2. Just ask
Despite the perception that 6 percent is the standard fee, agents can and do negotiate. As real estate columnist Kenneth R. Harney writes in the Los Angeles Times:
… 6% isn’t the real number. The average commission rate nationwide on home sale transactions hasn’t been 6% since 1992, when it was 6.04%, according to Real Trends, an industry publishing and consulting firm that obtains confidential transaction data from brokerages annually. In 2005, at the height of the housing bubble, it was 5.02% and in 2013 it was 5.38%.
You won’t know if you don’t try. Ask respectfully. One Realtor told another L.A. Times writer that, of course, agents will resist cutting their fees. And many will decline to do it. But Orange County agent Kellie Jones expressed amazement that some people are afraid to ask:
Jones, a pragmatist, said she would cut her commission “if I think I am not going to get the listing unless I do so.”
3. Shop around
Agents come in all shapes, sizes and colors. They have different situations and agreements that allow some to be more flexible on price than others. Don’t stop at the first (or second or third) agent you speak with. Keep looking.
4. Be respectful
Defensiveness and accusations will not help you make your case. Be appreciative of the work an agent does to make a living and negotiate with a respectful attitude.
5. Be realistic
It’s not reasonable to ask a full-service agent to drop her fee to the level of, say, a discount brokerage like Redfin. If you can negotiate a discount of one entire percentage point, you’ve done great. Also, sellers can shoot themselves in the foot by dropping the buying agent’s commission. That discount will be visible on your property’s listing to all agents and some — many, perhaps — may hesitate to show your home to buyers, even though ethically required to, if it seems a waste of their time.
6. Do your homework
You’ll be in a better position to win something in this negotiation by learning all you can about the local real estate market. Come up with a compelling argument about why you should pay a smaller fee. For example: “My research shows that homes in this ZIP code stay on the market just 45 days on average and they sell for above the initial asking price (see online listings for these and other statistics). That tells me it’s easier and faster to sell this home, requiring less of your time. You’ll probably spend less time and effort marketing it and showing it, and you can move on to your next transaction faster. I think that’s worth a lower fee.”
7. Be creative
Put yourself in the agent’s position and propose a deal that appeals to his self-interest. For instance, you could suggest that the agent drop the fee if the home sells within a short period of time — a month or 45 days, for example.
8. Be prepared to give
Winning a negotiation rarely — if ever — means coming away with your entire ask. It means holding firm on some items and giving on others to reach a middle ground that satisfies both parties.
What’s your experience buying and selling properties? Has it changed much with the technology? Share with us in comments below or on our Facebook page.