You probably know that your real estate agent will make a commission on any sale. Whether you’re buying or selling your home, there is a fee for the service that must be paid, and both agents involved, the listing agent and the buying agent, will take a cut, although it is up to them to determine what percentage of the commission each person receives. However, it can be confusing trying to determine who is paying what. In a general sense, the buyer always pays because the commission is part of the final sale price. But since the money comes of the sale price, you could also argue that the seller is ultimately responsible for the cost of commission. What is more important to understand, though, is that you can negotiate the price of commission, no matter which side you’re on. And there are several ways to do it.
Request a reduction. The price of commission and the degree to which it can be negotiated will vary not only by the sale in question, but also by the agents involved. However, the best way to find out if you can get a reduction is to ask. In some cases the agent will offer a discount in order to get your business. Or there may be other circumstances that will allow you to negotiate for a deal of some sort, but you won’t know unless you ask.
Ask for a flat fee. The commission fee is generally a percentage of the sale price (about 5-7% in most cases), but you can always request a flat fee. This could end up working in your favor or not, depending on the final price of the property you buy or sell. If, for example, you negotiate a flat fee based on your intended selling price, and then you end up selling for significantly less, your agent could be the one to profit while you end up paying more than you might have otherwise. But if you’re house goes for more, you’ll gain in the long run with this strategy.
Suggest that the sellers pay if you’re buying. If you’re trying to negotiate a lower price on the purchase of a new home and the sellers refuse to budge, you may be able to negotiate for them to cover certain things like the commission or the closing costs, just for example, if you’re willing to meet their price. Technically, you’ll save money with such tactics, even though the overall fees won’t actually change, just the party responsible for paying them.
Discounts for multiple transactions. If you’re using the same agent to broker the sale of your current home as well as the purchase of a new home, there’s no reason you shouldn’t ask for a discount on the commission since you’re bringing the agent two sales in one. You might also get a discount if you’re buying or selling multiple properties, so don’t hesitate to ask. Although your agent may refuse since taking on multiple jobs for you doesn’t mean any less work for him, he may be willing to waive some portion of fees in order to ensure the additional work.
Stick to your guns. Whether you’re selling a high-end home or looking to buy manufactured selling solutions to populate your rental properties, you have every right to negotiate fees with your agent, and you should if you value your money. Your agent may only be willing to negotiate so far, or not at all, as the case may be. But you get to choose who will represent you in a real estate transaction, and it may be in your best interest to find someone who is willing to negotiate with you.