If you are looking forward to selling your house, then you might be considering hiring a real estate agent to steer the entire process smoothly. Buying or selling a property is not as easy as it sounds. It involves complicated paperwork and is time taking too. Real estate agents know the local housing market in and out.
The real estate brokers provide comprehensive services and ensure easy transactions. Right from listing the home on the MLS to negotiating the sale and pushing a faster closing process, the agent does it all. They can help you find the fair value of your home, suggest needed home repairs, help you with home staging and marketing, negotiate the sale, arrange the inspector’s visit, and more.
They relieve the stress for both the buyer and seller. The real estate agents charge a commission for their work. Let us know how they charge their commissions work and how to negotiate real estate commission with them to save a significant amount of money.
Real Estate Commission in 2022
The real estate agent charges a commission between 5% and 6% of the home’s sale price. The buyer’s and seller’s agents split the amount. The realtors too share a part of this commission amount with their broker agencies.
Most likely, the seller pays the commission for buying as well as the selling agent and the buyer usually pays the closing costs.
Negotiating The Commission
Well, if you were thinking that you cannot negotiate the real estate commission rates, then you were mistaken. You are free to negotiate and offer a lower commission rate to your realtor, suiting your budget. While some may refuse and back out but some listing agents accept lower fees.
Many real estate brokers accept a low fee due to the reasons like:
- If they feel that your property is easy and quick to sell.
- If the home has a huge listing price.
- If your agent is providing fewer services compared to the full-service agent.
- If the agent is representing both the buyer and the seller or working as a dual agent.
- If you have a move-in-ready property that looks beautiful.
- If you have multiple properties to buy and sell and you have decided to use the same agent.
Why negotiate?
No matter what the real estate agents tell you about their commission rates, be informed that you can negotiate real estate commission. You don’t need to pay the fixed 6% while selling the home. As per the Department of Justice, due to the intense competition in real estate, many agents are open to offering rebates and accepting adjusted commissions.
How to Negotiate?
If you intend to crack a lower real estate fee deal, then you must prepare for the same. Here are the important tips for negotiating a real estate commission.
1. Market Analysis
If you are a prospective seller, then the first thing you need to do is to know your local neighborhood. Collect recent sales data and research to know how fast the homes in your area got sold. Know the selling prices as well for a deeper insight.
Though the commission structure remains common across all markets but you will get an idea of whether it is more or less common to negotiate commission rates in your specific local market. Compare your home with the rest of your local market. If it is above the average sale price in your area and in a desirable condition, then it would sell fast and the agent might charge lower. In case of the opposite situation when your home is cheaper than the average amount and is not so desirable, then it will be tough to sell and you may not get a low commission.
Also, the current local market conditions play a crucial role. When the stock is less and the demand is high, then the seller’s market is hot. The homes sell fast and match the asking price too. This means an easier deal for your real estate brokers and better chances of negotiation on the real estate commission.
2. Offer work
If you agree to perform some of the services that the realtor would have done for you, they may agree to negotiate real estate commission and work at a discounted fee. The real estate agent commission gets substantially low if you eliminate some of their services.
For example, if you are good at taking pictures or staging your own home, then you can offer to take up that work. If you are good at home search and just need the agent for negotiation and contract support, then also they will accept a lower fee. So, pick up the services that you can do yourself and ask for a discount on their fees.
3. Off-season sale
Yes, there are seasons in the property market as well. If you sell in the off-season, then the agents will be willing to negotiate better because they need business in slower months.
4. Close Multiple properties
If you are an investor and looking forward to buying and selling several properties, then consider transacting them all at one go. When the realtor knows that they can help you with multiple transactions, they will be willing to adjust their rates due to the prospective multiple sales.
5. Get in touch with several agents
One of the best ways to know how to negotiate real estate commission rates is to interview various agents. Make the agents realize that you are an informed seller by asking them relevant questions. Some questions could be:
- Whether they are a full-time agent.
- How long they have been in the real estate business?
- How many homes they have sold in your area in the past?
- How do they plan to market your home?
- Who are their other partners who help them sell your home?
- How many clients are they representing presently?
Let the agents know that you are evaluating many other agents. This will create a feeling of competition and will be more open to negotiation.
6. Flat Fee MLS listing
One of the best alternatives to paying high amounts of agent commission and avoid to negotiate real estate commission is to go for the flat fee MLS listing model. If you sell your home on your own or FSBO, a flat fee MLS listing service can help you list your home on the local Multiple Listing Service or MLS.
The MLS is the online resource where the real estate agents list homes, view homes, and share the same with other agents on the MLS. There are hundreds of local MLS databases. If your home is listed on the local MLS, the buyers and real estate agents can see your home. Use flat fee MLS listing service to list your home on the MLS. If you want further assistance, the flat fee MLS listing service will provide the same at an additional charge.
Negotiating with the agent can work in your favor and lower your cost. You can make the decision whether you want to pay more in return for additional services or you would still want to bring the rate of commission down. Hire an agent whom you can trust and who can do the best job for you.
Angela Spearman is a journalist at EzineMark who enjoys writing about the latest trending technology and business news.