For Agents: Negotiating a Sales Commission

Sales commission are two words that make home buyers cringe. Imagine paying someone a fee upwards of ten thousand dollars for twenty to thirty hours of work. Sounds similar to what attorneys and doctors make. The truth is, real estate agents come with a specialty that is similar to that provided by other professionals. There's another truth that hasn't been widely publicized. When you purchase a home, it is very possible to negotiate the sales commission you pay to your real estate agent.

If you've previously purchased a home, you might have known that you paid your real estate agent a sales commission. The agent might have told you that you were receiving his services for free. This isn't entirely false, but it's not entirely true either. In many cases, real estate agents factor in their commission into the sales price. You pay a sales commission, but you never really realize you do it. Rest assured if you were to make an offer directly to the home seller, you could knock at least 5% off the price quoted to you by the real estate agent and the seller would accept the offer.

When you are working with a real estate agency to purchase a home, you should always ask for a discount on the home. There are some real estate agents that will not assist you unless they receive a certain percentage of the sale price. Nevertheless, there are real estate agents that are willing to lower what they are asking for in commission so they can make the sale.

If the real estate you are working with does not want to provide you with a discount, perhaps you can negotiate receiving a rebate. One particular rebate practice is growing in popularity among real estate agents. Rather than working based on a commission, the real estate agent charges you based on the number of hours put into helping you purchase a home. The real estate agent subtracts this amount from the rate of commission included in the home sale price and rewards you with the remainder as a rebate.

While the notion of paying the real estate agent by the hour sounds feasible, there is one obvious drawback. You could end up paying a fee to the agent even if in the end he does not find you a home. Depending on the hourly rate that agent charges and the amount of time he spends working with you, you could end up spending an amount comparable to that of a commission with no house to show for it.

There is one thing that you can count on when you are dealing with real estate agents. They have a goal to meet just like you do. This knowledge can be your bargaining chip for negotiating a lower sales commission. You might look for signs that the agent is eager to sell the home. For example, the agent shows you a home that is out of your stated price range. You may be able to bring the price of the home within your range by negotiating a lower sales commission.

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