A Step-by-Step Guide to buyer agent Negotiating Commissions

A Step-by-Step Guide to Negotiating Commissions

/ April 26, 2024

Negotiating Realtor Fees: A Homebuyer's Guide to Saving Money

Hey, fellow homebuyers! If you're like me, you're probably excited about the prospect of owning your own place, but also a bit overwhelmed by the whole process. One thing that might be on your mind is how to navigate those pesky realtor commissions. Well, the good news is that things have changed in 2024 and buyers like us have more control than ever before.

Let's be real, those commissions can add up, so it's definitely worth trying to negotiate. And with recent changes in the industry (National Association of Realtors - NAR lawsuit settlement you might have heard about), it's actually becoming more common for buyers to do just that.

Negotiating a lower realtor commission – which currently averages 5.49% nationwide - can lead to big savings. Even trimming a small percentage off the agent's fee can have an impact. For example, reducing a real estate agent's commission rate from 6% to 5.5% on a $500,000 home sale would save you $2,500.

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Here's my personal take on how to tackle this:

1. Get the scoop on commissions: 

Before you start negotiating, take some time to understand how real estate agent commissions work. Traditionally, sellers have been footing the bill, but now we can negotiate directly with our own agents. That's pretty cool, right?

Things have changed in 2024. Articles like this one, How to successfully negotiate real estate commissions also mention the NAR settlement.

2. Know what YOU want: 

Think about what you need from a real estate agent. Are you a first-time buyer who needs a lot of hand-holding, or do you have experience and just need someone to help you with the paperwork? Knowing your needs will help you figure out what kind of value an agent brings to the table.

3. Shop around: 

Don't just settle for the first agent you meet. Talk to a few different ones, get a feel for their personalities, and see if they're open to negotiating their fees. It's like dating - you want to find someone who's the right fit for you!

4. Show them you're serious: 

If you're pre-approved for a mortgage, have a clear budget in mind, and are ready to move quickly, let the agent know! They'll be more likely to work with you on the commission if they know you're a serious buyer.

how to negotiate real estate agent commissions and fees

5. Think outside the box: 

If you're not thrilled with the traditional percentage-based commission, don't be afraid to suggest other options. Maybe a flat fee, or an hourly rate? Get creative! Learn how to negotiate commissions.

6. Be ready to compromise: 

Negotiation is all about finding a middle ground that works for everyone. Remember, agents are trying to make a living too, so be willing to give a little. Maybe offer a bonus if they help you close the deal quickly, or refer some friends their way.

7. Get it in writing: 

Once you've agreed on the commission, make sure you have a written agreement that spells out all the details. This will protect both you and the agent down the road.

8. Keep talking: 

Throughout the home buying process, keep the lines of communication open with your agent. If you have any concerns about their services or the commission, talk to them about it. Good communication is key to a successful working relationship.

Remember: The goal of negotiating isn't to squeeze the agent dry, but to make sure you're getting good value for your money. By approaching the process with a positive attitude and a willingness to collaborate, you can find an agent who's a great partner in your home buying journey. And who knows, you might even make a new friend in the process!
 

The latest LendingTree survey finds that nearly two-thirds of homebuyers or sellers who asked their real estate agent for a lower commission fee were successful. “Like most things in life, you won’t know if your real estate agent will be willing to lower their commission fee until you ask,” LendingTree senior economist Jacob Channel says. And in some cases, he says, “it can quite literally pay off. 64% of Homebuyers or Sellers Who Asked Their Real Estate Agent for a Lower Commission Rate Were Successful".