Tips to Negotiate Lower Real Estate Commission. –

A WORK IN PROCESS

Many people consider 6% as the “standard” real estate commission. We are going to use 6% as a starting point. In order to negotiate a lower real estate commission people should understand various real estate tactics. These could also be sales/negotiation tactics. Below are discussions that have occurred on social media with real estate professionals.

“You Get What You Pay For” – Red Flag?

This is part of an interesting discussion we had on Facebook recently. It is good to understand various tactics real estate professionals may use to keep commission high. The Facebook post is titled: The Home Team discusses the hidden dangers for homeowners by ending 6% real estate commission rates.

Supply Chain Today: The real estate industry is changing. Please pass this on to anyone who might be selling a home. Do not pay a 6% commission. Pay much less. We are thinking 4% or less. Look at what the realtors are saying this this discussion. They all say commission is negotiable so negotiate. When an agent says “You get what you pay for” that should raise a red flag. This tactic is often use so they don’t have to lower their commission. If an agent’s starting point is 6% commission you may want to go to the next agent right off the bat. We recommend sellers shouldn’t pay anything close to 6%. We will be writing much more about this. Here is something we threw together that includes a few negotiation tips and the settlement fact sheet: 

Real Estate Professional: “I’m sure you’ve heard the saying “you get what you pay for’ I hire the best vendors because my clients deserve the best and in the end it always results in a higher sales price. Help you sell is no longer in business but there are flat fee brokers if getting poor service, bad marketing and poor negotiation is what you’re looking for you’re welcome to use them.”

Supply Chain Today: Have heard the saying many times. Of a matter of fact it is in the post that I replied to you with: “When an agent says “You get what you pay for” that should raise a red flag. This tactic is often use so they don’t have to lower their commission.” It is interesting how often that phrase is sued in the real estate industry. Is it part of a class that realtors take?

Won’t Answer Questions or Dances Around Questions.

As you are interviewing real estate agents see if they are direct in their answers. If they continue to answer questions with questions that is most likely a red flag. Why wouldn’t a person answer a direct question? If the person is dancing around your question then make it the question so it is a simple Yes or No. At that point if they dance around the question you know they are avoiding it. This is part of a discussion we had with a real estate professional.

Supply Chain Today: The real estate industry is changing. Please pass this on to anyone who might be selling a home. Do not pay a 6% commission. Pay much less. We are thinking 4% or less. Look at what the realtors are saying this this discussion. They all say commission is negotiable so negotiate. When an agent says “You get what you pay for” that should raise a red flag. This tactic is often use so they don’t have to lower their commission. If an agent’s starting point is 6% commission you may want to go to the next agent right off the bat. We recommend sellers shouldn’t pay anything close to 6%. We will be writing much more about this. Here is something we threw together that includes a few negotiation tips and the settlement fact sheet: NAR Settlement Real Estate Changes https://www.supplychaintoday.com/nar-settlement-real-estate-changes/

Real Estate Professional: This is an interesting idea, but on what would you base your rationale?

Supply Chain Today: I think we can all agree that 6% commission to list a home is exorbitant. Agree?

Real Estate Professional: why would you feel it is exorbitant?

Supply Chain Today: So you not agree that it is exorbitant? To make it simple. Is the 6% commission fee exorbitant? Yes or No.

Real Estate Professional: actually, compared to most COGS or other commission %’s in other industries it is very inexpensive. Why do you feel it is exorbitant?

Supply Chain Today: I didn’t ask to compare to other industries. We can get into other industries once I know where you stand on the subject. You know where I stand. I asked you if you believe it is exorbitant? A simple Yes or No will suffice. Then I know what direction to take?

Real Estate Professional: you stated you feel it is too much, and I asked on what you base that? So, enquiring minds want to know! Tell us why!

Supply Chain Today: So you are going around in circles and not answer a simple yes or no question. This is similar to the person in this same chat that asked you: “why not just tell us the price”. Your reply back to the person was “Hi! Thank you for asking. Prices are subjective but the value of what makes up the home is not, so we showcase the best elements.” Then another person wrote: “just keeps dodging the question of price lol. Most people need to find out if it’s in the range of what they are approved for dude.” As a real estate agent why wouldn’t you tell someone the price of a home when they asked for it. That’s a red flag. Next red flag is not answering a simple Yes or No question. For some reason Bret (the real estate professional) put a gif below his comment of a Boy Band. Kind of strange. These are things you want to look for with real estate agents. Are they upfront? Do they answer questions when asked. Do they actually answer the question or dance around it. Would love to hear other people’s opinions (not just my own) on this once it is posted.

At this point we were done with the discussion. The person did write back but we knew there was no way we would use this person as a real estate professional. This is our opinion, people can make their own opinions as well.

Is 6% the Standard Commission? Are Commissions Negotiable?

Here are people commenting about 6% commission.

Real Estate Professional 1: Ridiculous article. Have they no fact checkers? Totally erroneous article. Nothing is changing for the consumer. Plus, 6% commissions? Wow. There are NEVER pre-set commissions- all negotiable. I’m a Realtor for 38 years and trust me – offer me a 6% commission and I’ll be there—- turning cartwheels.

This person actually said “offer me a 6% commission and I’ll be there – turning cartwheels.” Based on what this says we take it that 6% is high even to realtors. Thoughts?

