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Jacob Lund/Shutterstock May 09, 2022 Jennifer Bradley Franklin is a multi-platform journalist and author, often covering finance, real estate and more. Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Bankrate logo The Bankrate promise
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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Buying or selling a home is one of the biggest financial decisions an individual will ever make. Our real estate reporters and editors focus on educating consumers about this life-changing transaction and how to navigate the complex and ever-changing housing market. From finding an agent to closing and beyond, our goal is to help you feel confident that you're making the best, and smartest, real estate deal possible. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. In a real estate transaction, there’s always some level of negotiation. If you’re on the selling side, you may be considering negotiating not only with prospective buyers, but also with the person you’re working with to seal the deal: your real estate agent. If you’re looking to save some money, here’s what you need to know about negotiating your , and how to agree on a rate you both can feel good about.
How real estate commission works and who pays for it
The average real estate commission rate has of late to just under 5 percent of a home’s sale price, , a real estate research and consulting firm. This fee is typically paid by the seller at closing, and it’s typically split down the middle between the seller’s agent and the buyer’s agent. (So, for a 5 percent commission, each agent would earn 2.5 percent.) In the past, rates have been closer to 6 percent. Five or 6 percent might not sound like much, but when you’re talking about a $350,000 home, it can add up to tens of thousands for the seller. Agents and brokerages can have unique commission structures, however, with some offering flat fees or other incentives. Because of this, there may be opportunity to negotiate the rate if you’re looking to save on the . “There are agents and brokerages that reduce, discount or coupon their services,” explains Kevin Van Eck, executive vice president of Innovation and Education at @properties, a brokerage in Chicago. “Each agent along with their brokerage can determine where they set commissions based on the value and success created.”
Is your agent s commission negotiable
Often, yes, there is a bit of room for negotiation. As you prepare to list your home for sale, you may be meeting with a few listing agents to find the right one for the job. Ask each agent about their commission rate and what exactly you’ll be getting for that price. Consider not only how the agent plans to market your home, but also their skill in pricing it, experience, resources and track record. “It’s OK for a seller to ask about the commission, but the best time is after talking with the agent and understanding their experience, how they will create exposure for the home and the value they bring to the table,” says Van Eck. You can weigh what you learn against the services of a discount broker, as well. Just keep in mind that the discounter’s offerings may be limited compared to those of a full-service agent.
How to negotiate real estate commission
Once you understand exactly what you’ll be paying for, you will be in a better position to successfully negotiate. Here are some tips: If you’re able to offer the agent more than one listing opportunity, that might be a compelling argument for a reduced commission. “If [you’re] a real estate investor who is looking to offload several properties, I would definitely talk about the commission,” recommends Dana Bull, an agent with Sagan Harborside Sotheby’s International Realty in the Boston area. Bull adds that most agents welcome repeat business. If you don’t have another listing opportunity of your own to offer, you can try leveraging your ability to get the word out about your agent to others in your neighborhood or network. This might be especially impactful if you know your agent is looking to build their business. “I can’t just slash my commission, but I might be willing to give a slight discount if the client offered some sort of other strategy to get more business after the sale,” Bull explains. If you have a home in a sought-after area, or a buyer already interested, or an unusually high sale price, your agent may not need to do as much as they normally would to make a sale happen. If neither party can foresee the need for additional services — “if an agent is coming in to basically just do some hand-holding, keeping the transaction on schedule and assisting with paperwork,” Bull suggests — that might be another good reason to propose a slightly lower rate. You may be considering skipping the commission conversation entirely and selling your home yourself. If so, be aware: An experienced house flipper might be skilled enough to , but for most homeowners, the (FSBO) route can be more challenging, more costly and more time-consuming in the long run. Bottom line
As in any negotiation, it takes both parties to be willing. Negotiating your agent’s commission can work in your favor, but an agent can walk away if they don’t necessarily need your business. Keep in mind, too, that it can make sense to pay more for additional services instead of negotiating the commission down, Bull says. These might include higher-end marketing, or additional mailers, for instance. Ultimately, it’s important to find an agent you can speak with openly about cost, and who you trust to do the best job to sell your home. SHARE: Jennifer Bradley Franklin is a multi-platform journalist and author, often covering finance, real estate and more. Michele Petry is a senior editor for Bankrate, leading the site’s real estate content. Related Articles