When a real-estate agent quotes a commission, it sounds like an industry standard price. But it isn’t. Commissions are usually negotiable and there is no law that sets a standard percentage.
That does not mean every agent will reduce the fee, or that a lower commission is the better deal. The trick is to know what you are getting for your money.
Ask the easiest question first
Before signing a listing agreement or a buyer representation agreement, ask, “Is your fee negotiable and what services does it cover?”
The commission might include pricing strategy, professional photography, marketing, open houses, negotiations, transaction management and coordination with lenders, inspectors and attorneys. An agent with a lower rate may offer many of the same services, or far less. Have it in writing.
Agents can charge a percentage of the sale price, a flat fee, an hourly rate or a combination. Also inquire whether the fee varies if the agent represents both sides in a transaction, sells the property quickly or brings the buyer himself. Any changes should be documented before the transaction continues.
That agreement should state the agent’s compensation clearly. A seller may still agree to contribute toward a buyer’s agent’s fee, but it is not automatic. Buyers should ask their agent how the fee will be paid and what happens if the seller contributes less, or nothing.
These rules do not eliminate negotiation. They make it more important.
Compare value, not just percentages
Interview at least two or three agents. Ask for a written breakdown of services, the proposed fee, cancellation terms and any additional costs, such as staging, photography or transaction fees. Review recent sales and ask how the agent’s marketing plan would differ from competitors’.
For sellers, calculate the effect on net proceeds, not merely the commission rate. A highly effective agent who secures a stronger price or better terms may be worth more than a discount agent.
A commission is negotiable. What’s more important is asking whether the service, strategy and outcome justify the price.