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Tips to Negotiate Lower Real Estate Commission.

If anyone has tips to share to lower real estate commission would love to hear them. “You do not get what you want. You get what you negotiate.” ~Harvey Mackay. On top of negotiating be sure to get everything in writing so there won’t be any miscommunication at a later point. The $418 million National Association of Realtors settlement will cause major change in the real estate industry.

There are people who consider 6% as the “standard” real estate commission. This has often been 3% for the selling agent and 3% for the buying agent. It is our opinion that 6% is very high. In order to negotiate a lower real estate commission people should understand various real estate tactics. It is our opinion that a 4% or lower real estate commission can be achieved. As you will see in a comment below, real estate agents are salespeople and they are going to try to get paid as much as they can. That comment came from a real estate professional. Below are discussions and comments taken from social media discussions.

If you have any feedback, tips, corrections, constructive criticism… on anything in this blog please feel free to post it here in this Facebook post: Negotiate Lower Real Estate Commission. If we have said anything that is not correct let us know so we can make it right. Home sellers should seek out multiple sources to educate themselves as much as possible. Home sellers should do their due diligence, and definitely don’t be concerned about asking too many questions.

Is 6% the Standard Commission? Should you Negotiate Commission?

Here are people commenting about 6% commission. Has anyone been told 6% is the commission the top real estate agents use? Has anyone heard this one: you can go with someone else who charges less commission but you get what you pay for? It is interesting the type of language some real estate agents use to manipulate potential clients.

Real Estate Professional 1: Ridiculous article. Have they no fact checkers? Totally erroneous article. Nothing is changing for the consumer. Plus, 6% commissions? Wow. There are NEVER pre-set commissions- all negotiable. I’m a Realtor for 38 years and trust me – offer me a 6% commission and I’ll be there—- turning cartwheels.

This person actually said “offer me a 6% commission and I’ll be there – turning cartwheels.” Based on what this says we take it that 6% is high even to realtors. This person has 38 years experience and would do cartwheels for a 6% commission. Thoughts?

Real Estate Professional 2: I would venture to say less than 5% of my clients paid 6% and most less than 5%, but feel free to ask them yourself.

This person says most of their clients pay less than 5% commission. If this person is charging less than 5% commission to most of their clients then getting to a 4% commission shouldn’t be difficult. This person said multiple times how great of a real estate agent they were. But then again, does anyone know a real estate agent who doesn’t say how good they are?

Real Estate Professional 3: There is no “6% standard” and if there was, it was gone a long time ago. Sell your home when you’re ready and negotiate the commission with the agent you want to use, just like you could do yesterday and last year and ten years ago

This person says there is no 6% standard. Real estate professional have told me 6% is the standard. But since many real estate professionals are saying 6% is not the standard use this to our advantage. Don’t let anyone say 6% is the acceptable commission if so many real estate agents are saying it is not. Let’s start a new standard. I say we make it 4%.

Real Estate Professional 4:  I’ve worked in the industry for 17 years. Some agents won’t work for less than 6% and since they’re self employed and it’s their business, more power to them, it’s their business and they can charge what they want. Some agents like myself can count on two hands the times they’ve charged 6%. I’m not sure your point? Is it that salespeople will try to get paid as much as they can? Congrats, you’ve solved a real mystery there.

As this person said, real estate professionals are salespeople. They will try to get paid as much as they can. Does anyone need more than that to know they should go in as hard negotiators? This person has worked in the industry for 17 years and she can count on two hands the number of times she charged 6%. Those agents that charge 6% and won’t budge are going to say they are the greatest agent in the world. They may even throw in “you get what you pay for.” Whatever agent you use get it in writing what they are doing to do for you. Also get it in writing if they don’t do what they said they would, you can drop their services at no charge. With the $418 million National Associations of Realtors (NAR) settlement things are changing.

Real Estate Professional 5: What is it that they can see agents think when our clients aren’t around? You are good about making unfounded claims, click bait, but lack any real substance except made up stories about fake experiences. So go ahead, do tell ….

