3 responses when sellers ask you to lower your commission

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12/15/2015 | Author: Editorial Staff

At some point, a prospective seller will ask you to lower your commission. If you don’t agree with the seller’s proposal, try one of these responses.

Explain your successes. Offer specific details of the results you achieve. If your homes stay on the market for less time, or your clients often get full asking price, say so.

List your services. A seller, especially a first-timer, may not realize the services that you bring to the table. Don’t be shy about outlining everything you handle to make their transaction go smoothly and help them avoid problems.

Make a counteroffer. Everyone feels good about getting a bargain, so offering additional services at a discount may be something they’ll agree to. For example, offer free housekeeping for a certain time period, a free consultation with a home stager, or lawn maintenance while the house is on the market. While options such as these may cost you, you’ll still make off better than if you agreed to a reduced commission.

Categories: Business tips
Tags: commissions, sellers, client relations


david on 02/02/2016

All the above comments do not factor the Redfin competition. What about their reduction in commissions and the pressure that puts on us. We have to start reducing ours too, right?

Chris Matthews on 01/04/2016

I will usually just ask them the end goal in asking for a commission break. If the goal is to save $3000 or $5000 from what they pay me, or whatever it may be, they better believe that I can make that small of an amount up on sheer negotiation strength over an agent who so willingly says “sure, whatever you want” just to get the listing. I’m sure that will be that agent’s response when confronted with a tough negotiating buyer agent as well just to get the deal done. Desperation is not an operation I demonstrate with my money or the clients.

Batch Nuckolls on 12/21/2015

Reduced commission from what? Supposedly, the fee has always been negotiable.
Most agents assume that it’s 6% with a 3/3 split.. We were taught that it might be more difficult and more expensive to sell a grain elevator or a tract of land in an outlying area than a single family home in an established neighborhood, hence a higher fee. It can also be more difficult and time consuming to close a first time buyer with poor credit buying a starter home than it is a person that has established bank connections and is purchasing their third or fourth property.  The person buying a million dollar home is more sophisticated that one trying to get in for under $200,000. There is no real justification for charging them 10 times as much.
My fee for the first home that I sold was $225 (Half of the 2% brokerage listing fee. Back then we worked on 2/4 splits) The listing fee for the same house today is over $18000. What I hear from our industry is greed…
Our job is to get the property sold. If we accomplish that, we are amply rewarded. Last year I sold a home for a chopped beef sandwich.The home had been on the market for a long time but the agent could not net the seller’s enough to pay off the first lien. I could have charged them more, but they needed the money. We accomplished their goal and they received the same level of service that I give everyone. In our profession, if you are active, you will find people that need your help and you will be rewarded.
Other professions are paid less than their billed fees. Both doctors and hospitals can receive about 10% of what they originally billed after being written down by the insurance companies. Stores offer sales, etc. etc.

Gail Spinn on 12/18/2015

I have just one thing to say about negotiating commissions. Buyers and sellers need to be educated about what all goes into a transaction. Most folks have no idea what their Real Estate Agent or Broker does. They don’t purchase property often unless you are working with an investor, and once they see all the things you do, they are quite surprised.  So don’t give yourself away.  That being said, there are times now and again where you may have to negotiate a little bit to get something to work. But let’s hope those times are far and few between.  Keep up the good work folks - The Real Estate Industry has got some awesome people working in it!!

Stephen Williams on 12/18/2015

The original post and responses all seem to assume this negotiation happens at the point of the listing agreement.  To me, that’s the easiest time to handle this situation.  The bigger challenge in my world, is the seller who will take the reduced offer from the buyer only if (theoretically, any way) I also reduce my commission.  I weigh my options on a case by case basis, but sometimes it can be dicey.

