Some Advice On Bargaining Realtor Commissions

Tips For Negotiating Realtor Commissions

Selling a house is unquestionably stressful. Many homeowners engage a real estate agent to assist them with the selling process because there are so many variables and things to consider. An excellent real estate agent can manage all aspect of the transaction, including negotiations and marketing the property.

Realtors that offer these essential services do so at a hefty cost, one that most sellers prefer not to consider: the agent commission costs. One of the most expensive expenses when selling a home is the real estate commission, which often amounts to roughly 6% of the overall sales price.

Nevertheless, it would be wise to try to negotiate real estate commissions. Only around one-third of sellers attempt to negotiate, and most agents dislike it. However, those who attempt it frequently are successful in reducing their agent’s costs.

What Does a Typical Real Estate Commission Look Like?

Between 5% and 6% is the standard real estate agent commission rate, which is normally divided equally between the two agents participating in the transaction. The real rate, however, may change based on the setting and circumstance. Standard rates can actually differ by as much as 17%.

Depending on how fiercely competitive the market is in your location, commission rates may be lower or higher. The commission rate might be lower if you live in a neighborhood with a ton of real estate agents and high-priced homes that sell rapidly.

On the other hand, you might anticipate paying a higher commission rate if there aren’t enough Realtors in your region, there aren’t enough buyers, or there are lots of homes for sale but they’re moving along slowly.

In a report published in 2019, the Consumer Federation of America exposed how commission rates are frequently concealed and challenging to determine from one circumstance to the next. For instance, Buffalo, New York real estate agents traditionally charged 7% commission rates, while Atlanta, Georgia real estate brokers often charged 6%.


How Do Commissions For Real Estate Agents Work?

Real estate brokers are frequently compensated on a commission-only basis, which means they are only paid when your home sells. Agents don’t frequently keep the entire commission, though. Instead, the cost could be split in a number of different ways.


Divided with the buyers’ agent

When a selling agent and a buyer’s agent agree to split the commission, the fee is typically split equally between them. As an illustration, if a sale’s total commission cost is 6%, the money is split 50/50 and 3% goes to each agent.


Divided from the managing broker

Realtors and their managing broker can divide the commission fee in any range from 50 to 90%. How many homes they have sold and how long they have worked for the broker are two factors that affect the percentage. A beginner real estate agent will probably agree to a 50/50 split, whereas an experienced agent may keep up to 90% of the commission.

Tips For Negotiating Realtor Commissions

Fees for Real Estate Agents

In light of the extra expenses paid during the sale of your house, a Realtor may choose to reduce their commission amount. Recognize that hidden costs have an impact on the commission when you try to bargain a cheaper rate with your real estate agent. These include items such as:


  • Photography
  • Videography
  • marketing (print, print ads, etc.)
  • staging a house
  • Parking
  • Gas
  • Office costs
  • Fees for MLS listings
  • Licenses
  • Taxes
  • Associated costs

Knowing about these expenses in advance will aid you in your discussions. Marketing costs and other expenses might have an impact on the commission a real estate agent charges you.


Do real estate commissions get negotiated?

The majority of individuals are unaware that commissions are completely adjustable. However, the truth remains that there are no regulations governing real estate agent fees, and negotiating real estate commission is permissible wherever you are in the United States.

Realtors typically are willing (and expect) to reduce their commission rates since they want your business and it is in their best interest to do so. Even if the answer is no, it’s still in the seller’s best advantage to practice negotiating real estate commissions because even a tiny reduction in the commission can result in considerable savings.

Zillow reports that the average home is worth $259,906 dollars. You might save over $3899 in Realtor costs if you agreed to a 4.5% commission rate rather than a 6% one!


Advice on How to Negotiate Real Estate Agent Fees

It will be simpler to obtain the lower commission rate if you have a better understanding of the market you are operating in, the rate you desire, and your demands as a property seller. It will also be easier if you are prepared to defend why a lower rate is reasonable.

Do some market research to learn how much similar properties in the neighborhood are selling for and how quickly they are moving off the market. Using resources like Zillow and other house value estimator websites, you can learn more about the local housing market.

Consider the services you require or do not require from a listing agent as well. If you intend to advertise on Facebook yourself, why pay for it? In order to choose which agents best meet your needs, it would be beneficial if you also thought about requesting quotes from many of them.

