Can I negotiate with a broker on the sale commission when listing the house for sale?

Asked by Guy, Verona, NJ Fri Jun 12, 2009

Help the community by answering this question:

+ web reference
Web reference:

Answers

16
Alan May’s answer
Alan May, Agent, Evanston, IL
Mon Jun 15, 2009
Yes, you can negotiate with your broker on how much commission you will pay them to list/sell your property. Commissions are negotiable and there is no standard, or average commission... period.

That does not mean that each and every agent will negotiate with you. Many have set commissions that they charge, but it may vary from agent to agent and agency to agency.

What have you got to lose... give it a try. If they do agree to negotiate their commission, make sure that you aren't losing any "services" when they reduce their fee. Ask up front what will be included in their marketing, and if you've been able to get a reduction... make sure you haven't lost part of that marketing plan.
2 votes
Voices Member, , Benton County, OR
Mon Jun 15, 2009
Guy, I will again strongly recommend that you or any other member of the public read this as it answers the question " Can a low commission hurt my sale?"

Commissions are negotiable is legal thing to say. The reality seems to be that if you do not pay 3% per agent or more, if you try an FSBO or God-forbid a Flat Fee service you are doomed.

Do not consider buying or selling unless you agree to pay the "3%" or more. Only foolish people don't agree.

http://www.trulia.com/voices/Home_Selling/Can_low_commission…

This will also contribute to learning more about thinking of offering less....or more...
http://www.trulia.com/voices/Home_Selling/Can_For_Sale_by_Ow…
1 vote
Francesca Pa…, Agent, Manasquan, NJ
Sun Jun 14, 2009
Guy,

I hope you enjoy emails, because this question is certainly one that generates multiple points of view!

In NJ, commissions are negotiatble.

With no offense intended to any of the previous posters, there are typical "scripts" taught in RE 101 aimed at getting top commissions rates (1) you get what u pay for (which I agree with only to a degree) (2) an agent who is willing to negotiate down their commission at listing will not be not negotiate well with a buyer (huh? isn't it the seller who ultimately takes the primary role in negotiating) and (3) agents will not show your home. In most instances, these are just scripts and not necessarily a true indicators.

In my view, how low to go is best determined by the average rate in your area. In my area of NJ, the average commission a seller agrees to is typically 5% (2.5 to selling agency and 2.5 to buying agency). However, many agencies will accept 4 or 4.5% (certain brands such a Weichert will not allow anything below 5%). Whatever you agree upon, make sure the listing agency is offering an equal split.

Love and Peace,
Francesca Patrizio, Realtor, ePro
Francesca@PatrizioRE.com
Web Reference:  http://www.PatrizioRE.com
1 vote
Lukasz Wojtu…, , Fairview, NJ
Fri Jun 12, 2009
Lets not start this whole mess about Realtors not showing homes with lower splits again. There's already an entire discussion about it as Dunes pointed out in another Q&A section.

Guy,

The simple answer to your question is yes, since by law we are not allowed to have fixed commissions. However, please rember that just like you're interviewing agents, the agents are interviewing you. I for one am an agent who values his time and the amount of work that it takes to sell a home so I will not take a listing if I feel the owner is un-motivated to sell (overpriced) or is unwilling to pay me what I feel I deserve. As hard as it is to get a buyer to commit to a purchase and reach agreement on price between both parties, that's only the first step in a transaction that may take well over 2 months to close. Other agents will tell you that lower commission listings won't be shown by realtors... Maybe by some, but I doubt it since again, to get a buyer to commit is not easy. Today's buyers look at so many homes before they sign on that line so to actually think that agents will filter their listings is crazy to me since the buyer will just go to another agent.

I can tell you this however. If I see a listing with a higher commission than is usually seen, I will try to bring buyers to it that might not be looking at exactly that sort of home. Why, because you never know. I've had clients who started looking at condos and ended up buying a 2 family.
1 vote
Bonita Areman, Agent, Livingston, NJ
Fri Jun 12, 2009
Guy, great question. As the saying goes you get what you pay for, and in this market the more you skimp the harder it is to sell the home. For many of us to put a lot of time, energy and money into our clients we are very successful. I'm sure your saying to yourself, wow that 's alot of money the agent wants" and how could it possibly cost anybody that much money to sell a home"!!!

