How to negotiate real estate agent commissions

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When you buy or sell a home, your real estate agent’s commissions can trim thousands of dollars off the sale price — but many consumers don’t realize you can negotiate those terms.

Nearly a third, 31%, of homebuyers and sellers negotiated commissions with their agents, according to a new report by LendingTree. A majority of those, 64%, successfully reduced the fees. LendingTree polled 2,034 U.S. adults in mid-January.

About 36% of homebuyers and sellers say they didn’t know they could negotiate a real estate agent’s commission.

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That’s understandable: When buyers are budgeting costs for a new property, they often focus on the bigger things, like the down payment and the mortgage, said Jacob Channel, a senior economist at LendingTree.

“Real estate commission fees are one of the sort of less glamorous or less talked out parts of the homebuying process,” said Channel.

“Thoughts like how much a real estate agent’s going to get paid or who pays the real estate agent probably aren’t at the forefront of your mind,” he said.

How real estate agent commissions work

In 2023, the average commission was 5.37%, LendingTree found. Rates typically range from 5% to 6%, translating to thousands of dollars and the earnings are usually split evenly between the buyer and seller agents involved with the transaction. The seller typically pays those commissions at closing.

The median home sale price by the end of 2023 was $417,700, according to the Federal Reserve. That would mean commissions at a 5.37% rate amount to $22,430.49.

Yet 48% of homebuyers and sellers didn’t know how much their agent received in commission for their latest home transaction, according to LendingTree.

“The homebuying and selling experience can be so overwhelming,” said Channel. “Unless you’re paying close attention, it’s kind of hard to come up with an itemized list of what exactly you spent and where exactly you spent it.”

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Some home sellers avoid these fees entirely by selling the home on their own. So-called for sale by owner homes represented 10% of home sales in 2021, according to the National Association of Realtors.

Technology has made it easier for Americans to buy and sell properties on their own through online marketplaces. But they may end up putting in more time and energy than they initially anticipate or make the process even more complicated, Channel said.

“[Real estate agents] are doing a lot of work behind the scenes that isn’t necessarily [or] immediately apparent to sellers and buyers,” he said.

Agents are often familiar with local housing market trends, know how to sell a property for a higher price and are familiar with the necessary paperwork involved in the transaction, said Channel.

“All housing markets have their own individual…

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