Negotiating Real Estate Commissions

Whether you’re buying or selling a home, real estate agents are often essential in

getting the job done. They usually make money through commissions based on the

sale price of the property, which can vary widely depending on where you live and

the type of real estate market.


In New York and other states, homeowners/sellers are required to pay a realtor fee

at closing out of the proceeds from the home’s sale. Typically, the listing agent will

request that the seller agree to a commission rate in their initial contract with the

seller. This rate will include the amount of the buyer’s agent fee as well. Though

technically commissions are negotiable, in reality, very few homeowners/sellers are

willing to haggle with their agent over a given percentage and most simply go along

with the rate offered.


The good news is that when it comes to the buyers’ agent fee, there’s much more

room for negotiation. In some cases, a buyer’s agent will even offer a partial

commission rebate to the homeowner, which can save them a substantial amount of

money. This option is not available in all areas, and in some states, rebates are

illegal. Read more


For the most part, it’s up to the individual buyer to negotiate their own terms with

their buyer’s agent. Though this can be difficult, you may find that an agent is willing

to negotiate a lower buyers’ agent fee if they see that you are serious about

purchasing the property and are likely to close quickly. This can be a great way to

avoid any conflicts down the road and save some money.


Similarly, if you’re the seller and an unscrupulous real estate agent tries to bully you

into paying them more than they should, it’s important that you take action

immediately. In this case, you’ll want to file a complaint with the New York State

Department of Real Estate and the real estate board that governs the area. This will

give you a greater chance of being compensated for any unjustified commission

payments, and it can help to deter similar behavior by other agents in the future.


Another way that you can negotiate your real estate commission is by using the

sales price as a measure of the home’s value. For example, a home that sells for

$500,000 will yield a commission check for the agent of about $25,000 if they’re

working with a traditional brokerage company. However, that check isn’t just the

agent’s to keep—it will also be divided amongst the listing broker and the buyer’s

broker. This is why it’s vital to know your commission rate and how it will be split

before you sign a contract with an agent. It can change your entire transaction and

make all the difference in how you move forward with your purchase or sale.