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Negotiating Commission

bleigh
13 years ago

Agent I've chosen to list our house is asking for 6% commission. I'd like to try and negotiate that down a little. Any advice as to what is a reasonable rate? Thanks!!

Comments (32)

  • terezosa / terriks
    13 years ago

    I'd try 5%

  • Linda
    13 years ago

    I would see what others in the area are charging. In a market where there is lots of inventory, you dont want to be the house who is offering less than the competition.

  • bleigh
    Original Author
    13 years ago

    Decided to look it up and I think I might just leave it alone. Our house has some issues and this guy is really on top of his marketing...I'd be happy to pay him the full 6% if he can find us a buyer. Thanks for the replies!

  • foggyj
    13 years ago

    This area is 6%. Our RA already quoted he'd take 5 1/2% when we put it on the market in January.
    Possibly when the time comes, your RA will re-negotiate the fee with you. Around here, RA's will be a little more willing to lower commission in order to make the sale.

  • sunnyflies
    13 years ago

    Real estate fees are legally negotiable. They are not set in stone. It's one of the first things taught in RE courses.

  • steve_o
    13 years ago

    We tried negotiating the commission with an agent once and his response was that he was fine with 5% if we were fine with him not putting "6% effort" into the sale. At least he was honest enough to tell us what others would simply have done without telling us. (Not a matter of ethicality, BTW; we all tend to put less effort into work of less value.)

    The best we did with negotiating fees was with volume -- offering multiple sides (transactions). But asking is free, and you never know what the answer will be until you ask.

  • susienordin
    13 years ago

    in my experience, the best time to negotiate the agent's commission is during the offer/counter offer stage..."if we take this much less for the house, will you help us with a concession on your part?" or something like that.

  • phoggie
    13 years ago

    Our agent also wants 6%, which is the "going rate" here. We put it in our contract that if we had to come down "X percent" on our asking price, then she would have to come down the same percentage on her commission....and she signed off on it.

  • dazzlemewithcolor
    13 years ago

    I like susie's suggestion. I have heard that a lot of agents won't risk loosing a sale if they can help it.

  • ncrealestateguy
    13 years ago

    I never get my commission involved into the middle of a negotiation between a seller and buyer. I tell my sellers that I am not part of the offer to purchase, and niether is my already contracted commission. The time to negotiate the commission is before the listing goes into the MLS.

  • C Marlin
    13 years ago

    Real estate fees are legally negotiable. They are not set in stone. It's one of the first things taught in RE courses.

    What is the point of your post, the OP was not asking if negotiating is LEGAL, he was asking how best to do it?

  • C Marlin
    13 years ago

    You are probably smart to leave the issue alone for now. I'm all for negotiating commission, but in some places and in this market 6% may be the right number.

  • berniek
    13 years ago

    "I never get my commission involved into the middle of a negotiation between a seller and buyer. I tell my sellers that I am not part of the offer to purchase, and niether is my already contracted commission. The time to negotiate the commission is before the listing goes into the MLS."

    Same here. If an agent is that desperate to make a commission, s/he really must not be doing enough business and I would question their ethics, especially if s/he was an agent for the client.

  • ncrealestateguy
    13 years ago

    Another way to look at it is this... If an agent can not negotiate sucessfully to not cut his commission during the negotiating stage, then what would make you think that your agent can help you negotiate your best interests? Like most things in life, you get what you pay for.

  • C Marlin
    13 years ago

    I clearly understand the point you agents are making but I also can understand when receiving a lower offer when your agent is discussing you (the seller) take a lower offer, why not bring up the point of letting us both share in this lower offer.
    I would not consider the agent desperate, probably successful and able to consider making the deal happen, irregardless of a slightly lower commission.
    What on earth would make anyone question the agent's ethics in such a situation? There is nothing unethical about renegotiating a different commission.
    some agents may not want to reduce their commission, but there is certainly nothing improper about rediscussing the agreed commission if a lower offer is being considered. I would not suggest such a discussion if discussing a full offer or if the offer is what the agents originally suggested as the list price.

  • sylviatexas1
    13 years ago

    "letting us both share in this lower offer"

    So sellers in a good market would share gains?

  • berniek
    13 years ago

    "What on earth would make anyone question the agent's ethics in such a situation? There is nothing unethical about renegotiating a different commission."

    The commission is set at time of listing. Any agent who makes decisions based on making a commission more or less, is not representing their client, but focusing only on getting a commission, which is unethical.

  • jane__ny
    13 years ago

    When we were negotiating the sale of our house, after much back & forth, we came to an impasse of $5,000. I refused to budge as did the buyer. I told my agent that was that, I refused to accept the offer.