I'd like to explain where all the money goes. Let’s skip ahead to closing day. The title company subtracts $12,000 from the seller’s proceeds at sale. It goes to the seller’s Broker. Not the Realtor with whom the Seller dealt every day, but to the Realtor’s “employer”, the Broker.

Usually there are 2 brokerages involved in 1 deal, the Seller’s Broker and the Buyer’s Broker. The Seller’s Broker splits the commission with the Buyer’s Broker according to what was agreed between them in the MLS advertisement. In this case, the Seller’s Broker gets $6,000 and the Buyer’s Broker gets $6,000.

Then the Brokers turn around and split that commission with their respective Realtor agents. Again, the way they split it up is determined by individual employment agreements between the Realtors and the Brokers. Sometimes the Realtor gets 80% of the commission and the Broker takes 20%. Sometimes the split is 70% – 30%, 60% – 40%, or even 50% -50%. In any case, that $12,000 was split into two 6’s. Now it’s split again; let’s say in this case it’s split 70% – 30% between Realtor and Broker.

The Broker gets 30% of $6,000, or $1,800. From that, the Broker pays for the cost of running an office, providing phones, computers, printers and toner. The Broker and realtor also pays for Errors and Omissions Insurance. Brokers have to pay the clerical staff who handle data entry, phone service, and general document and transaction management. The jobs here have to get done & paid for. Whether the Broker takes a split or a monthly fee, they pay the bills somehow off of the work their Realtor agents do.

What about the Realtors? In this scenario the Realtor in the example got 70% of 50% of the $12,000 it cost the seller to hire that Realtor. Seventy percent of half of $12,000 is $4,200. Already, the Realtor who did all the work of selling the house watched his “paycheck” get whittled down from $12,000 to $4,200! Out of that, the Realtor must pay for:

Federal Taxes – Realtors are independent contractors and, unlike W-2 employees who only pay 6.25% of their gross wages to Social Security, Realtors pay about 12.50% of their income to the feds (we pay double whatever wage-earning employees do);
State & Local Taxes – don’t forget ‘em!;
Liability Insurance in case a client gets hurt while they’re together;
Auto insurance at above-normal rates because Realtors drive a lot with other people in the car who aren’t covered by their own auto or medical insurance;
Medical Insurance – Realtors are independent contractors and don’t get insurance through their employers;
Dental Insurance – same as above;
Vision Insurnace – again, same;
Disability Insurance – same again;
Annual MLS dues;
License renewal fees (in metro Phoenix, we renew once every 4 years);
Annual lockbox access dues;
Individual lockboxes for use at listings;
The cost of attending various seminars to continue learning and growing as a Realtor;
Staging Supplies, if any ;
Website developer fees and monthly or annual maintenance fees;
The costs of buying and installing yard signs, sign riders, posts, and so forth to put at listings (and the cost of removing them all at the end);
Advertising costs including web, print, billboards, radio, TV, newspaper, supermarket checkout divider thingies and whatever else the Realtor threw into the ad mix;
The costs of maintaining a home office complete with color printer/fax/scanner/copier, computer with high-speed Internet access, data backup resources, hi-quality digital camera & supplies;
Maintaining a big car that holds lots of people;
Open house supplies like drinks & snacks, pre-open advertising and buying the actual open house signs;
Cost of printing just listed cards and brochures
Astronomical monthly cell phone bills – because you’ve gotta have unlimited data, text, web if you’re going to compete in today’s mobile market
My point is that Realtors pay for all the above out of their own pockets and do it because doing so helps us service our clients effectively. On a final note, think of all the money we've spent and your home does not sell --we have no reimbursement!!- Bonita Areman, Burgdorff Realtors 973-568-0341 Accredited Buyers Rep
1 vote
Voices Member, , Benton County, OR
Sat Jun 20, 2009
No spam please! When in doubt, please refer to our Community Guidelines.
0 votes
Rick Lodato, Agent, Verona, NJ
Sat Jun 20, 2009
Dear Guy; Yes, commissions are negotiable and each and every office has their own policy. I have been marketing and selling Real Estate in Verona for over 22 years. I am also a resident of Verona since 1979.
I was the owner / broker of Lodato & Co. Realtors in Verona for over 14 years and I also managed Citrano & Assoaictes for 9 years. I merged with Prudential New Jersey Properties in Verona in January 2009.