The real estate agent with the lowest commission isn’t necessarily the greatest option, so keep that in mind. You should ideally work with a Realtor that has sold properties comparable to yours in the same neighborhoods and price ranges.


Other advice for negotiating real estate commissions is as follows:


Using the Same Agent to Buy a House

You might be able to use it as leverage and bargain for a cheaper commission if you intend to sell your old house and buy a new one in the same neighborhood. Since they will be compensated with both commissions, most real estate agents will serve as both your listing and buying agent. This is a fantastic chance to bargain for a lesser commission on the sale of your house or a buyers’ credit when buying a new house.


An unrepresented buyer is discovered by the listing agent.

Dual agency occurs when the same agent represents both you and the buyer. Although dual agencies are not permitted in every state, when they are, agents are paid listing and selling fee commissions. Simply because you are representing two parties while also having to remain impartial toward both of them, this is known as double-ending a deal and it can raise a real estate agent’s liabilities.

A dual agent manages a single property on behalf of two different parties with dissimilar interests. When anything is handled improperly, there are two times as many ways to claim damages. Some agents work as transactional agents to circumvent these issues. The Realtor serves as a neutral third party and simply helps with the paperwork in this capacity.

Listing agents are occasionally asked by sellers if they will reduce their commission if they represent both the seller and the buyer. When you receive an offer, you can debate this; nevertheless, you should give the matter significant consideration before you sign the listing agreement.

To ensure that other agents are aware of the lower cost to the seller in this circumstance, keep in mind that the Realtor should disclose this variable rate fee to other agents if you sign a dual agent agreement and negotiate a lower commission rate. Really, only when there are many offers would this matter.


Guaranteed Referrals

A recommendation is a fantastic marketing tool, and word-of-mouth promotion frequently has more impact than a flashy billboard sign. It’s important to let your Realtor know that you would be pleased to give them referral business in exchange for a reduced commission. Just be sure to keep your word and fulfill your pledge.


Think about hiring a less seasoned agent

As previously mentioned, you should compare real estate agents, learn what services they provide, and gather price quotes. Because they are still learning the ropes and expanding their businesses, less seasoned agents are typically more willing to cut their commission rates.

Although having more experience is better, a novice Realtor with few sales might nevertheless provide excellent service at a reduced rate. Don’t choose a novice real estate agent just because they’re less expensive, but also don’t ignore them.


Make Selling Your House Simple for Them

How can you increase the appeal of your house to listing agents? Make selling simple for them. Higher profit margins for them are the outcome of speedier sales because it requires less work on their part. There are a few other strategies to make your home simple to sell in addition to keeping it presentable, making it available for showings, and setting up a lockbox.


List with the Right Price

Take into account the market’s capacity as well as the value of your home. Investigate the costs of nearby comparable properties, pricing trends, and any changes you’ve made to your house (which will alter its value). Then, put it on the market at a price that will lead it to sell rather than remain unsold. Being overpriced is the biggest obstacle to successfully selling your house. Agents are aware that correctly priced homes will sell more quickly and with less effort than those that are not. Utilize this chance to bargain for a reduced commission.


Permit Home Staging

Make sure your home is marketable to buyers whether you want to hire a professional stager or do it yourself.

If you decide to do it yourself, you’ll need to declutter (storage space is very beneficial to buyers), deep clean everything, potentially replace carpets, rearrange furniture, and take high-resolution photos that best showcase your property.

Remember to stage the outdoor areas as well. To achieve this, sweep out porches and decks, make sure entryways are free of clutter, and decorate with a few vibrant plants to add a little more “wow” to the area.


Adjustable Showings

The demands of daily life can make it difficult to schedule showings, but if you want to close a deal, you must be willing to be flexible. Being flexible with show days and times can help you sell your house as quickly as possible because buyers need time to discover and fall in love with it.


Initial Examination and Repairs

Although a house pre-inspection may be expensive up front, it will end up saving you more money overall because it will prevent purchasers from seeking significantly more during negotiations. A certified inspector will evaluate the home’s condition and pinpoint any problems during the examination. After that, you’ll get a report detailing what does and doesn’t function as well as maintenance suggestions. Typically, a pre-inspection includes:


  • electrical apparatus
  • Plumbing
  • Units for heating and cooling
  • Doors and windows
  • Ceilings
  • Floors and walls
  • Insulation and the attic
  • Roof
  • Foundation
  • elements of a structure
  • Basement

Prioritize the important concerns. Typically, it is less expensive to remedy larger issues before your house is under contract than it is to pay for them to be fixed right away.


