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Yes, You Can Negotiate With Your Real Estate Agent To Reduce Their Commission

The house cleaning is complete. The home staging is set. And the ‘For Sale’ sign has been lowered into the lawn. You’ve enlisted the help of a real estate agent to get your house on the market and, hopefully, get you the best price. But before the offers start rolling in, you can’t help but think of the agent’s commission — and how much profit it will cost you.

Agent-assisted sales usually bring in an average of 23% more money than a standard FSBO listing; however, agents typically snag a 6% commission, so they’ll be taking a piece of your profit pie. But, if you choose to do so, you can negotiate a real estate commission, reducing it by as much as half — maybe even more.

In most cases, a commission is split four ways, between the listing agent and their broker, and the buyer’s agent and their broker. Federal antitrust laws prohibit two or more parties from engaging in a conspiracy to restrict or eliminate competition, generally known as price fixing, which is a crime. What does that mean for you as a home seller? Your listing agent and the buyer’s agent cannot get together for the purpose of agreeing on the amount of commission they’ll accept.

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How To Successfully Negotiate A Lower Commission

Leverage is key when it comes to negotiating a lower commission. If you choose a smaller, local brokerage firm you might have better luck with your negotiations than if you go with a large, national brokerage. Larger firms don’t necessarily need the business, so they’ll tend to work with those clients offering the standard commission.

You can also leverage the desirability of your property. If your home is considered ‘desirable’ and it’s being offered in a hot seller’s market, a real estate agent could anticipate not only multiple offers but also that the home will sell quickly. Taking those factors into account, the agent might be agreeable to a reduced commission.

Your leverage for reducing a commission is also increased if you’re buying a property through your listing agent, you’re selling in an off-season when real estate business is usually slow, or you’re an investor selling several properties through one agent.

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Negotiation Know-How

According to industry experts, the following tactics can help you successfully negotiate a lower real estate agent commission.

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Count On The Power Of Competition

Secure bids from multiple agents for comparative, and bargaining, purposes. If your agent becomes aware that another agent will take on your business for a lower commission, it’s likely they’ll accept a decrease in terms rather than foregoing your business altogether.

Photo: Creative Commons/♔ Georgie R

Know What You’re Paying For

First things first: What is the listing agent offering for that 3% commission? If the agent’s services include everything from photography to staging to marketing and more, you can use that information as a negotiation starting point. If you don’t need some of the agent’s specific services, then it makes sense that you should pay a reduced commission that doesn’t include those extraneous services.

Photo: Pxfuel

‘Anchoring’ Can Keep Your Best Deal Afloat

When it comes to negotiations, research shows that the first number proposed effectively anchors the rest of the back-and-forth about costs, etc.: Every subsequent offer will be proposed in relation to that initial number. Make sure that you propose the first number, and make sure that it reflects what’s most favorable to your situation.

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Consider A Contingent Contract

If commission negotiations with your agent have reached an impasse, a contingent contract could help get things moving again. You think your home will sell quickly, so you’re asking for a lower commission. Your agent thinks the house might sit on the market for a while and, therefore, is resisting any attempts to reduce the commission. A contingent contract could be the answer both parties are looking for: Propose a contract that stipulates your agent will accept a lower commission if the house sells within a certain time frame, and that you agree to paying a higher commission if the sale takes longer than that. Progress made. Problem solved.