Updated August 13th, 2019
Despite the immense value real estate agents bring to the table, most home sellers agree that forking over the standard 6% commission at the end of the sale is still a pretty hard pill to swallow.
While you don't have much control over about half of that commission (sellers will likely have to pay a buyer's agent about 2-3% no matter what), it is possible to negotiate rates with listing agents to boost your margins on the sale.
Possible, but not necessarily easy.
The best agents know what their services are worth and will be reluctant to cut their rates. And if you do manage to talk them down, you'll likely see a reduction in services or support to offset their losses on the transaction.
One simple workaround is to find your realtor through an established real estate referral network, like Clever, that has the necessary leverage to negotiate low commission fees on your behalf.
Clever connects you with top-rated, local agents who have agreed to provide full service and support for a fraction of their typical rate - saving you up to 50% on commission fees.
Importantly, our referral service is free and there's no obligation to sign. Interview as many agents as you'd like until you find a great match.
> Get in touch to learn more and interview low-commission agents near you.
If you're still interested in trying your hand at negotiating with a traditional, full-price agent, here are a few things you should consider.
Why Do I Need a Listing Agent?
Know what you need from your listing agent before entering into negotiations. Are you terrible at marketing? Do you not have time to market your home? Do you not know where to even begin when it comes to listing your home? Figure out the reason you are seeking out a listing agent and figure out what it's worth to you.
A couple of common reasons people hire listing agents are the lack of time or a lack of expertise. Others don't know the process well enough to feel comfortable tackling it on their own with that much money on the line. Acknowledging your purpose for hiring a listing agent will aid in finding the right fit for you.
What Do Listing Agents Do?
Your listing agent tackles marketing your home to attract the most relevant audience, such as:
- Listing your home so the right people will find it and picture themselves living there.
- Posting signs and printing flyers for passerby's to grab and schedule a walk-through.
- Holding your house open so people can comfortably stop by and take a look to see if the house is a fit for them.
- Handling paperwork and answering any questions you may have about the process.
But beyond the technical, your listing agent is your front line against negotiators like you who want the biggest bang for their buck. When prospects come up with an offer, your listing agent is the one who will negotiate the best price for you.
Finding the Right Realtor
Once you know what a listing agent is worth to you, understand if you go below the amount they feel they're worth, it compromises the value that you'll receive as well.
If you find a listing agent that is too eager to negotiate prices with you, know that that is how they will approach a potential buyer as well. When looking for an agent who will go to bat for you for a price they're worth, be on the lookout for an agent who is:
- Experienced and knowledgeable in the real estate market, especially in selling homes of similar value
- Approachable and friendly so that you can feel comfortable asking questions and getting them answered
- A great negotiator *
*This one is key. You don't want your listing agent to cave at the mention of reducing their rate, but you also don't want them to negotiate for an unbelievable price. How they negotiate with you is how they will negotiate with your buyers.
When you've got a price in mind with the listing agent you want, it's time to get the price desire. Here are a few tips on how to keep the negotiation on track for you.
Do your homework
Know the type of market you are in before the conversation. If you are in a seller's market or a great neighborhood and know that the house will sell quickly based on other similar homes in the area that will provide you with bargaining power on price.
Gather as much information as you can about homes similar to yours in the area. Make sure to note how much they sold for, as well as how quickly they sold.
Control the conversation
You already know what you need from a listing agent, and while they are the real estate professional, you are the expert in your own needs.
Begin in a friendly manner, and then thank them for meeting with you. Then explain that you are going to ask some questions about the services they provide.
If you find you are a mutual fit, you will then discuss prices. Setting up the conversation this way gives you the power in the discussion to control where it leads.
Find out what the listing agent can do for you
Every listing agent brings something new to the table. Ask about the homes they've sold, their process for working with sellers, how they market and deal with offers. Make sure their services are in line with what you want.
Discuss your needs
Let them know what you are looking for in a listing agent and what you don't need as well. Maybe you don't need the website they offer or aren't sure about sending mailers. Having a list of services they provide but that you don't need is a great way to get into negotiations.
Use your leverage
After you determine if you want to work with this agent, it's time to begin the haggling process. Let them know that you value their time and expertise, but would like to address the services you don't need. After that, it's time to use the research you did.
Show them similar homes in the area that sold for higher price points or sold quickly. Tell them that you're confident that your home will perform the same on the market, and ask if it would be worth it to them to work for a smaller commission in exchange for selling a home that will get a reasonable price or sell quickly.
Typical Realtor Commission and Fees
Listing agents typically charge 2.5%-3% of the home's value as their commission. As the seller, you'll be responsible for paying this (as well as commission for the buyer's agent).
Negotiations only work if you have something to negotiate with. If your home needs a lot of work, is in a rough neighborhood, or going short sale, then it may not be the best time to negotiate a commission with a listing agent who will need to work harder to sell your home.
If you are in a position where negotiation isn't the right path, or you can't afford to pay the pricey commission, there are other options available. Make sure you are confident in the value you are giving and the value you're receiving before jumping into negotiations.
If you're looking for a local, full-service agent that will provide you with the quality of service you deserve without the full-service price, Clever can help. Our full-service, brand name agents will list your home for a flat fee of $3,000 or 1% for more expensive homes. Call us today at 1-833-2-CLEVER or complete our online form to get connected a top-rated, local agent.