Is it possible to negotiate Realtor^Ⓡ fees?

When you sell your home with a real estate agent or broker, their services are paid through a commission when the sale goes through. Typically, the commission is built into the property price and serves as compensation for the marketing and manpower throughout the sale process. As a seller, do you have a say in how much you pay? Are real estate commissions negotiable? Keep reading to find out your options.

What is the standard Realtor^Ⓡ fee?

Whether you work with an agent, broker, or Realtor^Ⓡ – each with varying levels of education and licensing – a common commission rate is between 5 and 6 percent of the property sale price. On a $500,000 home, a 6 percent commission would be $30,000.

That amount is typically split with the buyer’s agent; a portion may also go to each of their respective brokerage offices. And while it may sound like a lot, keep in mind that the commission incentivizes your agent to help you get top dollar for your home. 

When can I negotiate?

Technically, real estate commissions are negotiable for any property sale. There’s no minimum or maximum commission rate, but agents won’t always be willing to go below the low end of the standard range in the local market and overall industry. Here are some situations where they may be more receptive to negotiation.

The sale requires less work or expenses than usual

From hosting open houses to negotiating offers, listing agents spend time and money facilitating property sales. If you have a property that’s expected to sell quickly – maybe it’s in an up-and-coming neighborhood and hopeful buyers are knocking on your door – your agent may not have to provide as many services as they typically do.

You have a high value property

Are you selling a luxury home or have a property in an area with a high cost of living such as New York or Washington, D.C.? A higher priced property means more commission for your agent, so they may be open to a smaller percentage knowing the sale will be lucrative.

Your agent also represents the seller

Dual agency is when one real estate agent represents both the buyer and the seller. In such cases, the agent is more likely to negotiate when they aren’t splitting the commission with a buyer’s agent. Dual agency is regulated by individual states (in some, including Texas, it’s illegal). But it can make sense when the purchase is merely transactional, such as between family members.

You have an ongoing relationship

Do you have plans to buy or sell a second home or investment property in the near future? The promise of future business may sway a Realtor^Ⓡ to compromise. They may also show their appreciation of referrals you’ve made to friends and family. 

What else should I keep in mind?

Of course, most everyone loves to get a deal, but is a discount on the commission always the best strategy? Striving for a low commission Realtor^Ⓡ isn’t always optimal. Here are some reasons to tread lightly when it comes to real estate agent discounts.

Easy discount = red flag?

Think about it: If you initiate a real estate commission negotiation and the agent accepts a discount without countering, is that the partner you want in your corner countering a buyer’s lowball offer? One of thekey things to look for in a real estate agent is that they are someone you trust to work on your behalf to get the best terms possible. The way they handle your negotiation could be a clue as to how they will handle your home sale.

How could a lower commission affect your exposure?

Real estate agents pay to promote your listing and get it in front of the right eyes. If they know they’re working for a smaller commission, they may forgo marketing opportunities that require a greater investment of resources, such as an open house or premium advertising space. That’s why it’s important to ask questions up front to ensure you know what services they will provide.

Rule of thumb: You typically get what you pay for

Before you start a hunt for the lowest commission Realtors^Ⓡ, remember the old idiom: You get what you pay for. While there certainly may be agents willing to offer discounts and still provide top-level service, it’s not a given. Instead, try thinking about all you gain working with the best agent: less work and stress, and more profit.

Are there other ways to save?

Sometimes lenders and real estate professionals have relationships that can benefit you as a seller or buyer. For instance, some mortgage lenders have a relationship with a real estate company or multiple companies where they assist you in finding an agent.  

It may be as simple as your agent referring you to a mortgage lender they know and trust, which helps streamline and speed up the process. Other times there is a more formal program such as getting a free home valuation as a seller or your real estate broker paying $1,500 toward your home buying closing costs. It can be worthwhile to ask potential lenders and agents if any programs like this exist.

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