Negotiating Commissions

Family members signing a contract

As in most areas, everything in real estate is negotiable…including commissions. This is an issue that needs to be considered before signing a listing agreement because after signing is a bit too late. Also, feeling the exhilaration of working out what you perceive to be a more attractive deal might be premature. Why? If your priority is a low commission and you work with the wrong agent you’ll be disappointed with less than stellar service and your house just might sell for less. All this points to the #1 most important goal by far, which is finding the most qualified agent for you. Once you’ve accomplished that, you can consider items like commission, but be careful.

 

After you’ve found the best person for the job, the possibility of negotiating a somewhat lower commission might exist. It’s really up to you and the broker the agent is supervised by. The only way to find out is to ask. Do keep in mind that a lower commission might impact on the motivation of all concerned. By this I mean the agent, their broker and the buyer’s agent and their broker. If the buyer’s agent’s share of commission is less than the typical 2.5% to 3%, this might have an impact on the number of buyer walk throughs you experience. Whatever the commission is, it will be divided up by all these parties, so be careful and balanced in your requirements and priorities.

 

When you bring the subject up, it’s likely the agent will review all the services (and there are many) they intend to provide in order to justify their standard commission level. They’ll make some very good points because they’ve had quite a bit of practice in the past. One is that listing with an agent improves your chances of selling sooner and for more money. It’s reasonable to assume that the better the agent is the more likely these things will happen, which justifies their commission level.

 

If they can adjust their compensation, be sure to find out if they’ll need to set aside some of their standard marketing services as a result. If that’s the case, you should know what that means and how that might impact on the process up front. If there are services considered to be “extra,” find out what they are and whether they might be held back also. Things like open houses come to mind here. As the saying goes, you get what you pay for.

 

There are times and conditions when brokers find it easier to offer commission flexibility. A hot market that makes it likely your home will sell quickly. You happen to have a home or location that buyers are clamoring for. It may be updated, ready to move in or offered at an attractive price because you’re motivated for a quick sale. If you’re a flipper, the agent will benefit by working with you on an ongoing and frequent basis. Like in the trades, electricians, plumbers and carpenters value the reliability of a regular pay check so they provide builders with competitive prices.

 

In summary, find the right agent for you and invest time in understanding what services and support they provide. If all your needs will be met and an adjustment can be made to the commission, that’s something to consider, but remember the old adage, “you get what you pay for!”