How to Pay Less Real Estate Commission
Recognize that commission rates are not fixed., Interview at least three agents., Determine good reasons to lower the commission., Think about how to reduce the agent’s work., Sell when the market is down.
Step-by-Step Guide
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Step 1: Recognize that commission rates are not fixed.
Before you begin to think about the various way in which you can attempt to pay less real estate commission, it’s important to recognize that there is no fixed standard rate of commission.
There is an expectation that commission will be 6%, but in recent years the average rate has been closer to 5%.Real estate agents may tell you that 6% is their standard rate, but that does not mean there is no room for negotiation.
Generally, rates of commissions fall during housing booms, and during this time selling a house doesn’t take a lot of work.
Commission rates tend to rise in downturns when selling a house is more of a challenge. -
Step 2: Interview at least three agents.
Keep an open mind when you are looking for a real estate agent, and be sure to interview a number of prospective agents before signing up with anyone.
Before you meet with any agents, prepare some questions to help inform your decision about which agent to choose.
If the agent has a proven track record of quick sales, then you may decide to pay a higher rate of commission.However, keep in mind that if the demand for houses is high where you live, then most Realtors in the area will have a proven track record of quick sales.
Ask the agent how long on average her listings stay on the market before being sold.
Ask her about what specific experience she has with selling houses like yours in your area.
Ask her what exactly she will do to sell your house.
The agent should have a clear strategy and track record., Your agent may begin with a 6% rate as standard, but you can always try to negotiate this.
The agent may refuse to lower it, but you won’t know unless you ask.
In your negotiations, it will be helpful to understand some of the reasons why a lower rate of commission may be appropriate.
Circumstances in which an agent is most likely to agree to lower commission include:
The house is in an area where homes sell very quickly and the agent is unlikely to have to do much work to find potential buyers.
The listed home is at the high end of the market.
The agent agrees to alter the marketing strategy.
This could include only listing the house for a short period, or not conducting an open house.You are selling the house to a friend, family member or somebody known to you.You are buying a house and selling a house with the same agent., One of the best ways to negotiate a lower rate of commission is to take on some of the work which the agent would otherwise do.
For example, if you are selling to somebody you know, you should not have to pay for marketing and listings.
You can also do some of the marketing yourself by hosting your own open house events and advertising your house yourself.
Another way to lower the work for the agent is to ensure that your house is in good condition and well presented for potential buyers.
In your negotiations, say you will commit to cleaning and fixing up the inside and outside of the house yourself.
If you negotiate a lower rate you could spend some of the money you save on a professional who specializes in presenting houses to buyers.
For example, you may be able to negotiate to pay for a photographer independently for your online listing., When houses aren’t selling an agent will be in greater need of work so are more likely to be open to negotiating down the rate of commission they charge.
Selling your house in the off-season, or while the market is stagnant, may give you a better chance of negotiating a lower rate of commission.
The trade-off is that your house may be harder to sell, and the price may have to be lowered. -
Step 3: Determine good reasons to lower the commission.
-
Step 4: Think about how to reduce the agent’s work.
-
Step 5: Sell when the market is down.
Detailed Guide
Before you begin to think about the various way in which you can attempt to pay less real estate commission, it’s important to recognize that there is no fixed standard rate of commission.
There is an expectation that commission will be 6%, but in recent years the average rate has been closer to 5%.Real estate agents may tell you that 6% is their standard rate, but that does not mean there is no room for negotiation.
Generally, rates of commissions fall during housing booms, and during this time selling a house doesn’t take a lot of work.
Commission rates tend to rise in downturns when selling a house is more of a challenge.
Keep an open mind when you are looking for a real estate agent, and be sure to interview a number of prospective agents before signing up with anyone.
Before you meet with any agents, prepare some questions to help inform your decision about which agent to choose.
If the agent has a proven track record of quick sales, then you may decide to pay a higher rate of commission.However, keep in mind that if the demand for houses is high where you live, then most Realtors in the area will have a proven track record of quick sales.
Ask the agent how long on average her listings stay on the market before being sold.
Ask her about what specific experience she has with selling houses like yours in your area.
Ask her what exactly she will do to sell your house.
The agent should have a clear strategy and track record., Your agent may begin with a 6% rate as standard, but you can always try to negotiate this.
The agent may refuse to lower it, but you won’t know unless you ask.
In your negotiations, it will be helpful to understand some of the reasons why a lower rate of commission may be appropriate.
Circumstances in which an agent is most likely to agree to lower commission include:
The house is in an area where homes sell very quickly and the agent is unlikely to have to do much work to find potential buyers.
The listed home is at the high end of the market.
The agent agrees to alter the marketing strategy.
This could include only listing the house for a short period, or not conducting an open house.You are selling the house to a friend, family member or somebody known to you.You are buying a house and selling a house with the same agent., One of the best ways to negotiate a lower rate of commission is to take on some of the work which the agent would otherwise do.
For example, if you are selling to somebody you know, you should not have to pay for marketing and listings.
You can also do some of the marketing yourself by hosting your own open house events and advertising your house yourself.
Another way to lower the work for the agent is to ensure that your house is in good condition and well presented for potential buyers.
In your negotiations, say you will commit to cleaning and fixing up the inside and outside of the house yourself.
If you negotiate a lower rate you could spend some of the money you save on a professional who specializes in presenting houses to buyers.
For example, you may be able to negotiate to pay for a photographer independently for your online listing., When houses aren’t selling an agent will be in greater need of work so are more likely to be open to negotiating down the rate of commission they charge.
Selling your house in the off-season, or while the market is stagnant, may give you a better chance of negotiating a lower rate of commission.
The trade-off is that your house may be harder to sell, and the price may have to be lowered.
About the Author
Julie James
Enthusiastic about teaching practical skills techniques through clear, step-by-step guides.
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