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Negotiating real estate commissions when selling a home is always worth trying. Traditionally, the seller’s agent charges a 5 – 6% commission, which they collect once the property is sold. Of course, if the seller changed their mind during the process and canceled the listing agreement, the agent would not earn a commission, despite expending out-of-pocket costs, such as advertising and time spent marketing the property.
Depending on market conditions, brokers and agents have been willing to do so, particularly under certain circumstances. With New York City’s high prices, a 6% commission is quite a large sum. Since the seller pays the commission, negotiating a lower rate is up to them.
Negotiating Commissions When Buying and SellingNegotiating Commissions When Buying and Selling
You have more negotiating power with your agent if you plan to use the same agent to handle the sale and your new purchase. The agent and brokerage will earn commissions from each transaction and can apply a lower commission rate to the sale.
If your property sells for $1 million, the total commission is $60,000, based on a 6% commission rate. The 3% fee for each brokerage is further divided between the agent’s brokerage and agent, dependent on their commission co-brokered. The brokerages representing the buyer and seller typically co-broke and split this fee equally.
Therefore, your agent collects at least a 1.5% commission on the sale. – to gain the business of selling and helping you buy a home.
A Less Experienced AgentA Less Experienced Agent
If a listing agent is starting or has little experience, they may offer a lower commission rate to drum up business. You should approach this cautiously, however. Sometimes, you get what you pay for and do not want the agent to learn and gain experience at your expense. If you are going down this route, ask the right questions. You seek answers that raise your confidence in their qualifications and ability to handle situations that may come up and negotiate well.
Higher Priced PropertiesHigher Priced Properties
An owner may negotiate a lower rate if you sell a high-priced property. After all, the commission’s dollar amount is significant. Remember, New York City’s high housing prices mean a higher threshold. The luxury market ranges from $3 million to $5 million. You can certainly ask for a lower rate on your $1 million property.
For Sale by OwnerFor Sale by Owner
Traditionally, the For Sale by Owner (FSBO) segment did not use a brokerage. However, there are situations where the agent will provide individual assistance for a discounted commission rate. We are wary about FSBO listings, however. New York City is a complex market, and you do not have full access to the agent’s expertise and marketing power. A listing agent also provides other services, such as home staging.
Does it Matter for Buyers?Does it Matter for Buyers?
The seller may not pass these commission savings on to the buyer. They may reap the rewards without sharing the gain with you. After all, you are looking at comps and basing your offer decision on the property’s estimated fair market value.
