In this article
Kooky
Builder of Shaka, the payment router that pays every agent their commission on closing date.
About Kooky and Shaka →Two agents can quote what sounds like the same commission and mean different sums. One says 2.5 per cent. The other says a little over 2 per cent with a bonus above a target. A third offers a flat fee. Until each offer is turned into dollars at a realistic range of sale prices, a seller cannot tell which is which, and an agent cannot easily explain why their structure is fair.
Queensland's rules make all three structures possible. The Office of Fair Trading states that there is no cap on commission and that agents and clients may negotiate freely, and the only firm requirement is that the result be written on the appointment, with GST included. This guide explains how each structure is calculated, where the arithmetic most often goes wrong, and what each one rewards. Every figure in the examples is illustrative and chosen for easy arithmetic. None is a market rate, because Queensland does not have one.
Any structure, provided it is written
The Real Estate Institute of Queensland tells its members that commission was deregulated in 2014 and that no standard rate exists for residential sales. Deregulation removed the scale and, with it, any single prescribed way of expressing a fee.
What remained is a rule about the record. The Office of Fair Trading's guidance says the appointment must state the fees, charges and any commission for each service, that the commission must include GST and say so, and that it is set in writing at the time of the appointment and cannot be altered afterwards. For residential property the record is Property Occupations Form 6.
Related readConjunction sales and referral fees: when two agents share a commissionIt follows that a structure is valid if two conditions are met. It has been agreed, and it is written clearly enough that the amount can be calculated from the contract of sale without further discussion. The second condition is where structures more elaborate than a flat rate need attention.
One sale is used throughout this guide so that the structures can be compared. Assume an existing house, with the parties expecting a price somewhere between $760,000 and $860,000 and treating $800,000 as the likely result. All commission figures include GST.
The flat percentage
The flat percentage is the structure most people picture. A single rate is applied to the whole sale price.
The calculation has one step: price multiplied by rate. In the example, a flat rate of 2.5 per cent including GST gives $19,000 on a sale at $760,000, $20,000 at $800,000 and $21,500 at $860,000.
Its behaviour is simple to describe. Every extra dollar of price adds the same fraction of a dollar to the fee. In the example, each additional $10,000 on the price adds $250 to the commission and $9,750 to what the seller receives before other costs.
That proportionality is the structure's strength and its limit. The agent's fee always moves in the same direction as the seller's result, so the interests of the two point the same way. But the movement is gentle. Between a sale at $800,000 and a sale at $860,000, a difference that may take weeks of additional negotiation, the agent's fee rises by $1,500. The agency's share of the last $60,000 is small when set against the certainty of a sale already in hand.
Related readGST on an agent's commission: how it is charged and shown at settlementThe fixed fee
A fixed fee is a dollar amount agreed in advance, payable on a sale whatever the price.
There is nothing to calculate. In the example, a fixed fee of $20,000 including GST is $20,000 at every price in the range.
The seller knows the cost on the day of signing, and every dollar of price above expectations belongs to the seller. Against that, the fee does not fall if the price disappoints. At $760,000, the fixed fee in the example is $1,000 more than the flat percentage would have been; at $860,000 it is $1,500 less.
A fixed fee can also be expressed as a rate after the event, and it is worth doing so when comparing offers. A fee of $20,000 is 2.63 per cent of $760,000, 2.5 per cent of $800,000 and 2.33 per cent of $860,000. The effective rate falls as the price rises.
A fixed fee is sometimes preferred where the likely price range is narrow, or where the parties expect the work involved to be the same whatever the final figure. It still depends on a sale: an agreed fee is a commission like any other, and the appointment states the event on which it becomes payable.
The tiered scale
A tiered structure, sometimes called a sliding scale or an incentive commission, uses two or more rates divided by price thresholds. A typical form sets a base rate up to a target price and a higher rate above it.
In the example, suppose the parties agree on 2.2 per cent of the price up to $800,000, plus 10 per cent of any amount above $800,000.
