Hi everyone,

Looking to sell our small 1 BR condo, hasn't appreciated much and with the 5% realtor fee's we would lose a little , however it's a great market to buy a house. Is there a way to negotiate lowering realtor fees or is this something you shouldn't/don't do?

 

YES it is very negotiable. Usually 3% is fixed to the buyer's realtor, but some people contract 2.5% to the buyer's realtor. Your selling realtor is totally negotiable especially in the market where their business is pounded.

 

You can always negotiate the commission, the question is whether it's wise.

Generally, most real estate agents won't bother with a listing offering less than a 6% commission (total) because they can simply move on to the next house; in that case, negotiating for a lower commission may severely limit the number of potential buyers. However, with today's market so sluggish, that's less of a factor.

Also, for what it's worth, the term "realtor" is not synonymous with "real estate agent"; the former is a trademark of the National Board of Realtors, and you have to be a member to use the trademark legally.

Finally, when you're buying, you should negotiate with your agent to pay them a larger commission for a lower price on the house. The normal commission structure giving the buyer's agent a fixed percentage of the selling price means that your agent's financial incentive is in your worst interest: he gets more money by making you pay a higher price for a house. It's a stupid system.

 

Negotiate a buyer/seller split on the commission, a 50/50 split.

 

Speaking as a licensed agent, I HATE being asked to renegotiate my fee up front. Like almost all agencies, we have a standard fee schedule and, while it is not written in stone, it is fair and consistent with the marketplace. But every so often, the question of cutting my fee comes up. Sorry to rant, but here goes. In any real estate deal, there will be attornies, accountants and contractors involved, among others. Are they also going to get their paychecks clipped? And many of these guys get paid if the deal happens or not, by the hour, while I only get paid if and when the deal closes. I know this going in and am willing to spec my time but please don't ask me to clip my fee, especially up front. And let me let you in on a dirty little secret. Once the deal gets moving, it hits a point where its close. Sometimes real close. And often time, to make the deal, the buyer will give a little and the seller will give a little. But if there is still a gap there, guess who all eyes turn to? Now I'm certainly willing to get into a discussion at that point. But how receptive do you think I'm going to be if I've already gotten clipped up front? Like I said, agents eat what they kill and most will bend at the end if that's what's needed to make the deal. But please don't clip us before we even get started. Okay, I'll go back into my cave now.

 

Didn't you see the movie Devil's Advocate... Everything is negotiable!!!

8 Ball I see your side of the coin on smaller properties, the more expensive, then you may have something to go on. If the same amount of work goes into a $200,000 property as a $2,000,000 property, is it really work 10x the commission. I understand that you will need to advertise more, etc and you do more to move the property, but $100,000 worth? From friends who have bought in that range, there is virtually always some negotiation.

Personally I wouldn't even try and negotiate on any property less than $500k.

 

It is and should be negotiated, sorry Alec (8_ball). If your agent is stellar there is still little they can do to actually sell your house. Most of what I feel I pay an agent for is the listing in the MLS.

I especially don't have a problem asking them to drop it on the sales side if they are also my buying agent.

 

Negotiate away as long as you keep the selling agent's portion the same as on a full price listing. If you don't then they simply won't show it.

You've already got a smokin hot commission at 5%, most of the country is at 6-7%.

One way to negotiate a lower commission easily is to go FSBO. They will usually come to you offering a lower commission so no negotiating needs to be done.

I think everyone ought to go FSBO first just to see if there isn't a buyer sitting out there waiting for the right property to come on the market. After you've used up all the easy ones, then give it over to a Realtor if you have to.

 

well... if you don't negociate, there are always discount realtors. however, I'd be careful. you may get what you paid for.

 

OK, out of my cave for a few last comments. But first a small disclaimer - I am not a residential realtor but rather commercial and operate in a very small sub-niche of that. But I have the same license and live by the same concepts. So a few things to keep in mind. First, agents are almost always full independence contractors. All expenses, including things like healthcare coverage, disability insurance, business cell phone, business auto expense, business travel, business computers, everything is borne totally by the individual. Plus you typically have to split your commission with the 'house' or brokerage company that holds your license. So a cut in commission can't be absorbed by some larger entity, it directly affects the agent's bottom line. Second, several have mentioned co-brokes. By reducing the fee, the listing agent has to either (a) offer a proportionally smaller fee to co-brokers or (b) keep the co-brokers competitive and bear the full brunt of the reduction. Neither is a particularly good alternative. Third, doctors, insurance agents and attornies are often ICs. Most customers wouldn't consider negotiating the charge associated re-setting a broken arm with their doctor. OK, maybe an extreme example but how about negotiating the fee with their insurance agent on a life or auto policy? Again, the cornerstone of my business is negotiating, so I get it. But I also bring 20 years of deal experience and a very well-developed network of buyers to the table. That has real value, way beyond sticking a listing in the MLS and shoving a sign in the ground. As I said, if the deal gets close at the end and the barber sheers come out, I'm all for stepping up for my clipping to get the deal done. Just please don't sharpen up those sheers before I even get started.

Back to the cave.