Home sellers: How to agree on a commission both you and your agent can live with

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In a real estate transaction, there’s always some level of negotiation. If you’re on the selling side, you may be considering negotiating not only with prospective buyers, but also with the person you’re working with to seal the deal: your real estate agent.

If you’re looking to save some money, here’s what you need to know about negotiating your agent’s commission, and how to agree on a rate you both can feel good about.

How commission works, and how to negotiate it

The average real estate commission rate has gone down to just under 5 percent of a home’s sale price, according to Real Trends, a real estate research and consulting firm.

In the past, rates have been closer to 6 percent. Five percent or even 6 percent might not sound like much, but when you’re talking about a $350,000 home, it can add up to tens of thousands for the seller, who typically pays the commission at closing.

Agents and brokerages can and do have unique commission structures, however, with some offering flat fees or other incentives. Because of this, there’s an opportunity to negotiate the rate if you’re looking to save on the cost of selling your home.

“There are agents and brokerages that reduce, discount or coupon their services,” explains Kevin Van Eck, executive vice president of Innovation and Education at @properties, a brokerage in Chicago. “Each agent along with their brokerage can determine where they set commissions based on the value and success created.”

As you prepare to list your home for sale, you may be meeting with a few listing agents to find the right one for the job. Ask each agent about their commission and what exactly you’ll be receiving for their rate. Consider not only how the agent plans to market your home, but also their skills pricing it, their experience, resources and track record.

“It’s okay for a seller to ask about the commission, but the best time is after talking with the agent and understanding their experience, how they will create exposure for the home and the value they bring to the table,” says Van Eck.

You can weigh what you learn against the services of a discount broker, as well, but know that the discounter’s offering may be limited compared to that of a full-service agent.

Once you understand exactly what you’d be paying for, you can be in a better position to successfully negotiate. Here are some tips: 

  • If you’re able to offer the agent more than one listing opportunity, that might be a compelling argument for a reduced commission. “If [you’re] a real estate investor who is looking to offload several properties, I would definitely talk about the commission,” recommends Dana Bull, a real estate agent with Sagan Harborside Sotheby’s International Realty in the Greater Boston area. Bull adds that most agents welcome repeat business.
  • If you don’t have another listing opportunity of your own to offer, you can try leveraging your ability to get the word out about your agent to others in your neighborhood or network. This might be especially impactful if you know your agent is looking to build their business. “I can’t just slash my commission, but I might be willing to give a slight discount if [the client offered] some sort of other strategy to get more business after the sale,” Bull explains.
  • If you have a home in a sought-after area, or a buyer already interested, your agent may not need to do as much as they normally would to make a sale happen. If neither party can foresee the need for additional services — “if an agent is coming in to basically just do some hand-holding, keeping the transaction on schedule and assisting with paperwork,” Bull suggests — that might be another reason to propose a slightly lower rate.

You might also be considering skipping the commission conversation entirely and selling your home yourself. Be aware: If you’re an experienced house flipper, you may be skilled enough to list your home without an agent, but for the most homeowners, the for-sale-by-owner (FSBO) route can be challenging, costlier and more time-consuming in the long run.

Bottom line

As in any negotiation, it takes both parties to be willing. Negotiating your agent’s commission can work in your favor, but an agent can walk away if they don’t necessarily need your business.

Keep in mind, too, that it can make sense to pay more for additional services instead of negotiating the commission down, Bull says. These might include higher-end marketing, home staging or additional mailers, for instance.

Ultimately, it’s important to find an agent you can speak with openly about cost, and who you trust to do the best job to sell your home.

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