Despite rate hikes, most real estate markets in North America still look incredibly strong, with owners enjoying a cushy “seller’s market.” Moreover, with generational trends slowly ticking forward, more baby boomers are considering downsizing – leaving their multi-room homes behind for something a little more modest. And more millennials are eager to enter the market, down payment in hand.
All these factors (and more) probably make it a good time to sell. But if you’re a prospective home seller, you may encounter setbacks and unforeseen expenses that complicate the process. First, there’s the matter of value renovations (a topic for another article). Next, there’s the dreaded realtor commission fee – a healthy skim off the top of your profit margin that can dissuade some sellers from trying.
Let’s talk about those fees. Contrary to popular belief, realtor fees and commission rates aren’t “non-negotiable.” Armed with a little foreknowledge, a techy online marketplace, some tactical maneuvering and self-advocacy, you can find the best realtor fee – and make that money work for you.
In this article, let’s review a few tips for negotiating realtor fees and commissions.
Research Fair Rates in Your Area
Every market is different. In some real estate markets, the going commission rate can be as low as 3% of the final purchase price. In others, it can be as high as %7. It’s important to note that these averages are descriptive – they merely illustrate the status quo, and are not necessarily indicative of the effort a realtor has to put into a sale. That said, it can be a hard sell to encourage a realtor in a “7% area” to take a 3% commission rate.
The point here is to do some research beforehand. Understand what the average is so that you can gently push against it. Then, ask yourself how challenging your home sale will be. If you live in a hot seller’s market, where properties routinely fly off the market in a matter of weeks, asking a realtor to take a reduced commission wouldn’t be unreasonable.
The bottom line is the more research you do, the better poised you are to state your case.
Take to an Online Marketplace
In the old days, sellers had little recourse for viewing their options. You could methodically work your way through the Yellow Pages, asking each realtor for their rates and services. But even then, many realtors purposefully kept their fee structures opaque.
Nobul changed all of that. Nobul is a real estate digital marketplace where sellers can openly see various agents’ commission rates, transaction histories, services, verified reviews, etc. In other words, you can compare a realtor’s asking price against their track record to see if you’re getting a good deal.
As Nobul CEO Regan McGee rightly stated in an interview with Medium, “Real estate transactions have the single largest fees people pay and the average person pays those fees 11 times in their lifetime. For us to be disrupting this market is extremely exciting.”
How is Nobul “disrupting” the market? Beyond enabling consumers to view realtor commission rates, the platform also allows sellers to foster competition. On Nobul, realtors compete for a seller’s business by offering more attractive services and (you guessed it) lower commission rates. By capitalizing on the “marketplace” model, Nobul has created an environment where sellers are in the driver’s seat – rather than the other way around.
Think Seasonally and Share the Load
If you’re still having difficulty landing a lowered commission rate, you have alternative options. Two of the best ways to make a lowered commission rate more attractive are a) selling in the off-season and b) sharing a few responsibilities with the realtor.
When you sell in the off-season, you may catch certain realtors during a slow period where they’re more likely to prioritize any work over high-value work. Likewise, you can make a strong case for a low commission rate by assuming some traditional realtor responsibilities (staging, inspection, private photography, etc.).
Wring Value from Your Fees
If you still need help lowering the commission rates, your last resort is to approach the subject another way. If a realtor won’t budge on rates, they will budge on services offered. You can wring value from your fees by ensuring that realtors go above and beyond. Get them to commit to an aggressive, multi-channel marketing strategy rather than relying on the MLS; make sure they hire out quality home staging and photography; and, as challenging as it may be to get in writing, ensure that your realtor maintains quick, open lines of communication.
Don’t let scary commission rates discourage you from selling your home. Follow the straightforward tips above to make sure you get a competitive rate for a top-notch job.