Pulse is a recurring column where we ask for readers’ takes on varying topics in a weekly survey and report back with our findings.
For some agents and brokers, the very idea of negotiating commission is taboo, the client conversation that must never be spoken of at all. For others, negotiation, even on commission, is always on the table, especially in hyper-competitive markets. It generates heated debate and frustration on both sides, and it’s the subject of intense scrutiny right now.
Last week, we asked: Under what circumstances would you be willing to negotiate commission? Readers had a lot to say.
Sometimes
- Commission is always on the table, and though I would love to say I only work with a 6 percent or 3 percent / 3 percent split — since prices are high I basically always agree to 5 percent or 2.5 percent to the co-broker. I will not go lower, though. If I bring the buyer to the table and it’s the only way to make the deal come together, I will negotiate on commission.
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When I am satisfied that the buyer and seller are at their last dollar and both willing to walk away. If there are no other prospective buyers waiting in the wings. If the alternative is for me to spend a lot more time and money to get an offer that will likely be less than what is currently on the table.
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I will lower my commissions for repeat customers only.
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If the marketing is not working I will reduce from 3 percent to 2.5 percent, and if I double-end the deal, I have a 4 percent fee to cover both sides.
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Almost never.
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When I need to keep the deal alive.
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If it will help my buyer get the sale. If they are buying and selling. If it will help get the deal closed.
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When I reduce my commission on a sale it’s only on my side; the co-broker’s percentage stays the same. Sometimes a client will ask for a reduction. Sometimes I offer one depending on the big picture: Does the client have financial circumstances beyond their control and would a reduction in the commission make a difference to them? How many hours will my team need to manage the sale? Is this a repeat client or a source of a lot of business? Did I make a mistake and need to own it? To me, these are all valid reasons to consider reducing my side of the commission.
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Repeat seller client and only on the listing side.
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For past clients.
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If I have a previous relationship with the client (they have purchased or sold with me before) or to save a deal heading south.
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Depends on the scope of the work requested. Full service = Full Price.
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High-end property. Bringing both buyer and seller.
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Only to help a good client save a deal from going negative.
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I always tell sellers 3 percent is my fee, but … if they ask me to reduce my commission to 2.5 percent and they are a repeat client that has a beautiful home ready to go that I do not need to orchestrate repairs, improvements, or staging.
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Seller request is genuine, hot seller’s market, repeat client.
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When it’s a direct (not co-brokered) deal and the parties need a nudge, despite all of your best negotiating techniques.
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If I am having more than one transaction with the same client or they are return clients.
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Lower commission to get a listing if they plan to purchase another home.
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If I both buy and sell with my client.
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Higher price of house, difficulty of seller and bottom line $ amount.
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To close a deal if heading to closing and there is any kind of a blip.
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I’m sorry to say that it is really only inexperienced and uninformed clients who won’t mention commissions and will pay the full 5 percent or 6 percent “prevailing” rate. I would never pay those high rates myself, licensed or unlicensed.
Never
- The conversation certainly comes up more often than it ever has. I always attempt to redirect the conversation until AFTER my value prop has been articulated. It commission is still a sticking point, I hold fast on my listing side comp and discuss the pros and cons of reducing the buyer comp. If the seller is adamant for a reduction … discounts have been coming off the co-broker side of the deal. I am holding to this while I can.
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I just lost a huge listing over commission rate, and I regret it. This isn’t the market to be clinging to principles.
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I used to but I don’t anymore.
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None!
Always
- In Minnesota all commissions are negotiable. I am always open to negotiation and have found that most homeowners believe there is a “going rate,” and that rate is higher than what I need to charge. Often, I am willing to negotiate, but most of my clients accept whatever price I give them.
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Always.
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The commission is always negotiable.
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Any.
What did we miss? Please share your thoughts in the comments section below.
Editor’s note: These responses were given anonymously and, therefore, are not attributed to anyone specifically. Responses were also edited for grammar and clarity. Inman doesn’t endorse any specific method and regulations may vary from state to state.