Should You Negotiate With A Real Estate Agent Over The Commission Rate?

When the time comes to sell your home, hiring a realty company is one of the best ways to get the job done. Real estate agents help people buy and sell homes, and they work on commission. When you hire an agent for help selling your home, you will have to agree to pay a commission when the house sells. The question is, should you negotiate with the agent on this rate? Here are two factors to consider as you make this decision.

What the current rate is

The first thing to find out is what rate the agent is charging for commission. On average, real estate agents charge between 5% to 7% commission. If your agent is charging a rate that is higher than this, you may want to consider negotiating. You can use the argument that this rate is higher than the average rate, and the agent might agree to lower it.

How the commission is divided

As you contemplate this decision, you should also keep in mind how much money the agent will actually make if he or she sells your home. Suppose the commission rate is 6% and the house sells for $200,000, you will have to pay a commission of $12,000. Of this amount, do you realize how much your agent will actually get?

Real estate agents work strictly on commission. In other words, they do not earn a dime unless a house sells. What you may not realize is that your agent will not receive the full $12,000 from this deal.

The commission on real estate is typically divided. The first way it is divided is between the agent that listed the house and the agent that sold the house. If the listing agent also sells the house, the first division of the commission will not take place. If the listing agent is not the one who sold the house, the commission is divided in half.

This does not mean your agent will get $6,000 though. Your agent will have to pay the brokerage firm he or she works for, and the amount paid will depend on the arrangement they have. The agent might have to pay 40% of the commission he or she earned from the sale, or more.

If you think of all the work your agent will do for you, asking for a lower commission rate might not be a good idea.

If you would like to learn more about realty services, contact a company like Plaza Realty in your area. This will help you decide if you want to list your house with that company or choose a different company to use.