The discussion with this real estate professional is one of the reasons why we decided to inform people about ways to negotiate lower commissions. This person came after us pretty hard. The person was saying we were making up stories and fake experiences. This is when we decided to add comments from real estate professionals so people can see some of the things being said when clients weren’t in the room. We believe this may help people understand the importance of negotiating a lower rate. The person that told us real estate agents are salespeople and are going to try to get paid as much as they can strengthened our reasons to help people negotiate lower real estate commission.

Real Estate Professional 6: These people need to stop reporting what they don’t understand. Causing chaos amongst people. COMMISSIONS HAVE ALWAYS BEEN NEGOTIABLE!

We have seen many real estate professionals saying the reporting on the NAR settlement is fake news. When they are asked what is the fake news they often bring up commissions have always been negotiable. They have also told us that everyone knows commission is negotiable. We are using this to be sure people know real estate commission is negotiable and they should be negotiating. If the agents are saying commission is negotiable, then it seems crazy if people aren’t negotiating. We believe a seller shouldn’t pay more than 4% to list their home. This would be 1.5% to the listing agent and 2.5% to the buying agent. We would love to hear differing opinions on this. As stated by Real Estate Professional 4 they are salespeople. They will try to get paid as much as they can.

Not sure if real estate person or not: no one is asking them to work for free. 1.5% for listing agent and 1.5% for buyer’s agent. No more 5 or 6 percent commissions. It won’t be necessary anymore.

This person bring up an important topic. Commission is split between the listing agent and the buyers agent. At 6% commission it is often split 50/50 so 3% goes to each agent. To get it down to 4% it is our opinion to make it 1.5% to the listing agent and 2.5% to the buyer’s agent. This gives more incentive for buyer agents to show the property. To reduce the commission further just lower what the buying agent would get. So 3.0% would be 1.5% to the buying agent, and still 1.5% to the listing agent. What do people think of this scenario?

“You Get What You Pay For” – Not Lowering Real Estate Commission?

Here is a question asked in a Facebook Real Estate Group: “You’re on a listing appointment, seller says “I know someone who will list my house for 1%.” What’s your response? Below are just a few of the responses. Follow this link to the Facebook discussion to see all replies. The replies by real estate professionals may surprise you of what they have to say.

  • If they can not negotiate their own worth, how well do you think they will negotiate your homes worth on your behalf?
  • Are you a commission rate minimiser? Or a sale price maximiser
  • If I can’t protect my commission, how could I ever protect your price?
  • If you can’t be good you can always be cheap.
  • They won’t do half of what I am gonna do and get you results. You can always find someone cheaper, heck if you do it yourself it’s free! But what are the final results and your bottom line net? Cheap doesn’t necessarily mean good results and your highest net. I’m sure you are looking for the best possible net to walk away at the closing table correct? Well let me show you how I will do that for you.

Remember this quote which was mentioned at the beginning of the article. “You do not get what you want. You get what you negotiate.” ~Harvey Mackay. Real estate agents are going to try to get you to think you either pay high commission or you don’t get good service. If you negotiate the service based on whatever real estate commission you decide to pay then that is the service you should get. Be sure to get this in writing.

Below is an interesting discussion we had on social media recently. It is good to understand various tactics real estate professionals may use to keep commission high. The social media post is titled: The Home Team discusses the hidden dangers for homeowners by ending 6% real estate commission rates.

Supply Chain Today: The real estate industry is changing. Please pass this on to anyone who might be selling a home. Do not pay a 6% commission. Pay much less. We are thinking 4% or less. Look at what the realtors are saying this this discussion. They all say commission is negotiable so negotiate. When an agent says “You get what you pay for” that should raise a red flag. This tactic is often use so they don’t have to lower their commission. If an agent’s starting point is 6% commission you may want to go to the next agent right off the bat. We recommend sellers shouldn’t pay anything close to 6%. We will be writing much more about this. Here is something we threw together that includes a few negotiation tips and the settlement fact sheet: 

Real Estate Professional: “I’m sure you’ve heard the saying “you get what you pay for’ I hire the best vendors because my clients deserve the best and in the end it always results in a higher sales price. Help you sell is no longer in business but there are flat fee brokers if getting poor service, bad marketing and poor negotiation is what you’re looking for you’re welcome to use them.”

