Trading tips and tricks|How much can you save?|Find average rates in your state
What is the average brokerage commission?
Ocurrent average brokerage commissionis 5.37%, with 2.72% allocated to real estate (for sellers) and 2.65% to the buyer's broker. These fees vary depending on the location of the property and market conditions, but are generally between 5% and 6% in total.
Who pays the brokerage fees?
Sellers are generally responsible for paying brokerage fees at closing.
Both listing fees and buyer's agent fees are usually included in the home's final sale price.
Listing agents have an incentive to share their commission with buyer agents, who are responsible for attracting qualified local buyers and helping to close the sale.
Are brokerage fees negotiable?
Technically, broker fees are negotiable – regardless of what a realtor or broker might tell you. However, it is not always possible to convince an agent to reduce their fees.
Your bargaining ability will likely depend on the price and condition of your property, the local market, inventory and demand in your area, and your agent's relationship with the broker.
One of the best ways to save money on brokerage fees is to work with a company that negotiates lower commission rates with brokers on your behalf.
For example, Clever Real Estate will match you with experienced real estate agents from brands like Keller Williams or RE/MAX, but you only pay 1.5% in listing fees (about half the regular price) when you sell.
How to negotiate the supply of real estate
Negotiating can be tough, so we've put together 10 tips to make the process less stressful. Before we get into the details, remember that you should approach negotiating a broker's commission with a potential agent with respect and discretion.
You trust your realtor to guide you through a complex, high-risk, and stressful process. Don't start things off on a sour note!
🤝 Always aim for a mutually beneficial outcome.
The goal of negotiation is not to “win”. It's about finding the most mutually beneficial terms for both parties involved. Rather than simply asking for concessions, think about how you too will add value to the partnership.
Access a trading tip
- Assess your trading advantage
- Find the average commission rate for your area
- Buy for the best price
- Make your home easier to sell
- Create value for the agent
- Offer a full buyer agent fee
- Work with a rookie
- Sell and buy from the same dealer
- Let your agent represent you and the buyer.
- Get ready to go
1. Determine How Much Trading Edge You Have
Compared to recent years, the real estate market for 2023 has cooled down significantly. With interest rates higher than they have been for years, buyers are reluctant to take out new mortgages, while sellers are reluctant to give up their low interest rates.
With fewer buyers and sellers around, brokers are competing for a much smaller pool of potential customers – and may be more willing to negotiate commissions.
Several factors can affect the quoted rate and how much leverage you may have to negotiate a lower rate. Pay special attention to:
The value of your home
The higher your home price, the easier it will be to negotiate a lower price. Regardless, luxury homes often pay lower prices, with no negotiation required. A small slice of a $650,000 pie can be much bigger than a large slice of a $180,000 pie – but both can take the same amount of time and effort to sell.
Your home's desirability factor
If you have a home with a high market value, a realtor may have more incentive to lower the price to insure your home. On the other hand, if your home seems difficult to sell - is it in a run-down or poorly located location, has an eccentric interior, etc. - the retailer takes greater risks and may be less willing to compromise on price.
The local real estate market
If you are in a hot market and properties in any condition sell within two days, agents may be more open to a lower price. After all, time is money – the faster your home sells, the less time and effort the realtor will have to invest.
the sales season
In off-season or low-inventory real estate markets, finding new listings is difficult. Agents may be willing to lower their prices to secure new business because they need work and are in less demand.
2. Know the average commission rate in your area
Real estate commissions can vary by state, city, and neighborhood. Knowing what is typical of the area where your property is located will give you a good basis for your negotiations, ensuring that both parties maintain reasonable wishes.
" MERO:Find the average commission rate in your state
3. Buy for the best possible value
There are many real estate agents and brokers to choose from, and each one is different.
Some are rigid in terms of pricing, while others are open to customizing fees and service structures to meet your specific needs.
Others – notably discount brokers and agent matching services – offer commission savings built in with no negotiation required (although there may be trade-offs in service quality).
Do your homework to find the right dealer or service for you. We recommend interviewing at least two to three options to find the best option - in terms of price.ecould serve.
4. Offer to invest in things that will make your home easier to sell.
Agree to make recommended repairs and improvements prior to listing, such as refinishing, landscaping, and carpet cleaning.
If you're willing to invest some money to make your dealer's job easier, they might be willing to lower the interest rate in return.
If you want to take it a step further, you can pay for a pre-listing inspection. This will help to highlight any issues that might delay or derail the negotiations.
5. Consider how you can create value for the agent
Selling a house is complicated. Real estate agents not only have to invest a significant amount of their personal time in the home selling process - they typically cover a range of upfront costs such as professional photos and marketing expenses.
When negotiating prices, look for ways to help lower these upfront costs or offer the dealer some sort of value to sweeten the deal.
Maybe you're not interested in open tours or 3D tours, or maybe you have a professional photographer friend who can take pictures for the post.