My extensive marketing experience and the power of Prudential have proven a very successful combination.
If I can help you in any way, please call my cell phone 973-239-3535 or http://www.VeronaRealtor.com or Rick.Lodato@verizon.net
Web Reference:  http://www.VeronaRealtor.com
0 votes
Bill Eckler, Agent, Venice, FL
Mon Jun 15, 2009
Guy,

Sales commission is negotiable but important to remember is that as you discount your fees there is a direct relationship to the level and quality of service.

We recommend that before you take the position of discounting the professional fees that you inquire about the scope of service provided. You will find that not all companies provide the level of service to necessary to meet your needs.

Good luck
0 votes
Laureen Coup, Agent, Long Beach Island, NJ
Mon Jun 15, 2009
Guy,
Commissions are negotiable. In this market with so many homes on the market, you want your home to stand out to agents. One way is to pay a fair or even higher commission and or bonus.
0 votes
Keith Sorem, Agent, Glendale, CA
Fri Jun 12, 2009
Guy
I would suggest watching how an agent negotiates with you about all aspects of the listing agreement including the commission. The manner in which an agent negotiates and their degree of success will probably provide you with a pretty good idea of how they will negotiate on your behalf with buyers.

You need a new negotiator.

Good luck.
0 votes
Bev & Bob Me…, Agent, Livingston, NJ
Fri Jun 12, 2009
Hi Guy,

In NJ, you won't easily know what commissions are being offered to the owners of competing properties unless they tell you honestly themselves. As Realtors we won't know that information unless it's in our agency.

Now, commissions are negotiable, but make sure you get what you want out of the partnership. For example, we offer different commissions but we put it in writing what you get at each level; most don't do this. You should have a full list of what to expect because someone will offer you a lower commission than others and may not do much.

The key is to find a team you trust and feel comfortable in representing you from beginning to end. A team that could say, call this client and ask them how they like our services.

If Bob and I can help you more, let me know at Sold@WestOrangeAreaHomes.com .
0 votes
"MICHAEL" Is…, Agent, Aventura, FL
Fri Jun 12, 2009
Yes. Commission can be negotiable. However, When you hire a Realtor to Market and sale your property
make sure that your first priority is to hire a professional full time Realtor that do the right job. Many times chip come expensive. Realtors are working very hard to sell their listing and deserve to be compensated accordingly. If you negotiate a low sale commission it is possible that many Realtors will not even show your property .Do not forget commission is paid once a Realtor sale your home not before.
0 votes
Ilia Wood, Agent, Upper Montclair, NJ
Fri Jun 12, 2009
Commissions are negotiable.
But as Jim said, don't focus on the commission alone. There are many other factors besides the commission that will impact the way your home will be marketed. Listen to what the agents have to offer as far as their marketing strategy, experience and expertise in your area.

I work for Prudential New Jersey Properties, which as you may know has a large prescence in Verona and high rate of success there.
If you have any questions or you would like to know more about what PNJP has to offer, please feel free to give me a call.

Ilia Wood
Prudential NJ Properties
92 Church Street MOntclair, NJ 07042
973-744-5544
201-892-8978 (cel) best number to be reached at.
0 votes
Voices Member, , Benton County, OR
Fri Jun 12, 2009
I think you should check this out if you want feedback on the risk you take with many agents if you are thinking of paying less than what they consider "standard" or "acceptable"

http://www.trulia.com/voices/Home_Selling/Can_low_commission…

Learn what the agents say what will happen if you negotiate for less Commission.
0 votes
Jim Irving, , Paso Robles, CA
Fri Jun 12, 2009
Always! But don't just focus on the commission...you should consider their marketing proposal, their experience and their success with homes similar to yours, as well as being aware of what commissions and or bonuses are being offered by the owners of competing properties.
0 votes
James L Stec…, Agent, Montclair, NJ
Fri Jun 12, 2009
Everything is negotiable Guy
However
Smaller commission=less marketing=longer time on market=lower sale price=an agent that will be weak in negotiating the best price for your home.
But it is negotiable :)
0 votes
Search Advice
Search
Ask our community a question
Home Selling in Verona Zip Codes

Email me when…

Learn more