It’s much better to negotiate the listing agent commission vs the buyer agent commission because buyer agents represent 90% of all home buyers, which means you’ll want their full attention if you want your home to sell. It’s easier to convince a listing agent to take a haircut on their commission because of ancillary benefits from having a listing, such as enhanced branding and an additional referral

What Is The Average Commission?

Realtors will always inform you there is no regular commission that sellers have to pay; however, real estate commissions in the United States have generally hovered about 5–6 percent in reality.

If you sell at high-priced metropolitan centres like New York City or the San Francisco Bay area, average transaction prices are no different. This means that while NYC’s average home sells $2,000,000 which is ten times the national average, NYC’s Realtors make ten times more money than their country cousins.

Why Do Agents Charge Such a High Commission?

Realtors cite 6 percent as a commission rate because the buyer agent’s market rate fee is 3 percent, and most MLS broker associations mandate listing agents to co-broker at least half of the commission with cooperating brokers, i.e. buyer agents. Another option is to use the sell my house online method. That way no commissions will be payable at all.

Notice at least half vs. exactly half of what we said. Although rules differ depending on the MLS system and the local Realtor association that runs it, most MLS broker databases would be fine with the listing broker co-broking at least half the total fee.

Some MLS broker databases might also be comfortable with some amount of co-broking, as long as it is not zero. Other MLS systems may be even more rigorous and involve the same co-broking process. If allowed, this latter method will make it very difficult for real estate discount brokers to operate as we’ll explain in the next section.

Is Commission Negotiable?

Yes, arranging the fee for the listing broker is the most sensible way to go, since doing so would not impact the ability to draw the interest of buyer agents. The listing broker; however, they could be op

en to taking a reduction in their fee as ancillary benefits from getting an exclusive listing is possible.

For example, an exclusive listing offers a broker more branding and referral opportunities, probably even from neighbours who contact them after seeing the listing to sell their assets. Even a listing from a management perspective can be useful. Getting more listings gives the impression of something occurring, and from a recruitment perspective, it can be useful. 

Finally, by serving direct buyers who have inquired on your listing, either on your property or on another property listed on the MLS, a listing broker may be entitled to contract additionally. After all, only one buyer ends up buying your house, meaning that every other direct buyer who has inquired on the listing is a potential client on something else.

Is It A Good Idea To Negotiate The Fee?

Don’t bargain too much on the buyer agent’s fee because buyer agents account for about 90 percent of all home buyers. Given that attracting the attention and cooperation of buyers’ agents is important, it is not a good idea to give them too low a commission on the MLS.

If you have a property worth more than approximately $1,000,000 then the agents of buyers will suggest co-broking just 2.5 percent. However, if you have a property worth considerably less than $1 million, consider sticking to buyers’ agents with a full 3 percent co-broke to draw their full attention. 

From the sell my house privately experience of our affiliate brokers, sellers will not receive a 2.5 percent co-broke demand from buyers’ agents. However, once you start offering to participating brokers 2 percent or less on the MLS, you can begin getting both verbal and written complaints. Many buyers’ agents will refuse to show your listing at those stages, and will not be afraid to put it in writing.

Dual Agency Commissions

While many of the larger franchises do not accept haircuts in contract, you might be fortunate that some of them agree to slightly reduce contract for dual agency circumstances.

Dual agency means that both the buyer and the seller will be represented by the selling agent and, as a result, both sides of the fee will be received. This occurs when the buyer does not have their agent and is not aware that through a buyer agent payment refund they will receive any of the buyer agent’s fee for themselves.

Unfortunately for most home buyers, for a direct buyer, dual agency case, the best they would be willing to negotiate from the larger franchises would be 1 percent off. That means the seller would usually still pay 6 percent in commission, but just 5 percent if the buyer has no own agent.