By Jamie Barrie P roperty prices are not the only things being nego- tiated these days in real estate. As seller try to offer the lower possible selling price to potential buyers they are looking to get the most money and return on their investment for the lowest cost. This trend has agents seeing a large increase in the number of custom- ers attempting to negotiate sales commission fees. For decades the standard has been 6 percent of the sale price. For example, an agent receives commission of $24,000 for the sale of a $400,000 property. A new survey suggests Americans are negotiating that number downward. Agents are responding to the trend with over sixty percent of sellers in the U.S. reporting that they got a discount from their agent and experts say as the marketing gets more competitive that number will increase. By negotiating with your rate with your agent your savings can be significant with the average being 41 percent off the standard commission according to real estate broker- age Redfin, which is a residential real estate company founded in 2004, that provides web-based real estate database and brokerage services. These numbers are significant; for the seller, they are putting more of their investment back in to their pocket, while the agent has it comes out of theirs. In the example above using a sale of $400,000 property, this new trend would reduce the $24,000 agent income to about $10,000. The big question is why would agents do this? The answer is in the numbers. Realtor.com reported in that the number of homes listed for sales was down 4.2 percent from the previous year. The low inventory numbers force agents to fight harder to get property listings and thus gives sellers more leverage, and when negotiating it is all about the leverage.
In markets like San Francisco and Dallas inventory shortag- es have driven up prices and reduced the time a property is on the market. Those two trends make it easier for an agent to accept a lower commission percentage. Many feel there is a simple phenomenon skewing the report numbers. Expensive homes produce large fees and there- fore agents have significant wiggle room when they are negotiating for the sale. Very low priced homes offer agents small commissions and cutting those percentages often makes the income from selling those listings not worth the investment of time and energy. Additionally a seller planning to use the same agent to sell their house and help buy a new one has some leverage in their negotiations. However, the Redfin survey suggests even if your property value is low and you do not intend to buy another house it is worth seeking a discount.
Any salesperson, especially any experienced realtor would tell you, it doesn’t hurt to ask.
33
SEPTEMBER 2016 • SPOTLIGHT ON BUSINESS
Made with FlippingBook - Online magazine maker