Real estate agent commission NZ: 2025 costs, rules & smart negotiation

September 03, 2025•14 min read

Agents usually charge commission as a tiered percentage: e.g. 3% on the first $400,000, then 2% on the balance — this must be clearly stated in your agreement.
(Settled)
Expect to pay an administration fee (often around $500) plus commission, and be sure it’s all explained in writing. (Settled)
A written agency agreement must be signed before any commission is payable,and you must be given a copy of the signed agreement within 48 hours. Commission terms (including how the fee is calculated and whether GST is included) must be disclosed in the agreement before you sign. (rea.govt)
Commission is typically deducted from the buyer’s deposit held in trust once the sale becomes unconditional.
Every agency agreement is required to be accompanied by a current market appraisal (CMA)” and agents must provide a written price appraisal before the agreement is signed

Real estate agent commission NZ is one of the biggest financial factors when selling your home, and understanding how it works can make a significant difference to your final outcome. The commission influences how much you pay your agent, the style and quality of marketing you receive, and ultimately, the net proceeds that remain in your pocket.

In New Zealand, commission is normally structured as a percentage of the sale price, sometimes with tiered levels. These terms must be recorded in a written agency agreement, which sets out how fees are calculated and when they are due. Under the Real Estate Agents Act 2008, no agent can claim a commission without a valid, signed agreement, which provides sellers with legal protection from unexpected costs.

Oversight comes from the Real Estate Authority (REA), which requires that approved consumer guides are provided before signing. These explain commission formulas, disclosure rules, and your rights as a vendor.

Choosing an agent isn’t only about fees — it’s about the value you receive. A skilled professional with strong marketing reach and negotiation expertise may deliver a far better result than a cheaper option. To explore this further, see our guide: How to Choose the Best Real Estate Agent in Auckland (2025 Guide).

How the real estate agent commission NZ works today

Real estate agent commission NZ is generally calculated using a tiered percentage structure, meaning you pay a higher rate on the first portion of your property’s sale price and a lower rate on the balance. For example, an agreement might apply 3% on the first $400,000 and then 2% on the remainder. These details must be written into your agency agreement, which you are entitled to review before signing.

Commission is not the only cost. Most agencies also charge an administration fee, often around $500, and some add marketing expenses such as professional photography, online premium listings, or auctioneer services. According to the Real Estate Authority, all of these charges must be disclosed clearly in advance.

Another essential detail is GST at 15%, which is added to the commission and any extra fees. Sellers sometimes assume commission quotes are GST-inclusive, but this is not always the case. The Inland Revenue Department stresses the importance of confirming whether fees are quoted with or without GST, as this directly affects your net return.

Payment is normally made from the buyer’s deposit once the sale and purchase agreement goes unconditional. The funds are held in the agency’s trust account and then distributed, with your lawyer or conveyancer overseeing the settlement process. As explained by Settled. govt. This process ensures the agent receives the agreed commission, and you receive the balance safely.

For a broader look at how commission fits into the overall selling journey, see our resource: 23 Questions To Ask Real Estate Agents When Selling Your Home in NZ.

Rules and protections for real estate agent commission NZ

Real estate agent commission NZ is governed by a strict legal framework designed to protect sellers from unfair or hidden charges. The most important rule is that an agent cannot claim commission unless there is a valid, signed agency agreement. This requirement ensures you are fully aware of the terms before any fees become payable.

Sellers are also protected under the Real Estate Agents Act 2008; an agent is not entitled to claim commission without a valid, signed agency agreement. The law requires clear disclosure of how the commission is calculated, whether GST is included, and what additional expenses may apply. If these details are missing or misleading, you have grounds for a complaint or dispute.

Another safeguard is the mandatory provision of consumer guides from the Real Estate Authority (REA). Before you sign an agency agreement, your agent must give you a written guide explaining your rights and obligations, including how to avoid the risk of paying double commission if you change agencies during your selling campaign. These guides must be kept with your records for reference.

Transparency also extends to marketing costs and rebates. If an agent receives a discount or rebate on advertising, this must be disclosed to you in writing. According to Settled. govt.NZ, full disclosure ensures you know exactly where your money is going and prevents conflicts of interest.

These protections provide sellers in New Zealand with a clear framework for understanding, negotiating, and challenging commissions if needed — giving you confidence throughout the selling process.

Negotiating real estate agent commission: data and tactics

Real estate agent commission in NZ is always open to negotiation, and approaching the discussion strategically can save you thousands while ensuring you get the best service. The secret is to weigh value over rate — the cheapest fee may not deliver the best sales result.