Sell off-peak goods

If you sell in the fall or winter when there are fewer listings, you might be able to negotiate a lower commission rate. Realtors are more amenable to working for lower pay during the off-seasons because they often need the business.

Remember that there are fewer buyers in the off-peak season, which means your agent may have to work harder and use this as a point of contention during your negotiations.


You Need to Sell More Than One House

In exchange for all of your unique listings, you might be able to negotiate a lower commission if you have more than one house to sell. The real estate agent will take into account a number of factors, including the dollar volume, market mobility, and the ease of selling the property.

You probably won’t encounter many difficulties in your negotiations for a lower commission fee if everything is in the agent’s favor. Be prepared for the possibility that your Realtor will reject your offer if they believe they can sell your house for the highest price and are at the top of their game.


Why Agents Refuse to Bargain Over Fees

If you are working with a big corporation, an agent might not be willing to discuss prices in that situation. The standard commission rate generates so much business for national brokerages that they are not forced to accept a lower rate in order to win your business. Alternately, their policies forbid agents from reducing their commission!

If your house is difficult to sell and the Realtor intends to spend a lot of time, money, and effort marketing and selling your home, you can also find it challenging to negotiate fees.

Additionally, your Realtor might worry that if word gets out that they accept lesser rates, they’ll be forced to accept commissions (like 1%) at lower rates going forward.


Alternatives to Bargaining for Real Estate Fees

The aforementioned advice is tried and true, but it can’t be relied upon and it doesn’t apply to every homeowner’s circumstance when negotiating Realtor commission costs. Fortunately, there are still further ways to cut costs and avoid paying excessive commission fees when selling your house.


Cheap Brokers

In contrast to a conventional full-service real estate agent, a discount broker, like Refin, publicly advertises lower commissions or buyer rebates.

Discount brokers may or may not provide the same degree of service, despite the fact that they are still regarded as real estate agents. In exchange for a discount, you could have to give up things like expert photography, more expensive marketing and promotion, and open houses.

A cheap broker may list your home, put up a sign, assist with paperwork and contract discussions, but all other aspects of selling your home are up to you.

To avoid confusion later, make sure you complete your research before signing up for the cheap broker’s service since everything actually depends on them and their plan.


MLS flat fee

For a small flat price, flat-fee MLS services enable sellers to put their property on a local Realtors MLS database of available properties. This guarantees that the home listing receives the most qualified buyers’ attention possible without having to pay the commission fees and the entire cost of a real estate agent.

A great strategy to promote your house and avoid paying commissions is to list it on the MLS. Realtors who work with purchasers in your neighborhood are notified when your house is posted on one of the many prominent local and national real estate websites. Remember that even if you are offering your home for sale by owner (FSBO) on the MLS, you are technically listed with a real estate agent and are therefore required to pay a buyers agent commission. Therefore, if you locate a buyer who isn’t using a buyers agency, you’ll save at least 50% of the commission or 100%.


Realtors with full fees

That’s correct, you can simply sign up with your agent at their full fee if you don’t want to discuss commissions with them. We should point out that even while you are not obligated by law to accept a full-price offer on your house, you can still be liable for the real estate agent’s commission charge if you list your house with them. Look for clauses in the listing agreement that prohibit the seller from rejecting a full-price offer or that refer to commission charges in the event that the full-price offer is turned down.


Companies that Buy My House

House-buying companies purchase properties directly from sellers, which streamlines and expedites the transaction compared to working with conventional real estate firms. Various kinds of businesses that buy houses include:


Investors in real estate who remodel houses to resell are known as “house flippers.”

Companies that buy and keep properties to rent to tenants

iBuyers are businesses that employ technology and data about the real estate market to submit offers following interaction with an owner. Two of the top iBuying companies are Opendoor and Zillow Instant Offers.

Companies that accept trade-ins: Occasionally offer to purchase a new home on the homeowner’s behalf and use the present home as collateral; other times, they permit the homeowner to rent the new property until the sale of the old one.