How To Negotiate Real Estate Commissions

The recent housing dip provides an excellent opportunity for buyers and sellers to extract lower commissions from their real estate brokers. The commonly accepted rate of 6% can now be negotiated to around 4.5%.

In theory, of course, broker commissions are always negotiable. Setting up fixed commission rates has, in fact, been considered illegal since a 1950s Supreme Court ruling. But real estate brokers certainly don’t want you to know that. “The owners of the large [broker] firms want everyone to think the broker fee is 6%,” says Jay Michael, Labinov’s realtor and the founder of Estate Property Group, a boutique real estate firm in Chicago that, while a full-service brokerage, negotiates its fees with its clients, typically charging 4.5% to 5.5%.

To further increase your leverage:

  • Use the same broker to sell your current house and buy a new one. Negotiate an overall discount on both houses.
  • Use a smaller firm. Lower rates can be approved faster with fewer layers of bureaucracy.
  • Use a different broker. If one broker won’t negotiate, leave him/her and find one who will.
  • For the especially adventurous, consider using the internet to replace your broker altogether.

    More Real Estate Brokers Are Reducing Their 6% Fees [Smart Money via FreeMoneyFinance]
    (Photo: brighterworlds)

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