Can You Negotiate a Real Estate Commission?

Real Estate News Article

< Back

Can You Negotiate a Real Estate Commission?

Written By: Ashley Sutphin
Friday, January 8, 2021

In a real estate transaction, there are typically three main parties involved. There are the real estate agent, the buyer and the seller. The takeaway for the agent is a commission, but many people experience confusion about things like how much it is and how its paid. They also wonder if they can negotiate a commission.

What is a Typical Commission?

Most people think theres a standard percentage across real estate for commissions. There isnt a fixed price. There is an average prevailing fee in most states thats around 6 of the final sales price of a home, however. If an agent sells land, they may get a higher commission of anywhere from 10 to 20 because it takes more time and a larger marketing budget to sell land.

The seller of a property is typically the one who pays a commission. It goes to the listing agent, and then the listing agent gives a portion to the agent representing the buyer. The home buyer doesnt pay anything.

Most real estate agents only work on commission and dont earn a base salary.

So what it might look like if you were to sell a 200,000 home is that the listing agent would charge a 12,000 fee. That would be a 6 commission. Then, they would split that with the buyers agent, so the agent representing the buyer gets 6,000, and the listing agent gets 6,000.

Then the agent has to share part of that 3 with their brokerage office. Sometimes that amount could be as high as 40 of the 3.

Agents also pay for a lot out of the fee, including their marketing and insurance costs. Commissions are paid at the time the title transfers for the home.

Can a Seller Negotiate?

Legally, a commission is negotiable. However, sellers have to be careful here. While an agent might be willing to negotiate in certain circumstancesfor example, the property is high-end or it may help them break into a great neighborhood, in many cases, they wouldnt be.

If a real estate agent is too willing to settle for a lower commission for seemingly no reason, you have to think about how their negotiation skills will look later on when theyre working on a deal for you.

The entire goal of hiring a real estate agent is to get the best price for your home, along with the best terms. A real estate agent who quickly agrees to take a lower commission may not achieve those goals. Also, the marketing costs will come from that commission, so in taking a lower fee, will the agent be cutting corners on their efforts to advertise your home?

Its not unusual for an agent to be unwilling to negotiate their commission simply because they dont have to. They may be so busy that theres no reason for them to take a lower commission. They can simply move onto other sellers.

What if the Same Agent is Handling Selling and Buying?

If youre going to sell your home and then the same agent will help you buy another one, they earn both commissions. Its possible that you could get a discount in this situation, but again, maybe not. Both transactions are separate from one another, and both require their own work. It doesnt matter to the agent if the seller and buyer are the same people because the workload would be the same as if they were different people.

What if the same agent represents you and the buyer?

This is a situation known as dual agency, but not all states allow this.

In this case, if its legal, an agent could earn the listing and selling fees. You might ask a listing agent if they will lower their commission fees, although again, theres no obligation on the part of the agent.

While negotiating is possible for real estate commissions, its not always the best idea nor will it always result in a discount for you as a seller.





Copyright© 2021 Realty Times®. All Rights Reserved

Updated: Saturday, January 16, 2021

Ask the HOA Expert: Vendor Int...
Question: Our HOA has a resident that interferes with vendors. Our landscaper has thr...

2021’s Hottest Home Décor Tren...
Most of us were more than happy to say goodbye to 2020, but we could still be spending a fai...

Where Do I Go From Here?...
Where do you go from here“Interest rates are at all-time lows.Pivoting i...

Copyright ©2021Realty Times®. All Rights Reserved

Housing Rebound: Factors to Consider
In Miami we have had an incredible year of growth with an ever shrinking supply of condos...

Hoteliers Buy Versace Mansion at Auction
Gindi Family and Nakash Family of New York were the winners of the auction for Casa Casuarina...

Stunning Estate for Sale on Allison Island
Allison Island is one of the man made islands comprising Miami Beach. One half of the island...

Avant Garde and Luxurious Penthouse on Fisher Island
Fisher Island is home to some of the highest net worth individuals in Miami. It is a private...

6000 Indian Creek, Condominium Spotlight
6000 Indian Creek is a Sieger Suarez project that was completed in 2007 and consists of...

$35 Million Buys you THIS on Star Island
$35 Million for a home on Star Island is par for the course in Miami Beach real estate....

Development Update
It is looking like a dusty winter season in Miami, with all the construction rapidly underway,...

North Bay Road Charm, 4330 North Bay Road
4330 North Bay Road is a stunning example of Mediterranean architecture in Miami Beach....

Best Home Improvements for Resale Value
It could not be a better time for a homeowner to list their home for sale in Miami. The...

Biscayne Gets a New Development
The Melo Group of developers acquired 601 NE 23rd St last year and have conceived of 23...

520 West Ave Residence 2301
520 West Avenue is home of the Bentley Bay. Bentley Bay is comprised of two modern towers...

Spice 2013, Guide 101
Miami Spice is a program whereby most of the restaurants in the city encourage people to...

Hollywood has a New Hotel
Margaritaville Hollywood is coming to Hollywood Beach and is likely to completely alter...

Sustainable Waterfront Home on Normandy Isle, 1.85 Million
Rarely on the market do we find completely sustainable, off the grid, homes in Miami Beach....

Housing Inventory on the Rise at the Close of Summer
The Wallstreet Journal released numbers via Realtor.com regarding the inventory of available...

Warm Spanish Style Home Listed on the Sunset Islands
1844 W. 23rd Street is listed on the Miami Beach luxury real estate marketplace for $11...

Former Gansevoort Getting Complete Eco-Renovation
Last year the Perry Hotel, formerly the Gansevoort, was purchased for $230 million. The...

Affordable Luxury Waterfront on Hibiscus Island
A home that is considered affordable in Miami terms for waterfront is generally between...

Bart Reines New Masterpiece Released on the Market
Bart Reines is one of the worlds most impressive modern architects living, and he has just...

New Listing on La Gorce Island
98 La Gorce Court has just been listed for sale. This over 7800 square foot home with 8...