A strong negotiation begins with information. Ask each agent to provide a written comparative market appraisal, which outlines their estimated selling price and explains how the commission would be applied. Comparing appraisals allows you to see:

Who understands your local market best?
Whether the suggested fee reflects the property’s value.
How realistic their price expectations are.

Timing plays a significant role. Agents often sharpen their offers once they know you are interviewing others. According to Settled.govt You should:

Shortlist two or three agents.
Ask each to provide a detailed breakdown of their commission.
Invite them to improve their offer — either by offering a lower rate or adding marketing extras.

Bundled marketing can add huge value. Instead of focusing solely on fee reduction, consider negotiating for:

Premium online listings.
Professional photography or video tours.
Auctioneers or specialist negotiators.
Targeted digital campaigns.

Commission structures themselves can also be adjusted. Vendors sometimes agree to:

A tiered structure (higher rate first, lower rate later).
A declining scale if a higher price is achieved.
A flat percentage inclusive of key marketing.

One critical detail is GST. The Inland Revenue Department requires all commissions to attract 15% GST, so confirm whether quotes are inclusive or exclusive to avoid surprises.

Finally, cover service levels, not just money. Clarify in writing:

How often will you receive progress reports?
How feedback from buyers will be shared.
What happens if the campaign stalls?

To strengthen your position, use Find Your Top Local Agent to compare multiple proposals. Having competing offers on the table puts you in the best position to negotiate a transparent and fair arrangement.

Regional and method differences in real estate agent commission NZ

Real estate agent commission in NZ can vary depending on where you sell and the method you choose. Commission rates are not standardised, and local market conditions play a role in how fees are structured.

In auction-heavy regions like Auckland and Wellington, agencies often include stronger marketing packages because competitive bidding typically drives higher sale prices. This can mean the commission looks higher on paper but delivers better value in practice.

In contrast, some smaller regions with lower property values may show slightly higher percentages, as agents must cover their fixed costs across fewer sales. According to Settled.govt.nz, what matters most is that all terms are disclosed in writing and explained clearly.

Your choice of sales method also impacts commission:

Auctions often involve higher upfront marketing costs but can produce premium results.
Tenders: Although they may attract fewer buyers, they add urgency, helping to justify the commission.
Private treaty sales: Provide flexibility and are widely used outside major cities.
Selling privately: Avoids commission altogether but requires more effort, legal knowledge, and buyer management.

For a breakdown of pros and cons, see Sell House Privately vs Agent NZ.

Worked examples of real estate agent commission with GST

Real estate agent commission NZ becomes clearer when worked out step by step. Commission is usually tiered, with one percentage applying to the first portion of the sale price and a lower percentage applying to the balance. According to Settled, these terms must be clearly written in your agency agreement.

Example 1: Sale price $600,000

3% on the first $400,000 = $12,000
2% on the remaining $200,000 = $4,000
Administration fee = $500
Subtotal = $16,500
GST at 15% = $2,475 (Inland Revenue)
Total commission payable = $18,975

Example 2: Sale price $800,000

3% on the first $400,000 = $12,000
2% on the next $400,000 = $8,000
Administration fee = $500
Subtotal = $20,500
GST at 15% = $3,075
Total commission payable = $23,575

Example 3: Sale price $1.2 million

3% on the first $400,000 = $12,000
2% on the next $800,000 = $16,000
Administration fee = $500
Subtotal = $28,500
GST at 15% = $4,275
Total commission payable = $32,775

These calculations highlight why it’s critical to ask for GST-inclusive quotes. Sellers sometimes underestimate costs because quotes are presented without GST.

Common mistakes to avoid:

Assuming marketing is included in the fee when it may be charged separately.
Comparing fees without checking whether GST is included.
Ignoring how tiered structures affect higher-value properties.

For a transparent comparison of agents and their commission structures, see Find your Top Local Agent.

Agency agreement and real estate agent commission

Real estate agent commission NZ terms are legally binding only when written into an agency agreement. This document sets out not just the commission percentage but also the conditions under which it is payable. According to the Real Estate Authority (REA), you must receive and review the agreement before signing.

An agency agreement should clearly state:

The commission structure (tiered, flat, or mixed).
Whether GST is included in the quoted fee.
Any administration or marketing charges.
How rebates or discounts will be disclosed.
The duration of the agreement and termination rules.

Settled. govt.NZ notes that you must also be given the REA Agency Agreement Guide, which explains your rights in plain language. Keeping this guide on file helps if disputes arise later.

Double commission is another concern. If you switch agencies during a campaign, you risk being charged twice unless standard REA–REINZ clauses are included in your agreement. Always ask whether these clauses are being used.