Related readHow real estate commission works in Queensland: negotiated and writtenAt $760,000 the price is below the threshold, so only the base rate applies: 2.2 per cent of $760,000 is $16,720. At $800,000 the commission is 2.2 per cent of $800,000, which is $17,600. At $860,000 there are two parts. The first $800,000 earns $17,600. The $60,000 above the threshold earns 10 per cent, or $6,000. The total is $23,600.
The logic is that the base price is treated as the result the market should deliver with a competent campaign, and the amount above it as the result of skill and persistence. The agent accepts a lower fee than the flat rate for an ordinary result, and takes a much larger share of the upper part.
The threshold is the heart of the arrangement. Set at a level the home will easily exceed, the higher rate applies to money that would have arrived anyway. Set well above anything the market will pay, it never applies and the agreement is in practice a flat rate at the base level. The parties' appraisals of the home therefore matter as much to a tiered commission as the rates themselves.
The same sale under three structures
Placed side by side, the three examples cross over within the expected range.
| Structure | Sale at $760,000 | Sale at $800,000 | Sale at $860,000 |
|---|---|---|---|
| Flat 2.5% | $19,000 | $20,000 | $21,500 |
| Fixed fee of $20,000 | $20,000 | $20,000 | $20,000 |
| Tiered: 2.2% to $800,000, then 10% of the excess | $16,720 | $17,600 | $23,600 |
Illustrative figures for one assumed sale. They are examples of arithmetic, not market rates.
At the low end of the range the tiered scale is the cheapest for the seller and the fixed fee the dearest. At the top of the range the order reverses: the tiered scale costs most and the fixed fee least. The flat rate sits in the middle at both ends.
Related readBrisbane court awards agency $30,030 commission without a trialNo structure is cheapest at every price, so a comparison at a single price can mislead. A seller who compares the three offers only at $800,000 sees the tiered scale as $2,400 cheaper than the others. A seller who compares only at $860,000 sees it as the most expensive by $2,100.
The other way to read the table is by what happens to the last $60,000, the step from $800,000 to $860,000. Under the fixed fee the seller keeps all of it. Under the flat rate the seller keeps $58,500 and the agent $1,500. Under the tiered scale the seller keeps $54,000 and the agent $6,000. The tiered scale gives the agent four times the flat rate's reward for the same improvement, which is its purpose.
Marginal or whole-price: the tier that needs careful wording
There are two ways to apply a higher rate above a threshold, and they produce different answers from the same pair of percentages.
The example above uses the marginal method. The higher rate applies only to the part of the price above the threshold, in the way that income tax brackets work.
The other is the whole-price method. Once the price passes the threshold, the higher rate applies to the entire price. Suppose an appointment reads "2.2 per cent, rising to 2.75 per cent if the property sells above $800,000". Read as a whole-price tier, a sale at $800,000 pays $17,600 and a sale at $810,000 pays 2.75 per cent of $810,000, which is $22,275. An extra $10,000 on the price has added $4,675 to the commission and $5,325 to the seller's side.
Related readProperty management fees in Queensland: letting and management commissionJust above the threshold the effect is sharper still. On the same wording, a sale at $801,000 pays $22,027.50. Compared with a sale at $800,000, the price is $1,000 higher and the commission $4,427.50 higher, so the seller is $3,427.50 worse off for having achieved the better price. A marginal tier cannot produce that result, because it only ever takes a share of the excess.
A tier must say what the higher rate applies to
"A higher rate above the target" can mean a higher rate on the excess only, or on the whole price once the target is passed. The two readings give different commissions from the same percentages. The appointment should state which is meant, ideally with a worked figure.
Either method can lawfully be agreed. The risk lies in an appointment that does not say which was intended. A structure that the seller understood as marginal and the agent as whole-price is a dispute waiting for a good sale to trigger it. Because the commission cannot be altered after the appointment is signed, the time to remove the ambiguity is before signing.
GST inside every figure
In Queensland the tax question has one answer whatever the structure. The Office of Fair Trading requires the commission to include GST and the appointment to say so clearly.
For a flat rate, the percentage written on the form is therefore the total percentage. For a fixed fee, the dollar amount is the total amount. For a tiered scale, every rate in the scale is a GST-inclusive rate.