Supply Chain Today: Have heard the saying many times. Of a matter of fact it is in the post that I replied to you with: “When an agent says “You get what you pay for” that should raise a red flag. This tactic is often use so they don’t have to lower their commission.” It is interesting how often that phrase is used in the real estate industry. Is it part of a class that realtors take?

In this discussion we literally predicted what was going to be said. It looked like the agent wasn’t reading everything because it almost seemed like something out of a comedy skit. Real estate agents go through training because they are salespeople. Do this a youtube search on “real estate scripts.” See what type of information comes up. Some of these videos are great to watch because if you discover a real estate agent is using a script on you that might be something to call them out on. They will most likely say they aren’t using a script and then use a deflection technique to try to change the subject. This has just been our experience.

Won’t Answer Questions or Dances Around Questions.

Anyone interviewing real estate agents should look be looking for if they are direct in their answers. If they continue to answer questions with questions that is a red flag. Why wouldn’t a person answer a direct question? Bring it up and ask them why they aren’t answering direct questions. If the person is dancing around your question then make the question so it is a simple Yes or No. At that point if they dance around the question you know they are avoiding it. Here is part of a discussion we had with a real estate professional.

Supply Chain Today: The real estate industry is changing. Please pass this on to anyone who might be selling a home. Do not pay a 6% commission. Pay much less. We are thinking 4% or less. Look at what the realtors are saying this this discussion. They all say commission is negotiable so negotiate. When an agent says “You get what you pay for” that should raise a red flag. This tactic is often use so they don’t have to lower their commission. If an agent’s starting point is 6% commission you may want to go to the next agent right off the bat. We recommend sellers shouldn’t pay anything close to 6%. We will be writing much more about this. Here is something we threw together that includes a few negotiation tips and the settlement fact sheet: NAR Settlement Real Estate Changes https://www.supplychaintoday.com/nar-settlement-real-estate-changes/

Real Estate Professional: This is an interesting idea, but on what would you base your rationale?

Supply Chain Today: I think we can all agree that 6% commission to list a home is exorbitant. Agree?

Real Estate Professional: why would you feel it is exorbitant?

Supply Chain Today: So you not agree that it is exorbitant? To make it simple. Is the 6% commission fee exorbitant? Yes or No.

Real Estate Professional: actually, compared to most COGS or other commission %’s in other industries it is very inexpensive. Why do you feel it is exorbitant?

Supply Chain Today: I didn’t ask to compare to other industries. We can get into other industries once I know where you stand on the subject. You know where I stand. I asked you if you believe it is exorbitant? A simple Yes or No will suffice. Then I know what direction to take?

Real Estate Professional: you stated you feel it is too much, and I asked on what you base that? So, enquiring minds want to know! Tell us why!

Supply Chain Today: So you are going around in circles and not answer a simple yes or no question. This is similar to the person in this same chat that asked you: “why not just tell us the price”. Your reply back to the person was “Hi! Thank you for asking. Prices are subjective but the value of what makes up the home is not, so we showcase the best elements.” Then another person wrote: “just keeps dodging the question of price lol. Most people need to find out if it’s in the range of what they are approved for dude.” As a real estate agent why wouldn’t you tell someone the price of a home when they asked for it. That’s a red flag. Next red flag is not answering a simple Yes or No question. For some reason Bret (the real estate professional) put a gif below his comment of a Boy Band. Kind of strange. These are things you want to look for with real estate agents. Are they upfront? Do they answer questions when asked. Do they actually answer the question or dance around it. Would love to hear other people’s opinions (not just my own) on this once it is posted.

At this point we were done with the discussion. The person did write back but we knew there was no way we would use this person as a real estate professional. This is our opinion, people can make their own opinions as well.

