Want a more profitable home sale? You may be able to save some dough on your agent’s commission.
Reduction! Rebate! Discount! Sale! Who doesn’t love it when you save a little cash? And when it comes to a major purchase like buying a home, a discount can mean thousands in savings. One of the main places to find them? Your real estate agent’s commission rate: Industry standard for commissions is 6% of the home price, with 3% going to the seller’s agent and 3% to the buyer’s agent.
But scoring a rate cut from your real estate agent doesn’t always come easy — after all, it means your agent takes the hit at the bank. But there are a few reasons your agent may be willing to take a pay cut, leaving you with more money in your pocket (and more money for the down payment on your next home). Here are three main factors to consider.
Frequently, an agent will be the one to bring up a discount on commissions when selling a home. “I set my fees at about what the average agent charges,” explains Bruce Ailion, a real estate agent with RE/MAX Town & Country in Atlanta, GA. “Occasionally, I will feel I made too much money in a transaction and will offer a client a refund. Occasionally I will be doing multiple transactions with a client and charge less.”
This was the case when Afton and Chad Davis were trying to sell their home in Spartanburg, SC. “Chad had gotten a new job, and we put our home on the market,” says Afton. “At that point, the market in Spartanburg was dead. Houses took months to sell. But we got lucky! A young couple wanted our house and needed to close in three weeks because of a new job. Our agent knew we had so much going on and another offer probably wouldn’t come through, so she crunched the numbers and dropped her commission to make it work. We really didn’t even have to ask. She was just that awesome.”
Real estate agent Keith Thompson often offers a customary reduction for his longtime clients. “It depends on your history with that client,” says Thompson, an agent with Berkshire Hathaway Real Estate in Charlotte, NC. “I have one client who refers an incredible amount of business to me and has been loyal for the 10 years I’ve known her. When her father went to sell, I told her I’d do it for a discount. I made one-third of what I normally would. It just really made good business sense for me long term. Take care of us and we’ll take care of you.”
Not all agents are quick to offer a discount, though, so if this is a deal-breaker for you, it’s best to ask. One seller, Sarah, who asked that her name be left out of this story, had commission reductions in mind when she and her husband listed not one but two homes (one was their primary residence and the other was a rental home) for sale before moving to their current home in St. Petersburg, FL. “Homes were selling fast in our neighborhood at the time, so we knew both properties would go fast,” says Sarah. “We figured it was worth asking our agent for a commission reduction.” He ended up cutting his commission by 1% on both sales, resulting in a savings of several thousand dollars for the couple. The first home was under contract within three days of listing and the other was under contract before in an off-market sale.
The biggest lesson learned is that it truly never hurts to ask for a discount. Had Sarah and her husband not brought up a discount on their real estate agent’s commission, there’s a chance it wouldn’t have been offered. But because they listed two homes with him, and the market was hot, their real estate agent knew the sales would be easy wins for him.
A fast-moving real estate market paired with low inventory sometimes prompts real estate agents to offer to trimmed commissions in order to encourage a homeowner to list their home for sale. But that doesn’t mean lower commissions are becoming the industry standard. “Giving discounts to your existing customers, repeat customers, referring customers, and high-volume customers makes business sense,” says Ailion. “Working for a cut-rate fee just to have some business, any business, is a one-way ticket to a starvation diet.”