To see how agents differ in their approach to agreements and fees, you can compare offers through Find your Top Local Agent before committing.

GST and real estate agent commission NZ

Real estate agent commission NZ is always subject to 15% Goods and Services Tax (GST), which is added to the commission and any related fees. Sellers often overlook this, leading to unexpected costs at settlement. The Inland Revenue Department makes it clear that GST applies to all professional services, including real estate.

When reviewing commission proposals, always confirm whether the quote is GST-inclusive. A fee that looks lower on paper may end up costing significantly more once GST is added. According to Settled.govt.nz, the agency agreement must clearly state how GST is applied.

Key things to check:

Is the commission rate quoted inclusive or exclusive of GST?
Are administration fees and marketing costs also subject to GST?
Does the final invoice match the agreement’s wording?

Payment of commission, including GST, is usually deducted from the buyer’s deposit held in trust after the agreement becomes unconditional. Your lawyer or conveyancer manages the distribution, ensuring the agent’s payment is correct and you receive the balance.

By clarifying GST upfront, you avoid surprises and ensure comparisons between agents are accurate.

Case studies and insights on real estate agents

Real estate agent commission NZ plays out differently in practice depending on how fees are structured and what value is delivered. Real-world examples highlight the impact of negotiating terms and inclusions.

In Auckland, one vendor selling a villa agreed to a standard tiered commission but negotiated for premium marketing to be bundled into the fee. This included professional photography, a video tour, and a Trade Me feature listing. The higher exposure attracted multiple bidders, and the property sold for a price well above its expected value. The extra marketing value easily outweighed the cost of paying a full commission.
A Wellington townhouse sale showed another angle. Here, the vendor negotiated a slightly reduced commission rate but placed greater emphasis on service. The agent committed to weekly progress reports, detailed buyer feedback, and an early tender deadline to create urgency. The result was a competitive offer above market expectation, proving that clear service commitments can be as important as the fee itself.

These case studies highlight the importance of considering value, marketing reach, and service levels in conjunction with commission. The right balance can deliver a better net outcome than focusing solely on percentage rates.

Compliance and competition history in real estate agent commission in NZ

Real estate agents have faced scrutiny in the past, with regulators stepping in to ensure fair competition and transparency. One of the most notable interventions came from the Commerce Commission, which has investigated and fined agencies for collusion on fee structures. These cases highlight the importance of sellers comparing offers independently.

Regulation has improved since then. The Real Estate Authority (REA) enforces strict rules that require commissions and expenses to be clearly disclosed in writing. Agents must also provide consumer guides that explain their rights and outline how to avoid risks such as double commission.

The legacy of Commerce Commission enforcement means today’s market is far more transparent. Agents are expected to compete on both value and service, not just fees. For sellers, this is a clear advantage: by inviting multiple proposals, you create competition that works in your favour.

These compliance measures show that the commission system is not left to chance. It is actively monitored by regulators, giving sellers confidence that the framework is fair — provided you take the time to compare and negotiate.

FAQ

Real estate agent commission raises many questions for homeowners preparing to sell. Here are the most important ones with answers based on official sources:

1. How is commission structured?
Most agreements use a tiered formula, such as 3% on the first $400,000 and 2% on the balance. This must be written in your agency agreement.

2. Can commission be negotiated?
Yes. Commission is not fixed by law. Vendors are encouraged to ask agents to sharpen their offers or include marketing extras.

3. Does GST apply?
Yes. The commission always attracts 15% GST, which must be shown clearly in the agreement and final invoice.

4. When is commission paid?
It is usually deducted from the buyer’s deposit once the sale becomes unconditional.

5. Can I be charged double commission?
This can happen if you switch agencies mid-campaign. Using REA–REINZ standard clauses helps prevent it.

6. What if there’s no agency agreement?
An agent cannot legally claim commission without a valid signed agreement under the Real Estate Agents Act 2008.

7. Are marketing costs included in commission?
Not always. Marketing is often charged separately, so ask for a full breakdown before signing.

8. What protections do I have as a seller?
You must receive the Agency Agreement Guide and other consumer resources from the REA before committing. These explain your rights and obligations. (REA)

Key facts

Real estate agent commission NZ is governed by strict rules that protect sellers. The essentials to remember are:

Commission is only payable if a valid agency agreement is signed.
The Real Estate Agents Act 2008 sets the legal framework for fees.
All commission attracts 15% GST, which must be disclosed. (IRD)
Agents must provide the REA Agency Agreement Guide before you sign. (REA)
Commission is usually deducted from the buyer’s deposit once the sale is unconditional. (Settled.govt.nz)

These facts ensure you know your rights before agreeing to any commission structure.