Useful tips and strategies for negotiating realtor fees

An important question you would find yourself asking, as a home seller, is if the real estate agent you hire would be open to negotiating realtor fees. Is the commission even negotiable?

Yes, it is. Sellers might and should negotiate. Especially for homes in top-notch condition. However, also remember that if an agent is okay with a really low commission, they might not be a skilled real estate professional.

A savvy seller aims for an agent who can score the best deal. A lower fee could also mean less marketing for your property, as agents often use their commission for advertising. If you’re spending thousands of dollars on a real estate transaction, why skimp on your agent’s commission fee?

What is the standard real estate agent commission? 

Contrary to popular belief, the real estate industry generally doesn’t follow a standard percentage for these commissions. How much a real estate agent gets paid is usually a percentage of the selling price of the property. The percentage can be anywhere between 5% to 6% depending on the property location, its desirability, home value, and market conditions.

When it comes to selling land, the commission is often a bit higher, around 10%, because selling land requires more time and marketing. 

Do real estate agents work only on commission?

Real estate agents typically don’t have a fixed salary. They earn money through commission-based payment which the listing agent has to split with the buyer’s agent. And, some portion of it goes to the brokerage, if any. The remaining amount has to cover their expenses such as advertising, license fees, marketing, and insurance. Also, agents only get paid when a home sale is completed, at the time of a home’s title transfer. This can take months of work before they get any income.

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Why would any agent settle for a lower commission?

Here are some reasons why real estate agents might consider accepting a lower commission:

• The property is easy to sell, making the process smoother.
• It might have a high listing price, potentially compensating for a reduced commission percentage.
• The agent is providing fewer services than usual for your sale.
• It’s a dual-agency situation where your agent is representing both the buyer and the seller.
• Your house is move-in ready and beautifully staged for open houses, requiring less effort from the listing agent.
• You’re using the same agent for both buying and selling simultaneously or for selling multiple properties.

What is the strategy for negotiating realtor fees?

Navigating the negotiation of real estate commissions can be challenging. When talking to a potential agent, you need to be respectful, positive, and considerate. After all, you depend on your real estate agent to navigate you through an intricate, high-stakes, and demanding journey. Starting off on the right foot is key!

Research your local market commission rates

Understand the typical commission rates in your local market. This knowledge provides a baseline for your negotiations. Real estate commissions may differ based on the state, city, and neighborhood. Understanding the customary rates in your property’s location provides a solid foundation for negotiations, promoting reasonableness in both parties’ requests.

You could also present data on comparable home sales in the area to justify your proposed commission rate. This demonstrates that you have done your homework and are making a fair request.

Read more: Questions sellers should ask agent about commission rates

Compare agent services

Evaluate the services offered by different agents in your area. If an agent justifies a higher fee with additional services or expertise, consider the overall value.

Remember, the agent wants to sell your home quickly and for a good price. If you try to save money by skipping important services, it could make it harder for them to do a great job. They might even think twice about working with you.

Discuss your commission structure upfront

Address the topic of fees early in your discussions. Establishing transparency from the beginning can set the tone for a more open negotiation.

Consider investing in enhancements that boost your home’s marketability

Agree to undertake suggested pre-listing repairs and improvements such as repainting, landscaping, and carpet cleaning.

By willingly contributing funds to facilitate your agent’s efforts, you may find them open to reducing their commission rate in appreciation.

For an added proactive approach, you can cover the cost of a pre-listing inspection. This step helps identify potential issues that might otherwise impede or complicate negotiations.

Highlight the property’s unique selling points

If your property has unique features or is in high demand, emphasize these points. A strong selling proposition can support your request for a lower commission.

Consider a tiered commission:

Propose a tiered commission structure where the percentage decreases as the final sale price increases. This aligns the agent’s incentive with your goal of achieving a higher sale price and will help you in negotiating realtor fees. 

Be willing to compromise:

Negotiation is a two-way street. Be open to compromise and find a middle ground that benefits both parties. Keep in mind that selling a house takes a lot of time and money for real estate agents. They spend their own time and money on things such as publicity photos and marketing. When talking about fees, see if you can help with these costs or offer something valuable to the agent.

For example, you might not need additional features such as open houses or 3D tours. Or maybe you can arrange for a photographer to take pictures for the listing.

Get the agreement in writing:

Once an agreement is reached, ensure that all terms, including the negotiated commission, are documented in the contract. This prevents any misunderstandings later on.

FAQs

Who pays the realtor in the case of a dual agency?

If the real estate agent is helping both the person selling the house and the one buying it, the agent has to be fair to both sides, which can be tricky. And, the seller covers the realtor fees in most cases. 

Read more: Broker Price Opinion -BPO- meaning real estate

What happens if you skimp on the agent commission?

Whether you’re buying or selling a home, if you’re negotiating realtor fees too much, they might not give priority to your property or your housing requirements.

Read more: Using-a realtor to find a rental

What is the lowest a realtor can charge?

In the United States, there’s no set standard, but it’s common for commissions to be around 5-6% of the property’s final sale price. However, some realtors may be willing to negotiate a lower commission, even go as low as a 1.5% listing fee, for a full service. Especially, in competitive markets or for high-value properties.

Read more: How much do realtors charge to find a rental

Written by Ramona Sinha. December 8, 2023

Ramona is the Senior Content Writer for Kukun. This experienced blogger uses simple and succinct words to decipher the complex phenomenon called life. She has written articles covering a broad range of topics, such as real estate, lending and mortgage, finance, business, taxation, home designs, home improvement projects, decor concepts, and more. An avid traveler, she’s a digital nomad at heart and an animal lover from the depth of her soul.