Wednesday, May 11, 2011

How To Avoid The Dreaded 6% Real Estate Commission

Picture of the "Gingerbread House" i...Image via WikipediaThe prices of homes may rise and fall, and housing bubbles may grow and and bust, but one little number continues to live on, the 6 percent real estate commission.

I grew up in the real estate and home building business and I have heard many, many times the irritation the 6% commission can cause. I would hear my father and grandfather complain every time they had to pay this fee. Whether the home sold for $25,000 or $250,000, it didn't matter.

It's a lot of money to pay for a service when margins can be very slim. Over the years there has been many negotiations, with brokers, to try and get it lowered. Some agents remain firm in their belief that the 6% commission is fair and well earned compensation for providing a necessary service. Real Estate offices have expenses and overhead. They pay for promotion and advertising. The legwork, phone calls, paper work, and negotiations use up a lot of time and money. Still, there are alternatives.
  • Before settling in on an agent ask if they will accept a lower commission, maybe 3 or 4 percent. Even a reduction to 5% would save you a lot of money.
  • If the buyer does not have an agent, your selling agent does not have to split the commission, so they may be more inclined to reduce their commission. Of course, negotiate this point before hand.
  • If the agent that sells your home will also help you find another home to purchase you will be able to negotiate a even lower commission because of two home sales.
  • Most real estate offices are quite large and must split the commission with the broker or even a home office, in case of it being a large franchise company. So it would be a good idea to find a smaller real estate company that would be more willing to take a reduced commission.
  • Find a real estate office that will list your home for a flat rate. If your willing to do all the work in selling your home you could find a company that will just put your home listing in a multiple listing service. Companies that offer fewer services may just be willing to charge you a couple hundred dollars for using the Multiple Listing Service(MLS).
  • If you have a real estate license for your state, whether you are buying or selling, you are entitled to half the commission. Check this for your own state. 
  • Sometimes the negotiation process is at an impasse, it may break the impasse if the broker takes a percent off his commission to entice the seller to close the deal. 

There are many ways to get around the 6% commission. There are many real estate offices willing because of the tough times to take a cut in commission just to make a sale. The way to get this right is to shop around until you find a broker willing to take a reduced commission.


  1. There are several realtors who advertise themselves as "discount" realtors and "rebate" half of their share of the commission -- 1.5 percent -- to you. I've had great luck using two discount realtors in two different states.

  2. Paula, another good way to save on commission. Thanks.


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