Sales Commissions on New Homes

Lelonmusk on 28/01/2021 - 21:56

I’ve just purchased a block of land in Sydney and am looking to find a builder to help me build my first home. I’m looking at the big builders like Clarendon Homes, Domaine, Wisdom etc.

I’m very curious to how much commission the sales agent would make if I decided to purchase a home build from one of these builders? I would love some insights from anyone that works in the industry.

Do they work on a percentage based commission similar to real estate agents or is there another pay structure that is used.

Financial

Comments

  • [Deactivated] on 28/01/2021 - 22:06
    +1

    My mate works for a builder here in WA. He is on commission and gets about 5 to 10k per sale. These builds are quite standard too so about 250 to 450k price range.

  • Ryanek on 28/01/2021 - 23:45
    +1

    For some builders, you don't even need to be a salesman. I have a mate who is a builder and he is offering 5k for any referrals.

    • elonmusk on 01/02/2021 - 13:03

      Does your mate have a display home? I'm curious how do small builders show their workmanship and build quality to buyers? Especially if they don't have a display home.

  • Hybroid on 29/01/2021 - 00:06
    +1

    Is it not possible to go to builders direct? Do you have to deal with a third party sales agent here? What value do they add?

    Been tempted to go down the buy land + build house route instead of buying existing one. New build projects are awfully small and basic.

    • djkelly69 on 29/01/2021 - 01:35
      +1

      I think the OP is referring to in-house sales people (who try to get you to sign a building contract with them), which most/all big builders have

      • Some Guy on 29/01/2021 - 12:45
        +1

        Genuinely didn't know this and shocked to know the mentioned incentives are this high. The base pay must be very lean.

        • spackbace on 29/01/2021 - 13:23

          New home salespeople don't have a retainer (typically), comms only

          I've looked into jumping into it in the past, but need a good 12 months income saved, as you won't get paid until your first house is completed

          • elonmusk on 01/02/2021 - 12:58

            @spackbace: Interesting, do you know what percentage the commission is relative to the new home price?

            • spackbace on 01/02/2021 - 13:08

              @elonmusk: Why? Do you wanna become one?

              • elonmusk on 01/02/2021 - 13:15

                @spackbace: Honestly, I am slightly interested especially based on the current market.

  • vash5 on 29/01/2021 - 01:54
    +1

    Make sure you do your homework and read over the contract thoroughly. I a neighbour of ours at a while back went with a big name builder and any changes to the build ended up costing him ridiculous amount out money through the builder. What's worse, his contract didn't allow him to seek services elsewhere due to the nature of the contract. Off memory they quoted him something like 30k for excavation works for the builder while a 3rd party quoted him 7k and it was for something basic.

    Also be mindful of shortcuts.. yes they take time and the build quality can be meh.

  • Cho0028 on 29/01/2021 - 10:39
    +1

    There's usually 2 sets of commission pay structures that a sales agent can potentially be on and it depends on the builder being used but usually it's one of the below:

    a) percentage of total sale
    - Usually in the vicinity of 1% - 1.5% of contract value
    - The percentage can change depending on how good the sales person is and what type of build they sell e.g. entry level build (like those for first home buyers) is usually slightly higher percentage because contract value is usually lower

    b) set value for commission
    - Usually somewhere between 5k - 10k

    Source: worked for a builder

    • elonmusk on 01/02/2021 - 12:59

      Thanks! Is there a difference on how smaller builders pay the sales agent vs bigger builders?

      • Cho0028 on 02/03/2021 - 13:29

        There isn't really much difference between bigger or smaller builder really. Commission structures need to remain competitive as there's a lot of internal movement of staff within the building industry so concessions are made to good sales people while the others tend to get something similar to what the market dictates.

        A key thing to note also is that staff within different roles like customer support, estimating etc. also tend to move between builders.

        Margins for builders tend to come from exceptions and add-ons that are outside the basic package.

  • spackbace on 29/01/2021 - 11:34
    +1

    I'm curious how the sales comm would affect your purchase…

    • vash5 on 29/01/2021 - 15:30
      +1

      I'm guessing it gives him intel about how much he may be able to push down the price??

      • spackbace on 29/01/2021 - 15:31
        +1

        But that's what I mean, given the salesperson gets a %, and given that new home builds are going crazy (at least in WA), it doesn't give any extra 'power'

        • vash5 on 29/01/2021 - 15:31
          +1

          Dunno.. that was my guess.

  • Dundundunnnn on 29/01/2021 - 20:31
    +1

    If commision only usually 3% paid half up front and half at slab stage. If retainer then rates are likely closer to 1—1.5%

    • elonmusk on 01/02/2021 - 13:02

      Does that mean they have a relatively low base salary package? Or is their base salary still pretty good given its still sales?

  • Dundundunnnn on 01/02/2021 - 20:12
    +1

    Normally nil base if 3% or maybe 25k-5=K base plus 1-2%

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