This question “are real estate commissions negotiable?” or “will you reduce your commission?” inevitably come up. Let’s face it, selling or buying a home is not cheap, but we all want to save where we can. So, it’s a normal question. Some agents get upset when asked and they shouldn’t. It’s a fair question. The answer is not as simple as it would appear. Read on and be sure to send me your comments! All feedback is always appreciated!
Can you negotiate a realtor commission?
Absolutely! Real estate brokerage commissions are completely negotiable.
As with anything in life, there are pros and cons, compromises. Companies or individual agents may set their own policy as to what they will charge and may or may not deviate from those policies. This is perfectly legal and ethical.
Think restaurants … some are more expensive than others. What’s your budget, occasion, and desired outcome? Each restaurant decides what they are going to charge and you choose your meal and beverage accordingly.
Do you pay real estate commissions in advance?
Most agents work very hard for pay that may or may not come – they only get paid at closing when the purchase or sale is completed. There usually is not a retainer, so basically they work for free until the job is done.
The amount of risk of not getting paid (think: buyer doesn’t qualify and loses sale; buyer decides not to take job and relocate; buyer doesn’t like what is for sale and decides to stay put and renovate existing home; seller decides not to move for health or other reasons; and the list goes on). Buyers and sellers receive valuable service and advice, all free if they don’t go through with purchase or sale.
By the way, the fall-through rate in the Boulder area is that 20-40% of transactions don’t close, at least the first time around.
Which agents discount their commission?
Most well-established, top agents won’t lower commissions … just like the best doctors, the best executives/managers; the best chefs … when you’ve paid the dues to be top-notch at your trade, you deserve to be paid fairly for your skill. That’s why the manager at McDonalds gets paid less than the guy who just got hired last week to flip burgers. With experience, hard work and diligence, the line worker may very well become the manager.
Most well-established, top agents won’t lower fees – they are well known and respected, do a fantastic job often saving their clients lots of money and hassles and they (like any other professional) have set their fees commensurate with their service standards, so you’re not likely to get the best agent if that agent is so willing to take a pay cut. Think: why are they willing to take a pay cut?
That being said, there are some newer agents, for example, that are willing to take a pay cut to get more experience and to get a deal. So you may still get a great agent for less but you’re taking the risk that they know what to do, and that they truly have the support needed to professionally navigate a complex and expensive transaction for you.
Will they defend your equity?
If you’re buying or selling the most expensive asset you own, be wary of an agent who would willingly give up part of their commission.
Just think, will they also give up your money as easily or will they defend your equity with everything they’ve got? You decide.
So, should you ask for a discounted commission?
That answer is a resounding YES! This is a test of your agent’s ability to handle pricing on your behalf as well as theirs. If they are willing to discount, ask what you are giving up for that discount.
Most people don’t work for free or for less than they are worth (unless they are volunteering).
Buying and selling real estate is fraught with misconceptions and myths. Ask and understand as much as you can so you can make the best decisions for yourself and your situation.
Give us a call to help you with the largest transaction in your life. We can help you find that dream home at a fair price and sell for top dollar. We will fight for your money and goals every step of the way!