How to negotiate your real estate agent's fees (2023)

Many people who enter the market to buy or sell a house do not know about this property.suppliesis under negotiation. Regardless of local customs, property taxes are generally not set in stone. Agents are waiting for negotiations to take place and some may immediately agree to a pay cut.

You should be prepared that some agents won't negotiate a commission with you because some agents don't need it. Some have enough trades to justify not trading, some have to pay higher fees to their brokers, and others may simply not want to reduce their commissions.

basic conclusions

  • Agents often charge a commission based on what is normal for the area, but there may be some margin.Negotiate.
  • High-demand agents who sell a lot of homes are less likely to negotiate than younger agents who don't sell as many homes.
  • Agents in competitive neighborhoods may be more willing to negotiate.
  • Earning more for an agent through referrals can also increase the likelihood of deals.

How are real estate agents paid?

Commission rates vary between brokers, depending on the company's policy and the agent's bottom line. A top producing agent who closes 100 deals a year is usually paid more, a larger split, than an agent who closes a deal every two months. only with permissionreal estate agentmay receive commission. Brokers often pay agents as independent contractors.

Commissions paid by a seller are usually split between the listing side and the sale side.

Why don't all agents charge the same commission?

For the most part, agents are paid according to local customs and fees. Note that agents operate differently and have different services. You should try not to choose an agent based on the commission only, but on the services he provides along with the commission.

In general, more expensive agents offer their sellers services and profit models that less expensive agents do not. Agents are usually paid what they are worth, which means it pays to do some research and find one that fits your needs and budget.

typical liquid profit

As an example of a broker's commission, let's say a buyer buys a home for $150,000. The total commission paid is 7%, with 4% going to the listing agent and 3% to the buyer's agent. The buyer's agent receives $4,500. The agent is entitled to 50% minus an 8% franchise fee, bringing the agent's share to $2,070.

Of this total, the agent pays 22% for general expenses and puts 30% in savings to pay Social Security and federal and state income tax. The agent takes home $993.60.

If that agent closed just one deal a month and typically worked a 40-hour week, his hourly pay would be close to $12.94 a month (before withholding and taxes). If the agent closed two deals per month at $150,000, they would earn about $25.86 per hour (two payments of $2,070) or about $2,900 per month after retention.


Estate agents are currently working on the ability to pay two months later. If your agent seems frustrated or stressed at times, he's probably trying to generate income for the next few months.

However, the national average for closing a house is close to 50 days.If an agent closes two houses a month, chances are they have been working on both houses for some time. An agent probably closes four houses in a week, but has had no income in recent months. In this case, they may not want to negotiate your commission.

Sell ​​and buy with the same agent

Sometimes agents will represent you when you sell your old house and buy a new one. You can negotiate a reduced commission, but they might not agree. If your dealer is yoursregisterand the purchasing agent will earn both commissions.

There are brokers who offer a discount if you sell and buy property through their agency.Real estate agentThose who refuse to cash commissions probably think the two transactions are separate from each other, and they are. Each side of the transaction involves separate work, whether the seller and buyer are the same person or two different, unrelated people.

Agents should not cash their listing commission while doing twice the work for less than twice the money. You will be able to negotiate a lower commission based on the referrals you can send your agent in the future.

When the same agent represents you and the buyer

This is called "double agency”, and it is not legal in some states.However, where legal, an agent will earn both sides of the commission – listing fees and sales. It is called “double expiry” trading. Your agent takes on greater responsibilities when he becomes a double agent – ​​he's dealing with the same property, two separate parties, with separate interests and different abilities to sue if something goes wrong.

In some states, dual agents are required to act as transaction agents and not to take sides. They don't offer advice or much help other than processing paperwork.

A tactic used by some sellers in some parts of the country is to ask astockbrokerif they agree to reduce their commission if they end up representing both the seller and the buyer. You have the option of negotiating this when you sign the listing agreement or when you receive an offer, but it's best to discuss this scenario ahead of time - at the start of the listing.


Dual agency brings its own problems. While some agents are honest in their actions, others may work to get higher commissions from both parties or not work at all to sell your home if they can earn more on another transaction.

Please note that this negotiation may fail. It can reduce the agent's willingness or motivation to sell your home to your own buyer. except for oneadministratorresponsibility of buying your home to all available buyers, what is the incentive for a buyer to buy your home if rates are lowered?

Some agents will accept a variable commission. In this type of business, if your listing agent sold your home, he would receive a different commission than another agent who might have sold your home.

Multiple listings with the same seller

A commission reduction in exchange for multiple unique listings from the same seller is subject to:

  • volume in dollars
  • it's not a joke
  • market dynamics

If all three of these variables are in favor of the agent, it becomes easier to negotiate with him. However, if your dealer is a top producer with a strong income stream, he might not budge.

agents check neighborhoods

Agents who do a lot of business in specific areas often offer occasional discounts here and there. These are agents who may ask for a higher commission but are quick to accept lower rates if there is competition from another agent.

If you like an agent who offered you a higher commission, but interviewed another agent who agreed to do the job for less, call the first agent and offer the second agent's fee. Explain why.

Try not to get so wrapped up in commissions that you lose sight of hiring the best agent you can find and afford - after all, you're paying them to help you find a home you'll love and keep for as long as possible.

Frequently Asked Questions (FAQ)

How do real estate commissions work?

Real estate agents base a commission on the total purchase price of a property. Normally, this commission is divided equally between buyer and seller, but is paid out of the seller's earnings. Listing and purchasing agents must then share their brokerage income and cover their expenses before profits are offset.

What is a typical real estate commission?

The commission on the sale of a typical home is usually between 5% and 6% of the selling price, but can vary more or less depending on a number of factors. This value is divided between purchasing agents and importers.

How likely is my realtor to negotiate his commission?

Whether your dealer will negotiate your commission depends on a number of issues. Basically, the more work you are willing to do and the better overall value an agent can get from working with you, the more willing they are to negotiate.


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