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Estate agent commission: how it works
Estate agent commission is the fee the seller pays the agent when a home sells. There is no standard rate in law: it is negotiated between you and the agent. Rates are often quoted at about 5% to 7.5% of the selling price, plus VAT. You pay it from the sale proceeds, so you do not need to find the money in advance.
How the amount is worked out
Commission is a percentage of the selling price, with VAT added on top. VAT is currently 15%. Here is a simple example, using made-up figures to show the method.
- Selling price: R1 500 000.
- Commission at 5%: R75 000.
- VAT at 15% on the commission: R11 250.
- Total payable to the agent: R86 250.
At a higher rate, the figure rises quickly. Each extra half a percentage point on a R1 500 000 home adds R7 500 before VAT. When an agent quotes you a rate, always ask whether VAT is included, because the difference is real money.
Who pays and when
The seller pays. The buyer does not pay the seller’s agent. Commission is normally due when the sale is complete, which means when the property is registered in the buyer’s name at the Deeds Office. The conveyancer (the attorney who handles the transfer) usually pays the agent from your sale proceeds and settles your bond and other costs at the same time.
Your mandate, the agreement that appoints the agent, should say when commission becomes due. Some agreements say it is earned once a valid sale agreement is signed, even if the deal later falls through for a reason that is your fault. Read this clause before you sign.
What you can negotiate
Because there is no fixed rate, you can ask. Agents may be willing to move on the percentage for a higher-priced home, or if you give them a sole mandate. Some points to raise:
- the percentage, and whether it changes above a certain price;
- whether the quote includes VAT;
- what marketing is included, and whether advertising costs are extra;
- how long the mandate runs and what happens if you cancel;
- whether commission is payable if you find a buyer yourself.
The lowest rate is not always the best deal. An agent who charges less but does little marketing may leave you with a lower price or a longer wait, which can cost more than the saving. Compare what each agent will actually do for the fee.
Rules the agent must follow
An agent must have a valid Fidelity Fund Certificate. If they do not, they have no legal right to be paid for the work. The conveyancer may not pay commission without a certified copy of the certificate, so a genuine agent should have it ready. Ask to see it early, and check their registration with the Property Practitioners Regulatory Authority (the PPRA, the body that regulates the industry) if you are unsure.
The agent also may not accept your mandate until you have handed over a completed and signed mandatory disclosure form. This is where you declare the defects you know about.
Attorneys who sell property from their practices fall outside the definition of a property practitioner in the Act, so ask them for their fee in the same way you would ask an agent.
Other costs when you sell
Commission is only one cost of selling. You will also pay the conveyancer’s fees, the cost of cancelling your bond if you have one, and the costs of any compliance certificates the sale needs. The bank may also charge an early termination charge, depending on your loan agreement and the notice you give. Add these up before you decide on your asking price, so you know what you will actually receive.
You may also owe capital gains tax if you make a profit, although the primary residence exclusion covers the first R3 000 000 of gain on your home (for the 2027 tax year, and the date that counts can depend on the sale agreement). A tax practitioner can tell you what applies to your case.
What to do next
- Run your own numbers with the estate agent commission calculator.
- Read sole mandate or open mandate to understand what you are signing.
- Compare selling privately with using an agent in private sale or estate agent.
- Find an agent and ask three of them for their rate and what it includes.
This article is general information for South African readers, not legal, financial or tax advice. Rules and rates change, so check your own situation with an attorney, your bank or a tax practitioner. Our property calculators can help you work out the numbers.