The century-old practice of residential real estate firms setting a fixed commission that home sellers are required to pay continues to be challenged in courts across the country. A survey of recent home sellers finds many have been successful in negotiating those commissions on their own.
But most sellers don’t know they could be able to negotiate the commission.
Real estate agent commissions are typically the seller’s sole responsibility.
Commissions are generally, 5% to 6% of the selling prices, which is split between the seller’s agent and the buyer’s agent, with a portion going to each perspective agent’s real estate firm. However, a seller could make the sales contract contingent on buyer and seller splitting the commission.
The average current agent commission is 5.37%, according to LendingTree data.
LendingTree surveyed more than 2,000 recent sellers, and found just 31% attempted to negotiate commissions, but 64% of those who asked successfully reduced theirs. Additionally, 36% say they weren’t aware negotiating was an option, but would have tried if they knew.
How do you go about negotiating the commission?
“The most succinct way I can say it is go about it politely. Remember, agents live on the commissions they earn, so while paying their fee may not be the most fun thing in the world, they can provide important services to you,” said Jacob Channel, chief economist at LendingTree.
The worst way to approach commission negotiations is aggressively, Channel said. Few professionals, in any industry, respond well to conversations that begin with demands.
Sellers, and buyers as well, often settle on an agent they really like, feeling they understand their needs, will work hard on their behalf, and feel very connected to them personally. Try to negotiate anyway.
“It is sort of like dating. You sometimes go on a date with someone and you really click and you get along perfectly, and nothing else really matters. But, even if you’ve settled on someone, there is still room to talk about things like commissions and fees,” Channel said.
Online tools and a plethora of information available for both buyers and sellers have made it much easier for buyers and sellers to try to go it alone, without involving an agent and avoiding commissions and fees. It is still a daunting undertaking.
“Buying and selling a house on your own can be really tough. It is time consuming and really, really stressful. So having someone there who can walk you through the process is important. I think that sometimes maybe we demonize agents a little bit. But I think for the most part, people will find they really help the process,” Channel said.
In its survey, 64% said they believed a real estate agent is at least somewhat necessary, though two in three also said online tools and services make real estate agents less necessary in transactions. LendingTree’s full commissions survey and analysis is online.
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