Edith Schreiber on 12/17/2015

It’s particularly troublesome to me that in the above comments, it is mentioned that only if you represent both sides of the transaction will the commission be reduced. I for one have NEVER represented both sides of the transaction (although I know it is permissible with the requisite disclosures to all parties). Once I explain to both the seller and buyer why I prefer to not do that (because both sides will be required to accept a lower level of representation), they agree there is really nothing in it for them (in terms of representation). In my opinion, the only one who comes out ahead in the deal where one agent “represents” both sides is the agent….both the seller and buyer are agreeing to no one really having their back…and it is something I cannot ever imagine doing. A slippery slope, at the very least.

Cody Farris on 12/17/2015

I agree with all the comments above.  Important to note that we do not keep the entire fee that we charge.  I always tell clients it’s not like the ‘reality’ shows where the agent makes X number of dollars with a few phone calls.  They need to understand the brokerage takes a cut, and from the agent’s portion, the agent pays all marketing, E&O insurance, CSS membership, board dues, advertising, and so on.  It’s what we net, not the gross, that we need to explain better.  Plus all the other value bring.

Vijay Jha on 12/17/2015

In my opinion TREC should ban and make it illegal of the commission return to buyers or sellers as a whole. This kind of practice has made this profession very hard for realtors.

Doris Snipp on 12/16/2015

We are the only profession who seems to believe a person has a right to ask for a portion of our income. Try that tactic with your mechanic,  Dentist,  grocer, etc.  Now our organization comes along and endorses the practice by giving us 3 “excuses” we can use to stop this practice.  As long as there are more licensees than needed, resulting in agents not being able to make a livable wage, the ease of obtaining a license with a few weeks education, a lack of serving as an apprentice until you understand your role and agents refusing to spend marketing dollars this practice will continue.  Msny builders have added a statement to the contract that says the agent will not share their commission. Why can’t our supporting boards do the same, thus taking the issue off the table. I think those who have profited from our income should be sent a 1099.  I think mortgage companies should endorse the “no sharing rule”.  We pay the boards dues and fees, we should get more support from them.  Simple line to the contract is all that’s needed!

Buster Spillar on 12/16/2015

I say to them.. ” I have a wife and 5 kids to support.. Here is my wifes phone number, give her a call and if she says it is okay, then I will reduce it..”
They then just laugh and say “oh, I was just trying to see what you would say.” and then we laugh and finish getting signatures..

Linda Randall on 12/15/2015

“If I cannot successfully negotiate my commission,  how successful will I be in negotiating any offers in your behalf?”

Linda Blackmon on 12/15/2015

Just say NO. Most sellers ask just to see if you will.

Nelly on 12/15/2015

I agree, you get what you pay for. It’s worked with me to tell my clients that if I represent both seller & buyer I will charge 5% commission, otherwise I can’t lower the commission. After so many fees we have to pay,  the 3% just sounds nice, we really don’t get the whole commission!  just saying!  But so far, this has worked for me!

Tom Morgan on 12/15/2015

These are all excellent suggestions on how to deal with a difficult situation.

Beverly Ward on 12/15/2015

Some I’ve used are -  When you go to your Dr. do you ask him to reduce his fees.  Do you want your employer to come to you and say we are reducing your pay check .
My services will be very limited should my Broker even consider it.
They think you get the full 6%. Explain 3% goes to each realtor firm, and then fee negotiated with agent and their agreement with Broker.
You get what you pay for, and agents do multiple tasks behind the spotlight, to see sale to successful
Closing. Many times listing agent
goes beyond to keep sale together,
Not in all instances., but most of the time.. Not to mention all the fees, license fees, MCE training classes, contract changes updates. It’s a full time job to be a Successful Realtor. 

Judy McKee on 12/15/2015

Justifying a commission has to do with the value to the seller. They should be informed of your commitment to the REALTOR Code of Ethics and why it is important to them. Disclosure, Cooperation, Fiduciary duties, advertising, relationship with other agents, knowledge of contract and listing agreement. There are many more, but these values need to be explainted to seller so they see the value you are giving them for them!!! Also, Broker sets commission, agent cannot negotiate without Brokers written permission. Also, if they want 100% service they pay for what you will deliver.

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