7 Tips Homebuyers Can Use To Negotiate Real Estate Commissions
Written by
Martin Dasko
Edited by
Ashleigh Ray
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According to a report from Clever Real Estate, the average real estate commission rate in the U.S. is 5.32%, which is split between the listing agent (2.74%) and the buyer’s agent (2.58%). The website also shared that closing costs on a home for a buyer are about 3% to 5% of the sale price, with the average expenses being anywhere from $10,000 to $17,000.
As a homebuyer, you’ll want to find any way possible to save money by reducing closing costs. You should also know there’s room to negotiate these real estate commissions, especially in certain market conditions. Here are tips that homebuyers can use to negotiate their real estate agent’s commission.
Find Any Leverage That You Can
As Seamus Nally, the CEO of TurboTenant, explained, “Though the NAR settlement has changed the structure so that buyers are now responsible for their agent’s commission, that can definitely be negotiated. You just have to find leverage or some kind of tradeoff.”
Consider his example: “… maybe the home inspection revealed some damage, and you can negotiate with the seller so that instead of them fixing the damage before the sale, you will fix it after as long as they pay your agent’s commission.”
The goal is to find any leverage that could help your situation as a homebuyer since you already have plenty of expenses to consider. This is why a home inspection is crucial to finding any potential issues with the home. You could then use any of these discrepancies as leverage to pay a lower commission.
Choose an Agent Open to Negotiation
While not all agents are open to reducing their commissions, Jim Sandford, a real estate investor and the founder of Freedom Properties Direct, said that many are, especially if they know you’re a serious buyer or if market conditions are favorable to negotiation.
“I always recommend asking upfront during initial meetings,” Sandford added.
An agent that’s open to negotiations is also typically more flexible and customer-oriented in other areas. You don’t want to find out when it’s too late that you’ll be charged exorbitant fees for your home transaction.
Interview Different Agents
“The best way for buyers to negotiate commission with their agents is to interview multiple agents,” advised Robert Washington, an experienced broker and the founder of Savvy Buyers Realty.
“Once the buyers have interviewed multiple agents and received their commission offers, buyers can go back to their favorite agent and let them know they’d love to work together, but another agent is offering their services at a lower commission.”
Now’s your chance to see if they can match the offer or come close. The odds are on your side that the agent will probably at least try to match this offer.
Leverage High-Value Transactions
Sandford also pointed out that agents are often more willing to negotiate if you’re purchasing a higher-priced home since their overall earnings remain significant even with a reduced commission rate.
If you’re buying a luxury property or you plan on using the same agent for various deals, you can ask for a better deal since they’ll want to keep your business.
Consider Flat-Fee Agents
Flat-fee agents aren’t as common as commissioned agents, but according to Sandford, the flat-fee structure can provide substantial savings, especially if you’re purchasing an expensive home. These agents charge a fixed fee regardless of the home’s sale price, so you don’t have to worry about the percentage rate increasing if there’s any kind of bidding war.
Bundle Services
If you’re working with the same agent to sell your current home and buy another, you have some leverage to negotiate a discounted rate. The agent may appreciate the opportunity to handle multiple transactions and could accept a reduced rate for the business.
Assess Market Conditions
“In a buyer’s market, where homes take longer to sell, agents may be more open to adjusting their commission to secure a sale,” noted Sandford.
The trick is to do your best to assess the current market conditions so that you know what you’re getting into as a homebuyer. Understanding the market puts you in a stronger position when entering commission discussions.
Closing Thoughts
Negotiating commission is important, but it’s equally essential to remember the value a skilled real estate agent brings.
“A good agent handles complex negotiations, ensures a smooth transaction, and often helps you save money in the long run,” said Sandford.
When buying a home, your primary objective should be finding an agent who balances fair commission rates with excellent service. By applying the tips in this article, homebuyers can save money on real estate commissions while ensuring a smooth process.
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