    The next day she said to accept the offer that she and the sellers agent would split the $5,000 and we'd get our asking price. She made it clear it wouldn't show in the contract, that the $5,000 was a private agreement.

    I'm not sure what that is called, but we got our price.

    Jane

  • steve_o
    13 years ago

    "letting us both share in this lower offer"

    So sellers in a good market would share gains?

    Yes, they do. If the commission is based on the actual sale price of the house, the agent earns more. If a house listed for $200,000 is the subject of a bidding war and goes for $220,000, the agent absolutely bases his/her commission on $220,000.

  • ncrealestateguy
    13 years ago

    But, again, that is negotiated up front, not during the middle of a transaction.

  • berniek
    13 years ago

    REALTOR CODE of ETHICS:
    � Standard of Practice 3-2
    To be effective, any change in compensation offered for cooperative services must be communicated to the other REALTOR� prior to the time that REALTOR� submits an offer to purchase/lease the property. (Amended 1/10)

  • sylviatexas1
    13 years ago

    so you're saying that I'd get a smaller percentage of a lower price in a low market, but my "reward" would be that I'd get my normal percentage in a good market???

  • C Marlin
    13 years ago

    The commission is set at time of listing. Any agent who makes decisions based on making a commission more or less, is not representing their client, but focusing only on getting a commission, which is unethical.

    We just disagree...
    An agent can simply either agree or not agree to a reduced commission. There is no basis for thinking the agent is ONLY focusing on getting a commission. One can also state the agent is focusing on getting the house of his client SOLD, this is a good thing.

  • C Marlin
    13 years ago

    so you're saying that I'd get a smaller percentage of a lower price in a low market, but my "reward" would be that I'd get my normal percentage in a good market???

    This is a commission discussion applicable to any market.
    Obviously your actual dollar amount is always variable.

  • notto
    13 years ago

    The commission should be agreed when sigining the listing contract.
    It is wise for the seller to have a net price set in mind, and to put in writing any commission adjustments IF the seller has to make any monetary concessions, and getting below the net price.

    Actually, I think there should be set commissions like 5k, 10k, 12k, instead of percentages. The RE business needs to be streamlined, and all the middlemen removed so that the consumer can save money. Commissions over 12k are ridiculous.

    Both sides (buyers and sellers)have expenses when buying/selling. The RE commission should not be that high.

  • C Marlin
    13 years ago

    Actually, I think there should be set commissions like 5k, 10k, 12k, instead of percentages. The RE business needs to be streamlined, and all the middlemen removed so that the consumer can save money. Commissions over 12k are ridiculous.

    I do agree some things have been streamlined, such a paying for print ads, should be much less than in the past. But to say no commission should be over $12k, seems not to consider large expenses for some higher priced housing. Do you not think there are many different dollar factors when considering unloading a $12M house vs. a $120k house?

  • ncrealestateguy
    13 years ago

    The market is very capable of determining a fair commission; a lot more than someone's random figure on a forum. Commissions are negotiable, as they have been from the start.

  • berniek
    13 years ago

    "We just disagree...
    An agent can simply either agree or not agree to a reduced commission."

    That's not the issue. The COE and MLS rules determine when an agent can negotiate their co-op fee.

  • worthy
    13 years ago

    in my experience, the best time to negotiate the agent's commission is during the offer/counter offer stage

    That's often true. Still, when I was a real estate broker, I never cut my commission to get the deal through. Of course, I had other sources of income.

    I haven't paid more than 4% commission since the mid '80s. Same agent--a couple dozen deals. She even splits it 2.5%/1.5% so the selling agent gets what they would on the more typical 5% commission. On the last deal, the whining selling agent even demanded and got 2.75% of the commission.

  • berniek
    13 years ago

    Here, the compensation to the buyers agent is spelled out in the buyer agency agreement. Should the co-op offered by the listing broker be less than agreed to in the buyer agency agreement, the buyer has to make up the difference. Most of the time,the buyer walks away and buys a home that compensates their agent according to their agreement.

  • worthy
    13 years ago

    Commissions over 12k are ridiculous.

    Last time, I shelled out $66K plus 5% tax. Altogether, that's about double what I paid for my first home. The tax is now 13%. Now that's true larceny.

  • C Marlin
    13 years ago

    Here, the compensation to the buyers agent is spelled out in the buyer agency agreement. Should the co-op offered by the listing broker be less than agreed to in the buyer agency agreement, the buyer has to make up the difference. Most of the time,the buyer walks away and buys a home that compensates their agent according to their agreement.

    berniek, this is really a none issue for most people. As I said, commission can be renegotiated between the seller and LA. This isn't about the commission of the BA.
    It really isn't the problem you are making it.
    If you consider it unethical or your local area does not allow it, ignore this discussion.