Why Negotiating the Agent’s Commission May Hinder the Sale

Why Negotiating the Agent’s Commission May Hinder the Sale of Your Home

Real estate agents work hard for weeks—and sometimes months—at a time in hope that they will be compensated with a commission upon the successful completion of a transaction

When preparing to sell your home, attempting to negotiate with a Listing Agent by shaving points off his or her commission could cause a Buyers Agent to avoid selling properties associated with a lower commission structure.

As real estate professionals, we make every effort to be focused on the needs of our customers, whether they are Buyers or Sellers. However, we work in an industry where our work is compensated after a sale is completed, making the commission our guiding light and tangible motivator for going above and beyond for our customers.

Buyers Agents typically search the Multiple Listing Service (MLS) to select homes that meet the criteria of a Buyer that is often ready to make an offer if they tour a property they like. With this in mind, Buyers Agents searching the MLS will quickly check the commission structure of the listed home to understand their income potential of a property.

Consequently, here are the Top 5 reasons that support why a real estate professional should make the full commission—which is often 3 % to the Buyers Agent and 3% to the Listing Agent:

  • Dedication – Bringing a sale to a close requires tedious work based on training, experience, regulatory compliance, and accuracy—all of which require a high-degree of focus to complete a transaction, beyond the emotional involvement of Buyers and/or Sellers.
  • Fairness – This is the agent’s livelihood and it would not be fair to agents on either side of the transaction, since this is their only source of income and a small reduction can limit their earning potential (we have families that depend on this too).
  • House Rules – Reductions or concessions may not be approved by the Listing Agent’s Broker because some real estate agencies have listing guidelines in place to protect the income potential of their real estate agents.
  • Opportunity – A lower commission reduces the chances of being attractive to Buyers Agents, who will more than likely choose to show properties with the highest level of commission available.
  • Motivation – The full commission allows the Listing and Buyer’s Agents to remain motivated as they have “skin in the game” and will be diligent and excited from beginning to end—and beyond the sale.

As you get ready to sell a property, listing a home in the MLS by a real estate agent is the result of interviews, photo and video sessions, coordinating with owners the showing schedules, filling out paperwork, and many more tasks that are not compensated directly. Then, after listing a home, an experienced real estate agent will begin marketing the property listing via a variety of efforts that may include emails to their database of past buyers, investors and fellow agents who may have prospective buyers for the listed property—a great strategy for getting a home sold quickly. Therefore, the opportunity to sell a home quickly highly increases when the deal is fair to all involved.

Now that you know what it takes to list, market and sell a property as a real estate agent in a competitive market, ask yourself these two important questions:

1. Would you work for free in hopes that you can make an income

2. Would you show a property that will make you considerably less money for the same effort?

Always remember that if the commission is lower than expected, Buyer’s Agents are likely to hold off in presenting that property—particularly when they know that other properties offer the full commission potential. And when you want to sell your property, nothing beats having a star real estate agent who will “go to bat for you” knowing that they will see an exciting monetary reward at closing.

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