Negotiation will always be a part of real estate transactions. Negotiating doesn’t only happen between sellers and buyers, but also with real estate agents. Typically, agents, ask for a 6% commission from the total price of the property. 

For sure, you want some money saved from your real estate deal, and this is why you must learn the art of negotiation with your agent. But success in getting a lower agent rate depends on various factors, such as the type of property you have, market demand, the agent’s relationship with the brokerage, etc. 

For more information about negotiating commission rates with your real estate agent, here is a blog article for you. 

How Does an Agent's Commission Work?

The average nationwide commission rate for real estate agents is 6%. They don’t charge a set fee because it seems like they are price-fixing when they do that. But the 6% commission won’t go straight to your agent’s wallet because it will be split between your agent and the buyer’s agent. 

Typically, it would be a 50/50 split, and both the seller’s agent and the buyer’s agent will divide their shares to their respective brokerage agency. 

Know Your Market’s Average Commission Rate

Commission rates vary by the local market. In a local market like San Francisco, agents charge less because they still make good money in this expensive market with a median selling price of about $1 million. 

Study the real estate market conditions in your area. In a desirable market where homes sell fast, you can negotiate for a lower commission rate. But if houses are difficult to sell in your area, you’re less likely to have negotiating power.

Look for the Right Agent

Not all real estate brokerage firms and agents are the same. Some are willing to modify their service structures and fees to suit your needs, while others are more rigid. Of course, there are pros and cons to both, but what you want at the end of the day is excellent service. 

Find an agent capable of listing your house for a good price, but who is open to negotiating commission rates. Stay away as far as possible from an agent who offers you a low commission rate but with a bad track record at listing properties. 

Shoulder Upfront Costs Usually Paid by Agents

Learn how to put yourself in your agent’s shoes. Besides time and effort, agents also put in their money to cover upfront expenses, such as marketing and taking professional photos. You have more chances to negotiate a lower commission rate if you shoulder some of the upfront costs. 

For example, you can contact your photographer friend to capture the photos for the listing. You can also drop 3D tours or open houses to minimize the expenses of the agent. Make the job easy for your agent, and maybe he will say yes to a lower commission rate. 

Offer to Work with the Agent with Your Next Transaction

You broaden your negotiating power if you promise your agent to hire him for your next real estate transaction/s. This offer allows your agent to earn more money from you, and this harmonious relationship can make your agent more willing to lower his commission rate. 

Work with a Discount Brokerage

A discount broker helps you connect with agents who are open to accepting lower rates. Discount brokerage companies usually trade-off service structures and quality, and that’s the risk you have to expect. However, the risks vary by company, as each has its respective (and creative) ways to make for the discounts offered to home sellers. 

The tradeoffs with discount brokerages are: not offering assistance for your home staging and not providing multiple open houses and brochures. You must also expect slower response times because discount brokers typically work with many clients at the same time. 

Hire a Newbie Real Estate Agent

Newbie agents tend to be focused more on increasing their number of sales, garnering positive reviews, and boosting referrals than earning higher commission rates. The only catch is that many up-and-coming agents are beholden to their managing brokers. So, it may be difficult for them to lower their rates. 

If you have an interest in working with a newbie agent, make sure that he has some capability to offer you a discount commission rate. 

Takeaway

There’s room for negotiation if you want to save money from working with a real estate agent. All you need is to find your negotiating leverage and know how to use the art of negotiation to achieve your goal. 

Learn how to see the perspective of your agent and know the important considerations when talking him into accepting your demands because negotiation has to do more with “give and take” than hogging a great deal of the advantages to yourself.