Should You Ask Your Realtor to Cut Their Commission?
Most people know that real estate commissions are negotiable. The question is, "What is fair?"
The first thing which needs to be understood is how the commission is distributed. In most instances, half of the commission goes to the company representing the seller and the other half goes to the company representing the buyer. After that, the agents get a certain percentage of the amount that went to each company.
From the percentage received by the agents, they must pay for their many expenses. They must pay for the marketing of the property and a portion of their annual dues and fees to belong to the various organizations that help them do their jobs: NAR, CAR, the Board of Realtors, WS, etc. In addition to the mandatory continuing education requirements, many agents designate a certain amount of their income toward non-required education programs to ensure that they are the best in the industry. Additionally, there are untold business expenses such as transportation, miscellaneous marketing, accounting, supplies, self-employment, etc. When all is said and done, despite what a seller may feel is a large expense, the net income to the agent is not that great.
It is certainly the seller's prerogative to try and negotiate to have the agent give their best effort for a reduced fee. But keep in mind that if an agent agrees to a reduced commission, one of two options will occur: 1) the agent will still offer 50% of the total commission to the agent that produces a buyer and that probably means that agents representing buyers will show your property last because they will earn less or 2) the agent can still pay a full share to the buyer's agent but then the agent representing you, the seller, will be working for 66% of the going rate. How hard would you work if you were offered a third less than your contemporaries?
Be sure to take the above information into consideration when deciding what is fair for the level of service that you expect.
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