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Agent may cut fee in good deal

Dear Steve,
When using the same real estate agent to sell your home and buy another, is the commission, which in this case is 6 percent, negotiable? With the market so hot, is it possible to pay the agent, say, 4.5 percent?
-- Kathleen

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Dear Kathleen,
Although commissions of 6 percent are pretty standard, real estate fees, by law, are negotiable. In a red-hot market with higher home values, it is certainly not unheard of to offer 4.5 percent or even 4 percent in a double deal, although I wouldn't posture much lower than that, lest you may start suffering from indifferent representation.

Even with slightly reduced commissions, most agents will jump at the chance to get your action on both the selling and buying ends, because of their hope of a "sure thing" on the second leg of the arrangement. The scenario may even motivate them to market your current house more aggressively to expedite the purchase of the new home.

However, some hot-shot real estate agents with a reputation of extracting the maximum value from a sale may not want to work for less than 6 percent, especially on a lower-value sale or purchase. For a $150,000 home, for example, it may be tougher to find quality representation at much below 6 percent. For a $600,000 home, your odds are much better. Fees, by the way, should always be established in writing at the time an agent is contracted.

Of course, if you're buying a new home, you probably don't need an agent and can negotiate directly with the builder and may be able to get better upgrades or additional amenities with the money that you save your builder.

But in a conventional deal involving an existing home, your agent will probably prioritize higher-paying clients, and your home may be slower to sell if you get too stingy on the commission side.

Remember, there probably will be an agent representing the person who's purchasing your house and an agent representing the seller of the house you will buy. In other words, the pie may be divvied into smaller slices than you might think, and commissions from both deals will be split with other agents. If your agent is part of a company or franchise system, he or she will have to sacrifice an additional chunk of that commission to the employer to cover overhead and marketing.

But by all means, be a shrewd (but fair) negotiator in the commission game. In an active, high-priced market peopled by an abundance of real estate agents, you can usually whittle a point or two off that 6-percent standard, especially on a two-transaction deal.

Good luck.

-- Posted: Feb. 26, 2005

Negotiating real estate commissions



How real estate commissions are calculated


Deciding whether to use a real estate agent


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