Understanding real estate commissions is crucial when buying or selling a home. These fees, typically a percentage of the final sale price, compensate agents for their services in guiding you through the process. Contrary to common belief, real estate commissions are negotiable and not set in stone.
With recent changes in the NAR settlement, there may be confusion about agent payment and the possibility of negotiating real estate fees. In this article, we will explain how commissions work, how Redfin deals with them, and provide tips on negotiating to help you save money.
What is real estate commission, and how much is it?
A real estate commission is the payment made by the homebuyer or seller to their agent(s) for assisting them in buying or selling a home. The commission is usually a percentage of the final home sale price and is exchanged during the closing transaction.
There is a common misconception that there is a fixed fee or percentage for real estate commissions industry-wide. In reality, commissions are negotiated between the agent and the homebuyer or seller and can vary.
Can you negotiate real estate agent fees?
Absolutely! Real estate commissions have always been negotiable, even after recent changes. Commissions are not regulated by law and can vary by location, giving both buyers and sellers the opportunity to negotiate these fees.
5 Tips for negotiating real estate commissions
Negotiating realtor fees can be daunting, especially for first-time homebuyers or sellers. However, negotiating real estate fees is allowed, and there are no laws against it. Here are some strategies to help you lower commission fees.
1. Do your research
Understand the typical commission rates in your area to have a starting point for negotiations. Rates can vary based on the market, property type, and agent experience.
2. Leverage competition
Interview multiple agents and use competing offers to negotiate lower fees. Agents may be more willing to reduce their commission to secure your business.
3. Highlight your situation
If you are selling a high-value property or buying in a competitive market, communicate this to the agent. A quicker sale or higher price may incentivize them to lower their fee.
4. Ask about discounts for repeat business
If you plan to work with the same agent for another property transaction, inquire about a loyalty discount.
5. Be upfront about your budget
Some agents may adjust their fees if they know you have financial constraints, especially if it helps close the deal.
How does Redfin stand out in terms of commissions?
At Redfin, we are dedicated to providing consumers with the best value, offering sellers a listing fee as low as 1%.* For buyers, our fees vary by market but remain competitive. We also provide additional savings through our Sign & Save program, reducing our fee by 0.25% if you hire your Redfin agent before your second home tour.
A final note on negotiating real estate commissions
Negotiating real estate commissions may seem daunting, but it is a beneficial part of the home buying or selling process. By researching, comparing agents, and understanding your leverage, you can potentially lower fees and save money. Real estate commissions are flexible, and with recent industry changes, transparency and negotiation have become even more important. Whether you are a buyer or seller, do not hesitate to discuss fees with your agent and strive for the best deal possible.
*Listing fee subject to change, minimums apply. Any buyer’s agent fee the seller chooses to cover not included. Listing fee increased by 1% of sale price if buyer is unrepresented. Sell for a 1% listing fee only if you also buy with Redfin within 365 days of closing on your Redfin listing. We will charge a 1.5% listing fee, then send you a check for the 0.5% difference after you buy your next home with us. Learn more here.