Commission is the fee the real estate agent earns for selling your home, and for most sellers it is by far the largest cost of the whole process. It is also one of the least understood, partly because it is rarely a single flat percentage and partly because agents do not always explain it clearly up front. Understanding how commission is structured, who pays it, when it is due and how GST applies puts you in a far stronger position to compare agents and to negotiate with confidence. This guide explains it plainly, in general terms current at the time of writing, so that when an agent presents their fee you can read it, question it, and decide whether it represents good value rather than just signing it.
Quick answer
In New Zealand, real estate commission is paid by the seller, not the buyer, and it is taken out of the sale proceeds at settlement rather than paid up front. It is usually calculated as a percentage of the sale price, and very often it is tiered, meaning a higher percentage applies to the first portion of the price and a lower percentage to the amount above that, sometimes with a fixed base fee on top. GST is added to the commission. Because it is a percentage, the dollar amount rises with your sale price. Commission is negotiable, and rates and structures differ between agents and agencies, so it is genuinely worth comparing. The most important thing is to get the exact structure in writing before you sign the agency agreement, and to make sure you understand whether the figures quoted include or exclude GST.
The detail, in plain English
A tiered commission is the most common structure, and it works like this: the agent charges one percentage on the first slice of the sale price, then a lower percentage on the rest, frequently with a small fixed fee added as well. So the headline rate alone does not tell you the full cost; you need to apply the whole structure to your expected sale price to see the real dollar figure. Always ask the agent to do that calculation for you on a realistic price, and to show it including GST, because a quote that quietly excludes GST will be larger than it first appears. Commission is paid out of the proceeds at settlement, usually deducted by the lawyer or held by the agency from the deposit and balance, so you never write a separate cheque; it simply reduces what you receive. Crucially, commission is negotiable. Agents and agencies set their own rates, and there is no fixed industry figure, so two agents may quote noticeably different structures for the same home. When you compare, look beyond the percentage to what the agent will actually do for the fee, because a slightly higher commission paired with stronger marketing and sharper negotiation can return more in your pocket than the cheapest rate that under-sells your home. Commission usually sits on top of separate marketing costs, which the seller also generally pays, so be clear about what the commission covers and what is charged additionally. For the full picture of selling costs, read how much it costs to sell a house at /how-much-cost-to-sell-house-nz/.
What it means for you
Because commission comes straight out of your proceeds, it directly affects what you walk away with, which for many sellers is the deposit on a safer, more settled next home. That makes it worth understanding rather than glossing over. The point is not simply to drive the rate as low as possible, because the cheapest agent can cost you more if a weaker campaign or softer negotiation leaves money on the table. The smarter approach is to judge commission as part of the overall value: what result will this agent get, with what marketing and negotiation, for this fee. Ask each agent you meet to lay out their commission structure clearly, including GST, calculated on a realistic price, and to explain what it buys. An agent who is transparent and confident about their fee, and can justify it with a strong plan, is usually a better bet than one who is vague or evasive about how much you will actually pay.
Common questions
Who pays the commission, the buyer or the seller? The seller pays it, deducted from the sale proceeds at settlement. Is commission a flat percentage? Often not; it is commonly tiered, with a higher rate on the first portion of the price and a lower rate above, sometimes plus a fixed fee. Is GST added? Yes; GST applies to the commission, so always check whether a quoted figure includes it. Can I negotiate the rate? Yes; commission is negotiable and varies between agents, so comparing and discussing it is reasonable and expected. Does commission include marketing? Usually no; marketing is typically a separate seller cost, so confirm what the commission covers. When do I pay it? At settlement, out of the proceeds, not up front. What happens to commission if my home does not sell? On most agreements no commission is due if there is no sale, though you may still have paid for marketing, so confirm this in writing. Is there a standard commission rate in New Zealand? No; there is no fixed industry rate, which is exactly why comparing agents and discussing the fee is both reasonable and worthwhile.
Your next step
The clearest way to understand what commission will cost you is to have a couple of good local agents present their fee structure in writing, calculated on a realistic sale price and including GST, then compare them alongside their marketing plan. Maifang can match you, free and with no obligation, with capable local agents so you can compare fee and plan side by side rather than cold-calling several agencies. To start, find a local agent at /find-a-local-agent/, and to see how commission affects your bottom line, read what net proceeds means at /what-are-net-proceeds/. When you are ready, get in touch at /contact/ and we will help you take the next step.
In plain English: In plain English: the seller pays the agent's commission out of the sale proceeds at settlement; it is usually a tiered percentage of the price plus GST, it is negotiable, and marketing is normally charged on top. Compare agents on fee and plan together, and always get the structure in writing, including GST, before you sign.
General information, not personalised real-estate, legal or financial advice. Confirm your situation with a licensed adviser. Read the full disclaimer →