Real Estate Professional 2: I would venture to say less than 5% of my clients paid 6% and most less than 5%, but feel free to ask them yourself.

The person says most of their clients paid less than 5% commission. If this person is charging less than 5% commission to most of their clients then getting to 4% shouldn’t be difficult.

Real Estate Professional 3: There is no “6% standard” and if there was, it was gone a long time ago. Sell your home when you’re ready and negotiate the commission with the agent you want to use, just like you could do yesterday and last year and ten years ago

This person says there is no 6% standard. Real estate professional have told me 6% is the standard. But since many real estate professionals are saying it is not due to the NAR settlement, don’t let anyone say 6% is the acceptable commission.

Real Estate Professional 4:  I’ve worked in the industry for 17 years. Some agents won’t work for less than 6% and since they’re self employed and it’s their business, more power to them, it’s their business and they can charge what they want. Some agents like myself can count on two hands the times they’ve charged 6%. I’m not sure your point? Is it that salespeople will try to get paid as much as they can? Congrats, you’ve solved a real mystery there.

Real Estate Professional 5: What is it that they can see agents think when our clients aren’t around? You are good about making unfounded claims, click bait, but lack any real substance except made up stories about fake experiences. So go ahead, do tell ….

The discussion with this real estate professional is one of the reasons why we decided to inform people about ways to negotiate lower commission. This is part of the reason we are adding comments from real estate professionals so people can see what they say when clients aren’t in the room. The person came after us pretty hard as you can see. The person was saying we were making up stories and fake experiences. So we decided to us his wording as well as show what other real estate professionals are saying. We believe this may help people understand the importance of negotiating a lower rate. We will also be writing a paper about selling or buying a home on your own.

Real Estate Professional 6: These people need to stop reporting what they don’t understand. Causing chaos amongst people. COMMISSIONS HAVE ALWAYS BEEN NEGOTIABLE!

One of the things we have seen a lot are real estate professionals saying the reporting on the NAR settlement is fake news. When they are asked what is fake news they often bring up commissions have always been negotiable. They have also told us that everyone knows commission is negotiable. We are using this to be sure people know real estate commission is negotiable and they should be negotiating. If the agents are saying commission is negotiable, then it seems crazy if people aren’t negotiating. We believe a seller shouldn’t pay more than 4% to list their home. This would be 1.5% to the listing agent and 2.5% to the buying agent. We would love to hear differing opinions on this.

Not sure if real estate person or not: no one is asking them to work for free. 1.5% for listing agent and 1.5% for buyer’s agent. No more 5 or 6 percent commissions. It won’t be necessary anymore.

This person bring up an important topic. Commission is split between the listing agent and the buyers agent. At 6% commission it is often split 50/50 so 3% goes to each agent. To get it down to 4% it is our opinion to make it 1.5% to the listing agent and 2.5% to the buyer’s agent. This gives more incentive for buyer agents to show the property. To reduce the commission further just lower what the buying agent would get. So 3.0% would be 1.5% to the buying agent, and still 1.5% to the listing agent.

Realtor Says They Guarantee their Work, or Guarantee They Will Sell your Home

Supply Chain Today: It seems that you are more fear mongering with your tag line. What is wrong with the tag line from ABC15. Here is a discussion we were having on another chat. Will ask you again since it doesn’t seem you answered a simple Yes or No question. You talked about guaranteeing your work. You said you will guarantee none of your clients will regret hiring you when done with the purchase? Here is our Yes or No question. Will you put this in writing and saying you will give the client your commission if they regret hiring you? Yes or No? What’s a guarantee if it isn’t put in writing? If I have said anything incorrect please correct us.

Supply Chain Today: Then you probably shouldn’t say you will guarantee something. Here is guarantee defined: “a formal promise or assurance (typically in writing) that certain conditions will be fulfilled, especially that a product will be repaired or replaced if not of a specified quality and durability.” Thank you.

We were having a discussion with a real estate professional who was saying they guarantee their work. When someone says they guarantee their work ask them to put it in writing. As we said to the individual above “What’s a guarantee if it isn’t put in writing?” We provided the definition of guarantee to the individual. They definitely had pushback on this. We have also seen agents who guarantee they will sell your home or buy it. If an agent says this be sure they put it in writing. Also have in writing how long does the home have to stay on the market before they buy it, and how much will they buy it for.

Negotiation Quotes

• “Don’t bargain yourself down before you get to the table.” ~Carol Frohlinger
• “You have to persuade yourself that you absolutely don’t care what happens. If you don’t care, you’ve won. I absolutely promise you, in every serious negotiation, the man or woman who doesn’t care is going to win.” ~Felix Dennis
• “This is a classic negotiation technique. It’s a gentle, soft indication of your disapproval and a great way to keep negotiating. Count to 10. By then, the other person usually will start talking and may very well make a higher offer.” ~Bill Coleman
• “So much of life is a negotiation – so even if you’re not in business, you have opportunities to practice all around you.” ~Kevin O’Leary
• “A negotiator should observe everything. You must be part Sherlock Holmes, part Sigmund Freud.” ~ Victor Kiam
• “You do not get what you want. You get what you negotiate.” ~Harvey Mackay

Negotiation and Real Estate Resources

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