Remember that the realtor wants to sell your property quickly and for the best possible price. If you try to save money by giving up important services that might hinder their success, they may have second thoughts about working with you.
6. Offer a full buyer's agent fee
Offering a competitive rate to the buyer's agent is key when it comes to selling homes quickly and for the best possible price.
📢Don't skimp on the buyer's agent commission!
About 90% of buyers work with an agent. When you don't offer a commission to a competing buyer's agent, the buyer's agents will downgrade the appearance of your home - if they don't turn your clients away from it entirely (although this is technically illegal, it still happens).
If you or your agent don't have a buyer ready to sell, offering a low commission to the buyer's agent will greatly reduce the pool of potential buyers and make it more difficult for your home to sell.
It will also make your agent less likely to lower your rate, as you would be taking a greater risk by taking on a listing that may take longer to sell - or not sell at all.
7. Consider partnering with a newbie
Newer agents may be willing to lower their prices - as long as their broker allows it - to increase their sales figures and reputation.
The best agents with extensive experience know their worth - and are usually in high demand. This makes them less likely to be flexible in terms of pricing than a hungry newcomer looking to set up shop.
8. Offer to sell and buy with the same agent
As an occasional customer, you represent an exclusive payment option for an agent, which gives you limited bargaining power.
But when you agree to sellebuy from a reseller, now you double that payment option. The agent earns more money without having to invest additional resources to carry out this second transaction.
As a result, the agent may be willing to drop his price to secure both deals. They would earn a smaller commission for selling the house, but more money overall, since they would charge a fee for both transactions.
9. Have your agent represent you (the seller) and the buyer
When a single agent represents both parties to a real estate transaction – known as dual agency – it is common for them to reduce their overall commission rate as they charge both sides of the fee.
Dual agency usually occurs when you find your own buyer or when an unrepresented buyer approaches your agent or broker directly about your listing.
Dual agency reduces overall transaction costs and can therefore be beneficial to all parties. However, it also carries some significant risks and conflicts of interest for both buyer and seller. For this reason, double duty is illegal in eight US states.
" I LEARN:Everything you need to know about dual agency
10. Be ready to go
The goal of any negotiation is to reach a mutually agreeable outcome that benefits all parties involved - but you must also be willing to walk away if the other party is unwilling or unable to give you what you need to make the agreement meaningful.
That said, before you draw a line in the sand and declare something like an agreement, make sure you're really ready to do the same. If you bluff and the other party calls, chances are they'll feel like they can push harder - and your chances of getting a positive result are much lower.
Challenges in negotiating a lower commission
Brokerage fees are theoretically negotiable. But in practice, not all agents can reduce their rate.
Many brokerages dictate commission structures, especially for newer agents. Thus, an individual agent may not be able to reduce his rate even if he wants to.
Some other common challenges salespeople face when trying to negotiate lower commissions include:
Final sale price of the property:If you are selling a home worth less than $500,000, it may be more difficult to negotiate a lower commission. Your realtor may invest as much time and effort into selling your property as he would a higher-value residential home, but his commission will earn you less at closing.
Local market:In a slow housing market, your home may take longer to sell. A realtor who invests significant time in selling his home may be less willing to work for a lower commission.
How easy (or difficult) is it to sell your home:A property that needs a lot of works can also stay on the market for a while. The longer it takes to sell your home, the more effort your realtor invests.
You may not be able to convince a broker to lower your fee. This is where a free service like Clever Real Estate can help. It is free to use and the size of the company gives it much more bargaining power than an individual real estate seller.
Clever pre-negotiates a low listing fee of 1.5% with leading local agents for companies like Century 21 and RE/MAX. In return, agents receive a steady stream of new business with no upfront costs.
How much can I save by trading a broker's commission?
Most agents are used to discussing compensation and will be open to negotiating prices.
In fact, a Zillow study found that around 31% of home sellers try to negotiate terms with their agents – and around 57% are successful.
The market is becoming more and more competitive as more agents compete for fewer listings.
In addition, discount services such asIntelligenteRedfin, with low interest rates built in, continues to gain market share and reshape consumer expectations about the price of a broker's services. Smart offers, eg. a listing fee of 1.5%.
As a result, many agents and brokers are becoming increasingly flexible in their pricing and service structures - especially as they look to attract sellers with desirable qualities in high demand markets.
Even a 0.5% reduction in your broker's commission can translate into thousands of dollars in savings, so it's worth trying to trade. Try our calculator to see how much you can save by paying a lower brokerage commission.
The average real estate commission is between 5-6%, with half going to the seller's agent and half to the buyer's agent. However, real estate fees vary from state to state.Find the average commission rates in your state here!
Yes, real estate agent fees are negotiable. But your ability totrade brokerage commissionit depends on many factors, including where you live and how easy your home will be to sell.
The Zillow Group."2018 Consumer Housing Trends Report."