Can You Negotiate the Realtor Fee?

While there’s no fixed commission rate that real estate brokers charge, it is often assumed that the industry standard is 6% of the final selling price. On an $800,000 property, that can add up to $48,000, which is a lot of money. So, can you negotiate realtor fee? Absolutely!

Can You Negotiate the Realtor Fee?

You can always negotiate the realtor fee, as it is not fixed by any law or governing body. Commissions have become increasingly negotiated, while other models like flat fee purchasing have entered the market.

Common reasons people negotiate the realtor fee is if your property is highly-priced, move-in ready, or if you’re working with the realtor on multiple transactions. There are also agents willing to reduce their commission rates if your home is in a place where properties sell quickly.

Two people shaking hands in front of house

Why Don’t All Realtors Charge the Same Commission?

Despite other industry norms, realtors are paid based on local rates and customs. They also have different services and work differently. That being said, we recommend you choose a realtor based on the services they offer rather than on commission alone.

Generally, more expensive realtors provide full service for their clients that less expensive realtors don’t offer. At CA Flat Fee, you get a full-service brokerage with complete closing coordination, marketing, and professional photography. We also coordinate negotiations, offers, and all showings for a low flat fee.

Reasons Realtors May Lower Commission Fees

Realtors may consider lowering their fees by a half percentage point and in certain circumstances, a full point when:

You Buy and Sell With the Same Realtor

Sometimes realtors may represent you when you’re selling your old house and buying a new one. If your realtor is your buying and listing realtor, they may receive both commissions. In this situation, you may negotiate a lower commission.

While some real estate brokers may give you a discount if you buy and sell your house through their agency, others may refuse to discount fees. This is because they believe the two transactions are different from each other.

Each transaction involves separate work whether the buyer or seller are unrelated individuals or the same person. Bear in mind that realtors may not discount their commission while doing double work for less money. However, you may negotiate a lower rate based on referrals you may send them in the future.

The Same Realtor Represents You and the Buyer

This is also known as dual agency and it’s illegal in some states. In areas where it’s allowed, a broker may earn both selling and listing fees. In such transactions, your broker accepts liability when they’re a dual agent.

This is because they’re dealing with two different parties, with separate interests, the same property, and different abilities to sue in case something isn’t handled properly. Some states require dual agents to work as transactional agents without taking anyone’s side.

This means they don’t provide much assistance or offer advice. They only process paperwork. Some sellers in certain areas use this tactic to ask a listing agent to reduce their fees if they represent both the buyer and the seller. Note that you typically negotiate all commissions when signing the listing agreement.

You Have Several Listings With the Same Seller

Lowering commission fees in exchange for multiple listings from the same seller can be possible depending on the following three variables:

Sales prices of transacted homes
Ease of closing a sale
Market mobility

If all the above variables are in the realtor’s favor, negotiating a reduced commission becomes easier. Also, if your realtor has a strong income stream from you, they may not refuse.

The Realtor Controls the Neighborhood

Realtors who conduct much of their business in certain locations may offer you a discount. These are realtors who may ask for higher rates and quickly agree to reduce their rates if there’s competition from other realtors. Look for a Realtor that has a preferred vendor’s program, which in turn could help you with your costs.

If you like a broker who quoted you higher fees and interviewed another who agreed to complete the task for less, contact the first realtor and offer the second realtor’s rates. However, don’t focus so much on commissions that you end up not hiring the best realtor you can afford.

Person with a piggy bank and a small house model on the palms of his hands

Negotiating as a Seller

Sellers are usually shocked when they receive different commission prices, marketing tactics, and listing prices. If you’re a seller, interview at least three brokers. Some brokers can promise you a high sales price just to buy the listing while listing agents can suggest a lower listing price to sell a home with little effort.

However, you can make your broker’s job easier by renovating your property before a sale. You can either get your backyard landscaped, the carpets cleaned professionally, or paint your house. Bear in mind that a staged property sells quickly, for more money.

Negotiating as a Buyer

It’s unreasonable to negotiate your broker’s commission if you want high-end services from a realtor that’s ready to sacrifice evenings and weekends to show you every house available in town. However, you can negotiate it in certain situations.

For instance, if you’re buying an expensive or a newly constructed home and completed most of the legwork yourself, you can ask for a lower rate. A good idea is to formalize your business relationship from the outset in a buyer’s contract.

We recommend working with a committed buyer’s agent who takes their duties seriously.

Conclusion

Although there’s no guarantee that a realtor may agree to lower their fees, it doesn’t hurt to ask. However, keep in mind that some realtors may reduce their rates while others may not. For instance, realtors whose brokerage firms take a percentage of each commission may not be able to negotiate.

Can You Negotiate the Realtor Fee?