Does Your Broker Needs a Shave ...


You thought you got a good deal on that home... until you factored in the commission and extras. Should brokers cut their commissions? Most will tell you they're worth it, but here's why I think they need a shave.

Traditionally, a home seller pays out 6 percent in commissions, split evenly between the selling agent and the buyer's agent. If you don't have a lot of equity in your home, the commissions and closing costs alone can put you in the red on the whole deal.

It pays to be a shrewd negotiator. And the rules aren't set in stone. As a seller, you don't have much control over the buyer's agent, but you can always try offering a 2 or 2.5 percent commission and see how many agents come calling. According to National Association of Realtors, the buying agent was compensated by the seller approximate 65 percent of the time. A third of the time, either the buyer paid for their agent or the buyer and the seller split it somehow. There are a few ways to split that nut, but in a weaker market, you usually need to incent the buyer's agent with a full 2.5-3 percent commission.

On the other side of the transaction, the selling agent is your employee, and only gets paid if and when you sell, so you should be aggressive in asking them to reduce their commission if you feel it's appropriate.

Here are some of the more compelling reasons why a selling agent might be willing to cut their rate: