Negotiate Real Estate Commissions
Selling your home can result in realizing extreme amounts of real estate equity, however, commissions paid to your realtor can really eat into your profits. A recent Consumer Reports Magazine reported that 46% of sellers, during a specified time, attempted to negotiate a lower commission and an amazing 71% of these sellers succeed in reducing their commission costs. Even more encouraging is that of the sellers that succeeded in reducing their commissions by as much as 3% reported being just as happy with the service their realtor provided as those that paid higher commissions.
Typically, real estate agents charge around 5-6% of the selling price of your home in commissions. A house selling for $500,000 would cost the homeowner any where from $25,000-$30,000 in commissions! In markets like the current, the commissions alone may be enough to wipe away any equity gained during your time in the home.
Why not try to negotiate your commissions with a realtor? We are not married to our current realtor; you shouldn’t feel bad picking a different one offering a better bargain to you. Realtors want your business and in my opinion have to earn it. Try haggling the commission price down to around 3% with a few different realtors, letting them know you are considering others. Maybe the best you can get is a 4% commission. But compared to 6% in the sale of a $500,000 house, can save you $10,000 (approximately the cost to close on your new home).
As you can see, haggling your commission can be well worth the effort. Imagine saving $10,000 on commissions like in the example above. Doing so would allow you to borrow $10,000 less on your next home, which has the potential of saving you $12,756 in interest payments over 30 years. In total, your efforts of bringing down your commission from 6% to 4% could save you $22,756 if put towards your next home. Give it a try; what do you have to lose other than lots of money! $
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Great ideas! Negotiation has the potential to make you more on a per hour basis than just about anything else you could do.
I would recommend negotiating on the front end though. Too many times, the agent mentally spends that commission.