekly wage under what the industry calls a debit-credit salary, which builds up between sales. They don’t earn any of their commission until it exceeds what they’ve already been paid in wages: a kind of “wage debt”. So if an agent racks up $5,000 in weekly salary payments, they don’t net any of the $4,000 commission from your sale. It just goes towards clearing their wage debt.

Many real estate agents become disheartened

Every year, new agents pour into the industry after completing the required government courses. But the pressure to earn in real estate is high. Agents have to generate their own income by canvassing homeowners for listings and obtaining properties to sell. They often work unsociable hours across weekends and evenings, and most will only earn a modest base income. Not the greatest reward for such unsociable hours. So it’s hardly surprising that a large share of newly registered agents become disheartened and leave the profession within their first couple of years.

Agent money is in listing, not selling

As I always say, “houses sell themselves”, so the best thing an agent can do to maximise his or her income is to focus on getting listings. Lots and lots of listings. This is why agents will do free appraisals and spend huge amounts of time and money trying to secure your business. Time and money that is not being spent on trying to sell the properties they have listed already.

Commission isn’t regulated anywhere in Australia, either. Agents set their own rates, and they expect to be negotiated with. NSW Fair Trading’s guidance on agency agreements is a good plain-English rundown of what you’re actually signing up for, and if you do go the agent route, our guide to what a fair commission looks like and how to negotiate it can save you thousands in a single conversation.

A different perspective

As Director of PropertyNow, I tend to have these recurring conversations with sellers.

“I think I could sell my own property,” they tell me. “But my agent assures me they can get a higher sales price.”

“This is something I hear all the time,” I explain. “And I can appreciate why you would think that, but it’s simply not true. I see living proof of this every day.”

And this is true.

You only have to read through PropertyNow testimonials to see that sellers often achieve a sales price well above the highest price quoted to them by an agent. In fact, one owner who sold with us in Sydney ended up being more than $250,000 better off. That’s extra profit in their pocket with no money lost to agent commissions.

Australian real estate agencies are racking up incredible profits for very little effort. Before signing with an agent, most home sellers don’t question where their commission is going and whether it will achieve them a higher sales price.

But you now have some understanding of how real estate commissions can be structured. And so, I have one question for you.

Knowing the bulk of your commission may merely be feeding the pocket of the real estate agency and not the agent, are you still keen to use their services?

Selling property is one of the most important financial transactions you’ll ever make. So I urge you to explore all of your options and make sure you have all the facts at hand. This way, you can pick the selling method most suitable for you and your own personal circumstances.

Curious what the maths looks like on your own home? Our commission savings calculator puts a typical commission next to a flat fee in about ten seconds. And if the idea of selling your own property appeals but the process feels unfamiliar, our step-by-step guide to selling your home online covers it from listing through to settlement.

Frequently asked questions

How much do real estate agents earn per sale? Far less than the commission figure suggests. On an $800,000 sale at 2.5 per cent, the commission is $20,000, but after the agency’s share and the split with the listing agent, the selling agent may see around $4,000, and often less once their weekly wage is deducted.

How much commission does a real estate agent charge in Australia? Typically 2 to 3 per cent of the sale price in 2026, with a national median around 2.65 per cent. Rates vary a lot by state and postcode, and they’re negotiable everywhere.

Do real estate agents get a base salary? Many do, but often as a debit-credit arrangement: a weekly wage that’s later deducted from the commissions they earn. Until their commission exceeds their accumulated wages, a sale earns them nothing extra.

Does paying a higher commission get you a higher sale price? Not reliably. The agent personally receives only a small slice of any price improvement, often about $50 on an extra $10,000. What the structure really rewards is winning plenty of listings and selling them quickly.

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Related stories: Real estate agent commission by state (2026) · Real estate agent commissions: how much should you pay? · The hidden fees for selling a house

Post Author: Andrew Blachut: Director and Licensee, PropertyNow

Andrew is a licensed real estate agent who has been working in the industry for decades. Andrew is a big advocate for change in the industry and pioneered the agent-assisted sales model in Australia. Since then, Andrew has helped thousands of people to sell their properties successfully and with no commission.

Disclaimer: Commission figures are 2026 market averages provided as a general guide only; rates are unregulated, vary by suburb and agent, and are negotiable. Claims about how commission is distributed are based on Mr Blachut’s decades of experience in the industry and do not necessarily reflect standard practice in every agency around Australia. We encourage owners to explore all options and get the facts, particularly with regard to the commission arrangements of any agent they choose to engage.