GST is 10 per cent of the price of a service before tax, which makes it one-eleventh of the price after tax. In the example, the $20,000 fixed fee is made up of $18,181.82 for the service and $1,818.18 of GST. The tax invoice the agency issues will show the split. The seller pays $20,000.
Related readQueensland sale commissions average 2.33 per cent, platform data showsA person selling an existing home generally bears that tax as a cost. The Australian Taxation Office explains that the sale of existing residential premises is input taxed, so the seller is not liable for GST on the sale and cannot claim GST credits for things bought for it.
The point to watch when comparing offers is consistency. If one agent's rate is discussed before GST and another's after, the comparison is off by a tenth. Asking for each offer in the form in which it will be written on the appointment removes the problem.
The price the rate is applied to
A percentage needs a base, and the base is the price the property actually sells for. The Queensland law firm Attwood Marshall, in a note on commission disputes published on 28 August 2025, makes the point that a percentage commission must be calculated by reference to the actual sale price and not an estimate.
That sounds obvious, and in most sales it is. The contract states one price and the rate is applied to it. Complications arise at the edges. A contract may include items sold with the property, an adjustment negotiated after a building inspection, or a price that is varied before settlement. If the price is reduced by agreement after the contract is signed, the appointment's wording decides whether the rate applies to the original or the reduced figure.
For a tiered commission the same question decides whether the higher tier is reached. A contract signed $5,000 above the threshold and later renegotiated $10,000 down has crossed the line and come back. Which figure counts is a matter for the form.
What each structure rewards
Commission is how agents are paid for work whose outcome they cannot guarantee, and each structure distributes risk and reward differently. None is better in general. Each suits some sales and some temperaments.
| Structure | Seller's cost is known | Fee rises with price | Needs careful drafting |
|---|---|---|---|
| Flat percentage | Only once the price is known | Yes, evenly | Little: one rate, one price |
| Fixed fee | Yes, from signing | No | Little: one amount |
| Tiered scale | Only once the price is known | Yes, steeply above the target | Much: threshold, rates and method |
The flat percentage shares the outcome in fixed proportions. It is easy to understand and to check, and it never produces a surprise.
The fixed fee gives the seller certainty and gives the agency a known income from a successful campaign. It places the whole benefit of a higher price with the seller and the whole burden of a lower price with the seller too.
The tiered scale concentrates the agent's reward in the part of the price that is hardest to win. It asks the agent to accept less for an ordinary result and the seller to pay more for an exceptional one. Whether that trade is attractive depends on how confident each side is about the threshold.
For the agency there is a further consideration. A commission is gross income to the business, out of which salespeople, premises and campaigns that end without a sale are paid. A structure that lowers the fee for an ordinary result lowers the income the agency can count on.
What sits outside the commission
No structure can be judged alone, because the commission is one of two lines on the appointment. The Office of Fair Trading requires the form to state any other expenses, such as advertising and marketing, and when they fall due.
An offer with a lower rate and a larger marketing budget may cost more in total than one with a higher rate and a smaller budget. The same is true across structures. A fixed fee that includes professional photography and a signboard is not the same offer as a fixed fee that bills them separately.
The conditions for payment matter as well. The appointment states when commission is payable and whether it applies if a sale is not executed. Two offers with identical arithmetic can differ in what happens when a contract falls over.
Working through an offer
Turning any offer into numbers takes a few minutes, and the same method works for all three structures.
- Write down a low, a likely and a high sale price for the property.
- Calculate the commission at each price under each offer, using the rates as they will appear on the appointment, GST included.
- For a tiered offer, confirm whether the higher rate applies to the excess or to the whole price, and calculate accordingly.
- Add the marketing and other expenses listed for each offer.
- Compare the totals at each of the three prices, not at one.
The exercise does not choose an agent. Service, experience and the quality of the campaign are what the commission buys, and they do not fit in a table. What it does is make sure that both parties are describing the same sum when they shake hands, and that the appointment they sign afterwards says what they both meant.
A percentage is only half an offer. The other half is the price it is applied to, and no one knows that on the day the appointment is signed.
Kooky, from Shaka
Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.
