How to negotiate your agent’s commission

Trying to sell your home?

Worried about an agent’s commission eating into your proceeds?

Real estate commission is one of the highest expenses in the property sale process. No matter what conventional thinking says, though, an agent’s commission is never carved in stone. As a home seller, this means you have a golden opportunity to negotiate concessions before engaging someone. 

When and how you negotiate can determines your success. In the U.S., real estate commissions will cost you anywhere between 4%-7% of the sale proceeds. Note: It is generally the seller who pays the agent’s commission. The proceeds are shared by the seller’s agent, the buyer’s agent, and the broker.

So, how can you negotiate concessions from the agent?

When the agent is a local

Experienced local real estate agents have a firm business footprint in most U.S. neighborhoods. They can make the sale quickly and are usually able to offer more flexibility in commission. At first, they might ask for a higher commission, but when there’s competition amongst realtors, they may agree to a lower commission.

Remember, while an inexperienced agent may offer you a concession without much negotiation, their chances of making the sale are comparatively less likely.                                                                                                         

Negotiate when you have a high value property

If you’ve a high value property, agents will readily accept that the commission isn’t set. The logic is simple.

Say you have a high value property priced at $500,000, and the agent’s commission is 6%. The agent would receive $30,000 upon closing. For the same amount of work, if the agent sells a property worth $200,000, the agent would get just $12,000. (You get the point.)

Now, considering the share of the buyer’s agent, the listing agent gets $15,000 in the first scenario and $6,000 in the second, where the agent cannot afford to give concessions. So if you have a high value property, you can negotiate for an amicable commission.

When the home is highly desirable

Agents put all their efforts into closing a deal when your home is highly desirable.

Things like repainting the home, fixing the flaws, cleaning the landscape, and vacating the house before listing are some of the ways to make your house desirable. Agents can leverage these points to make a quick sale. And this allows you to negotiate the commission.

Market conditions and season

Consider the real estate market conditions before negotiating the commission. In a hot market, homes sell quickly, and an agent could sell your property without much hassle. This increases the possibility of the agent discounting the commission. 

On the other hand, if it’s a relatively slow market where selling takes longer, an agent must work harder for the property to sell. In this case, they’d likely be unwilling to make a concession on their share.

Also, keep an eye on the season while negotiating. Agents are most likely to negotiate commissions during the off-peak season (late fall and through the winter in the U.S.).

Kick second guessing to the curb

It’s time to set aside your hesitation and start negotiating with your agent. Even a minor change in the commission will save you thousands of dollars. So be bold, go agent shopping and find out who is willing to make you the best offer.

But remember, don’t get hung up on commissions and lose sight of the most important aspect: hiring the best agent. This is the experienced pro who will be able to net you a higher price for your property.

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