This is the first thing buyers want to know when I go do a listing presentation. I can understand why, it is their biggest expense and they need to budget it in, especially if they are planning on buying another home.

Before I get into commission rate, I have to say this: “All agents do not offer the same service for the price you pay”. I will get back to this later on. This does have a direct effect on the commission.The law
As an agent, the real estate law does not permit me to say things like, “well the average rate around here is…” or, “agents usually get about this amount”. That’s a no no.

Most vendors don’t realize that yes you can negotiate the commission rate. There are lots of interesting ways to pay an agent, whether it is a flat rate or a percentage. You can get very creative. Just remember though, if the agent is too easy negotiating their commission and low-balling themselves, are they the agent you want representing you at the table negotiating your interests???!!!

Caution! – Brokerage contract
If there is another agent involved who is bringing the buyer, it does not state in the brokerage contract how your agent will be paying the other agent. Most everyone assumes that the fee is split in two, 50-50. That is NOT the case. Please tell your agent what you want to see happen or what they suggest.

A story of commission – A big learning lesson for the Vendor
This story happened to me about two years ago. The vendor who was an experienced contractor who bought, fixed up and sold a lot of homes. On this day, his agent didn’t show up at the signing. When all the paperwork was handed out with the breakdown of the finances, the vendor saw that the 7% commission that he gave his agent was not split 50-50 down the middle. In fact, I was only offered 2.5%, leaving 3.5% to the selling agent. As the agent bringing the buyer, I have no idea what is in the brokerage contract. I only know what is offered to me from the listing.

Splitting the commission
The commission can also be split in many ways. Let’s say you list the house with an agent at 6%. You can request that the agent offers the buyer’s agent 3.5%. It’s a great marketing approach at a time when the market that is full of listings. I’m sure that’s what the vendor in the story above was expecting; more of an incentive to other agents to bring buyers.

No matter what the commission is, remember you are paying for the services and skills of an agent. Is it a well deserved compensation.