Realtor Says They Guarantee their Work, or Guarantee They Will Sell your Home

Supply Chain Today: It seems that you are more fear mongering with your tag line. What is wrong with the tag line from ABC15. Here is a discussion we were having on another chat. Will ask you again since it doesn’t seem you answered a simple Yes or No question. You talked about guaranteeing your work. You said you will guarantee none of your clients will regret hiring you when done with the purchase? Here is our Yes or No question. Will you put this in writing and saying you will give the client your commission if they regret hiring you? Yes or No? What’s a guarantee if it isn’t put in writing? If I have said anything incorrect please correct us.

Supply Chain Today: Then you probably shouldn’t say you will guarantee something. Here is guarantee defined: “a formal promise or assurance (typically in writing) that certain conditions will be fulfilled, especially that a product will be repaired or replaced if not of a specified quality and durability.” Thank you.

We were having a discussion with a real estate professional who was saying they guarantee their work. When someone says they guarantee their work ask them to put it in writing. As we said to the individual above “What’s a guarantee if it isn’t put in writing?” We provided the definition of guarantee to the individual. They definitely had pushback on this. We have also seen agents who guarantee they will sell your home or buy it. If an agent says this be sure they put it in writing. Also have in writing how long does the home have to stay on the market before they buy it, and how much will they buy it for. Be as detailed as possible if someone says they guarantee their work.

Real Estate Settlement – National Association of Realtors (NAR) and more.

Real Estate Changes will be happening due to the NAR Settlement. Under the terms of the agreement NAR will pay $418 million over approximately four years. This is having a major impact on the real estate industry. Much more on this topic can be read here: NAR Settlement Real Estate Changes.

(Reuters) – A real estate brokerage owned by Warren Buffett’s Berkshire Hathaway said on Friday it reached a $250 million settlement of nationwide antitrust litigation that is expected to change how real estate agents are paid. More can be found here: Warren Buffett’s real estate brokerage reaches $250 million antitrust settlement.

1% Listing Services

There are companies out there that will list your home for 1%. This is a drastic reduction of the 3% many listing agents charge. A home seller would then need to determine if they are going to add a buyer agent commission. Here are various services some of the 1% listing agents offer:

  • MLS Listing
  • Photos (just like you see on MLS)
  • Home featured on Zillow and thousands of other websites
  • Guidance from licensed realtors
  • High security lock box

If you go with a 1% listing service be just as detailed as you would with a agent charging 3% to list your house. Ask plenty of questions and get everything in writing. Be sure your home would be searchable on MLS just like other homes. Make sure you understand the number of pictures that will be uploaded to MLS. If they offer a lock box be sure it is highly secure. If there are 1% listing services out there it is not difficult to understand why offering 1.5% commission to a listing agent is not unreasonable.

Flat Fee Companies.

Flat fee companies in real estate offer an alternative to the traditional commission-based system. Here’s how it works:

  • Fixed Fee: Unlike traditional agents who charge a percentage of the selling price, flat fee companies charge a set upfront fee for their services. This fee can vary depending on the company and the level of service provided.
  • MLS Listing: A key service offered by most flat fee companies is listing your property on the Multiple Listing Service (MLS). The MLS is a powerful tool that exposes your property to a wide network of buyers and agents.
  • Services Offered: The level of service you receive can vary. Some companies may just provide the MLS listing, while others may offer additional services such as yard signs, marketing materials, or transaction coordination for an extra fee.

Here’s a quick comparison:

  • Flat Fee: Fixed fee, regardless of sale price. Less hand-holding, you manage most aspects of the sale.
  • Traditional Agent: Commission based on sale price (typically 5-6%). Provides full service including marketing, showings, negotiations, and paperwork.

Choosing a Flat Fee Company:

  • Research: Compare pricing and service offerings of different companies.
  • Read Reviews: Get a sense of other sellers’ experiences.
  • Consider Your Needs: Are you comfortable handling showings and negotiations yourself?

Remember: Flat fee companies can save you money, but they require more effort on your part compared to using a full-service agent.

Is 4% (listing and buying agent) a fair Real Estate Commission? Go lower?

