Selling Investment Property The Seller’s Guide to Negotiating Real Estate Commission by Charles Mburugu July 15, 2020July 14, 2020 by Charles Mburugu July 15, 2020July 14, 2020 Selling a house can be a very stressful and complex process. While you could choose to go for the For Sale by Owner (FSBO) option, it would be a good idea to hire a real estate agent. Working with an experienced agent will ensure a smooth transaction and enhance your chances of getting a good deal. A good agent will list your property at the right price, market it, organize for a home inspection, negotiate with potential buyers, handle all the paperwork, and expedite the closing process. Related: 10 Benefits of Hiring a Real Estate Agent However, selling your home through a real estate agent comes with a price. Typically, you will be required to pay about 6% of the property’s sale price in real estate agent fees. For example, if your home sold for $300,000, the commission will be $18,000. This means that the real estate commission is one of the highest expenses among the costs of selling a house. Most real estate agents get paid on a commission-only basis. However, it is important to keep in mind that your agent probably won’t pocket the whole commission. Usually, this fee is divided in several ways: Split with the buyer’s agent – Typically, the commission paid is divided equally between your real estate listing agent and the buyer’s agent. Split with the managing broker – The listing agent will then split their share of the commission with the broker that they work for. The split will be determined by their seniority, how many properties they sell in a year, among other factors. A newcomer might have to settle for a 50-50 split, while a top performer could keep as much as 90% of the commission. Marketing costs – To help you get the best price for your home, your listing agent is likely to spend a lot of money on marketing. This includes costs such as professional videography and photography, Facebook advertising, and home staging. All these expenses come out of their commission. Other expenses – Your real estate listing agent will incur other costs like parking, MLS real estate listing fees, association dues, licenses, and taxes. Therefore, though the commission might be substantial, your agent will only take home a small percentage of the proceeds. Are Realtor Fees Negotiable? Real estate agent fees are not regulated by law. Therefore, no matter what state or city you are in, asking a realtor to reduce commission is allowed. Many real estate agents are hoping to get business and are usually willing to give some concessions to the property seller. So there is room for negotiating with a real estate agent when it comes to commissions. Lowering your commissions by even 0.5% could result in significant savings. For instance, saving 0.5% on a $500,000 home sale would mean saving $2,500. However, others will simply not entertain negotiating real estate commission, especially if they have to split the fees with the buyer’s agent. How to Negotiate with a Realtor The key to successfully negotiating real estate commission is to know what rate you are going to ask for and being ready to explain why you believe the lower real estate commission is fair. Here are some home selling tips for negotiating real estate commission: 1. Study the real estate market If you are in a great neighborhood or a hot market and are sure that your property will sell fast, you can use that information as leverage for negotiating real estate commission. You can use Mashvisor’s real estate heatmap tool to analyze your neighborhood based on metrics such as cash on cash return, rental income, and Airbnb occupancy rate. Mashvisor’s Real Estate Heatmap Go further and conduct a comparative market analysis to find out how much similar homes in your area were sold for, and how fast they were sold. 2. Offer to share the work You can reduce your real estate agent’s work by handling some of the tasks involved in selling a home. For example, you can make an effort to make your home move-in ready. Do some renovations and thorough cleaning to spruce up the inside. Get rid of all the clutter and work on your curb appeal to attract property buyers. You could even host your own open house and place a for sale sign on the front yard. When you make your agent’s work easier, they are likely to be open to negotiating real estate commission. Related: 15 DIY Curb Appeal Ideas That Will Help You Sell Your Home 3. Sell in off-season Whether it’s in the middle of winter or fall, selling in the low season is a great strategy for getting discounts on real estate fees. Since real estate agents are more likely to be in need of business during this time, they will be willing to work even at reduced realtor fees. However, the downside of selling in off-season is that you might succeed in negotiating real estate commission, but fail to find suitable buyers. Related: When Is the Best Time to Sell a House? 4. Vacate early Vacating your property early and leaving it staged is another great strategy for negotiating real estate agent commission. In most cases, real estate agents find it easier to sell a home when it is not occupied. You could even consider placing a lockbox in the door to allow showings without the presence of the realtor. Due to the convenience, your agent might be open to negotiating real estate commission. 5. Buy with your listing agent If you are selling and buying a house at the same time, consider using the same agent for both transactions. You can then use this as leverage for negotiating real estate commission. Keep in mind that you might be held in breach of contract if you change your mind later and decide not to buy with them. 6. Offer multiple listings In case you are a real estate investor and you intend to sell multiple homes in the future, build a long-term relationship with your real estate agent. If they will be working with you on future deals, then you can use this as leverage for negotiating real estate commission. Such an arrangement works especially well for fix-and-flip real estate investors. Conclusion Though getting a discount on real estate commissions is not guaranteed, it is worth giving it a shot. Use the strategies listed above for negotiating real estate commission and you might just be left with a few hundred or thousand dollars in your pocket during home selling. Looking for other ways to save money when selling a home? List your property for free in the Mashvisor Property Marketplace. Start Your Investment Property Search! START FREE TRIAL AgentCostsListing AgentNegotiationsReal Estate Tips 0 FacebookTwitterGoogle +PinterestLinkedin Charles Mburugu Charles Mburugu is a HubSpot-certified content writer/marketer for B2B, B2C and SaaS companies. He loves writing on topics that help real estate investors and agents make better choices. Previous Post Adjustable-Rate Mortgage vs Fixed-Rate: Which Is Better for a Real Estate Investor? Next Post No US Housing Bubble Crash in Sight, Expert Says Related Posts Should I Sell My House or Rent It Out to Fund Mortgage Payments? How Do You Find a Buyer’s Market in the US Housing Market in 2018? Everything You Need to Know About Selling and Buying a Home with Owner Financing Learn How to Wholesale Real Estate Properties for the Maximum Profit Short Sale vs. Foreclosure: Why Opt for Short Sales in Real Estate Investing? What’s the Best Way to Sell Your Rental Home for Sale? Do You Need to Find a Real Estate Agent to Sell Investment Property? 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