But, there is some good news. There's a lesser-known trick that can save you a lot of commission money, possibly thousands of dollars. All you have to do is ask the right question.
Yep. It's that easy.
This question also must be asked at the right time in order to be effective.
So what's the question?
This is a question you must ask your Realtor, right as he or she is about to draft the listing paperwork on your property.
Real Estate Agents don't really want you to know this, but their commission rate is negotiable. Whatever commission rate they're about to enter on your contract CAN be lowered. Is Agency Commission typically 7% in your area? Is it 6%? Whatever the case, it's up for negotiation.
Many times, when 6 or 7% are the acceptable commission rates for the average priced home in your community, homes that are priced on the very top of the market are usually discounted. For example: If the average home in your area sells for $86,000 and the commission usually charged is 6%, most agents as a matter of practice won't offer discounted commissions unless the home is around $200,000. (Some never offer discounts unless they are asked.) They then may offer 5%. This is the case in the area where I have practiced Real Estate throughout my career, and I've seen listings in our MLS for as low as 3%.
Knowing that, as the listing paperwork is about to be drafted, ask your real estate agent this question:
"Have you ever listed a house for less than "X percent"?" (insert the commission percent they are charging you here)
Let's assume that the commission typically charged in your area is 6%. You could then ask, "Have you ever listed a house for less than 6%?" If they say yes, you could ask them, "Have you ever taken a listing for less than 5%?".. and you could go on to negotiate the commission rate that way. Chances are that the agent has indeed accepted lower commission rates and if asked, will accept a lower rate from you.
If the agent says no, he or she has NOT accepted a lower commission rate, then you can proceed to ask, "Has anyone in your office ever accepted less than 6% (or whatever percent is customary)?" They would certainly know, because the commission "split" is known by all agents in the MLS.
If the answer is again no, you could ask "Do you know of another agency in town that has accepted a lower commission rate than 6%?" Again, they know the commission offered to the selling broker or office/agent, as it's listed in the MLS.
Please understand that both the timing of the question, and the phrasing of the question itself are very important. We COULD ask, "Will you take a 5% listing?". However this is not the best way to ask, as it gives the Agent an opportunity to respond in a way such as: "Well, our normal commission is 6%. As you know, Mr. or Mrs. Seller, we do a lot of advertising in the newspaper, int he MLS, on television and radio ads, home brochures, etc. etc." Asking the Agent the question the right way will eliminate the "canned" response that he or she has been taught.
Chances are very good that your Realtor will not want to lose out on the listing and commission of your home, even if that means accepting a lower commission from you. But it's good to keep in mind that some Agents will not be too excited about showing a home at a commission lower than 2 or 3 points below "normal", and therefore they may not work as hard to sell it. But, they of course will not refrain from showing it if a Buyer wants to see it. And if your Agent tells you they will have to check with their Broker, let them check. Just remind them that you will also be checking with other offices if you don't hear from them right away.
So you see, by asking this question, you'll be able to open up the way to negotiate a lower commission rate for your listing and save a large amount of money! For example, if your home sells for $200,000 and your commission rate was at 6%, you'd be paying $12,000 in commission! If you were able, at the time of listing your property, to get your agent to agree to accepting 5%, you'd be saving $2,000 in commission; 4% and you'd be saving $4,000 in commission! You could even negotiate commission rates with half percentages, like 4.5 or 5.5%.
It's such an easy way to save money, yet it's so commonly overlooked! Don't overlook it when you go to list your home for sale!
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