You have seen what 1% listing services offer. They seem to offer everything that is needed to sell a home. For any realtor who says this is not true feel free to let us know what the 1% listing services don’t do. If you want pretty brochures and other things the price does go up. What we propose with the 4% commission is that 1.5% goes to the listing agent and 2.5% goes to the buying agent. There are companies out there listing homes for 1%, so 1.5% seems to be fair. The reason you want to give more money to the buyer’s agent is to incentivize them to bring buyers to your home. If you want a 3.5% real estate commission then maybe keep the 1.5% the same for the listing agent and drop the buying agents commission to 2.0%. People can do research and figure out what works best for them. Everything here is an opinion so we encourage people to do their own research. Look up 1% listing services and see how they compare to what a local realtor is offering. Look up reasons why buyers don’t bring people to certain houses. Here is a question for people to ponder. If a home buyer wants to see a certain house, but their agent sees the commission is low, is it ethical for the agent not to take the home buyer to the home?

Should Average Real Estate Agent Salaries Be This High for What they Do?

One of the arguments we have heard real estate agents make is that they don’t make much. They use this to say their commissions shouldn’t be reduced. “I am not going to work for free” is another phrase we continue to hear as a push back. Here are some average real estate agent salaries. Is this what people call not making much?

  • Arizona – $102,000
  • Arkansas – $89,000
  • California – $106,000
  • Kansas – $108,000
  • Texas – $92,000

If you want to see what is the average salary for your state here is the link: Real Estate Agent Salary: How Much Do Agents Really Make?

How To Negotiate Commission With A Real Estate Agent

There are plenty of videos out there like this one. Don’t just look at one video and think you learned everything. Do a search on youtube and see what comes up. What works for some people may not work for you. We all learn differently so do what works for you.

Understand Realtor Tactics for Not Cutting Commissions.

The best negotiators understand both sides of the argument. The video below looks at the realtor side of things. Do people see this as manipulation tactics realtors use against future clients? How much training do realtors go through to counter arguments about reducing commissions? When you talk to enough realtors sometimes you can see a pattern of respond with a similar answer. In the past when we saw realtors using “tactics” we cut the meeting short because we knew we weren’t going to use them. Do a search for videos that teach realtors sales tactics. Do you want a realtor working for you that thinks they can manipulate you through sales tactics? The phrase “you get what you pay for” seems to be used a lot in the real estate industry. If everyone seems to use it then it makes you wonder if people are being taught this phrase in some type of training.

Real Estate Agent Scripts to Counter Lowering Real Estate Commission

“Have you ever been asked why your commission is so high?” Here are training scripts your realtor may know. The best negotiators know what is going to be said to them before it is even said. Do a Youtube search on “real estate scripts” and see what comes up. You can be prepared for a great number of scenarios that real estate agents train to do. If any real estate agent disagrees would love to hear what you have to say. We think home sellers should be trying to get 4% real estate commission or less. Our guess is that many real estate agents won’t be happy with this.

Negotiation Quotes

  • “Don’t bargain yourself down before you get to the table.” ~Carol Frohlinger
  • “You have to persuade yourself that you absolutely don’t care what happens. If you don’t care, you’ve won. I absolutely promise you, in every serious negotiation, the man or woman who doesn’t care is going to win.” ~Felix Dennis
  • “This is a classic negotiation technique. It’s a gentle, soft indication of your disapproval and a great way to keep negotiating. Count to 10. By then, the other person usually will start talking and may very well make a higher offer.” ~Bill Coleman
  • “So much of life is a negotiation – so even if you’re not in business, you have opportunities to practice all around you.” ~Kevin O’Leary
  • “A negotiator should observe everything. You must be part Sherlock Holmes, part Sigmund Freud.” ~ Victor Kiam
  • “You do not get what you want. You get what you negotiate.” ~Harvey Mackay

Negotiation and Real Estate Resources

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Would love to hear people’s feedback, constructive criticism, and thoughts on this topic. If anyone disagrees with our opinions on this blog would love to hear what you think. The information we have shared is our opinions so would like to hear your thoughts as well. We have plenty of information to share. Home sellers should seek out advice and education from a variety of sources. Don’t believe just one source. Feel free to post your thoughts on the link posted in the beginning of this blog, or feel free to post it on the Facebook discussion below.

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