Sellers' agents can show their value in commission negotiations

November 8, 2016

Long-time real estate professionals have likely never seen a seller's market this strong last for this long. It has been years since the recession ended, but the sector still heavily favors homeowners looking to sell. That reality, in turn, makes it easier for sellers to try to simultaneously boost their asking prices while lowering the share their agents get in commission. This issue can be hard on agents in some ways, but there are still methods to maximize a commission by demonstrating value in the negotiation process.

One recent poll found about 3 in 5 sellers these days have been able to get their agents to take a lower-than-normal commission, according to Redfin. And the reduction was often significant, coming in at about a 41 percent discount from what agents would normally seek. That drop-off can be a significant amount of money for agents to miss out on, and the trends driving that feeling about discounts might be surprising.

A huge seller's market
Indeed, the Redfin survey showed nearly 7 in 10 sellers think it might be worth exploring alternatives to working with an agent in the traditional way. And while the vast majority of sellers still relied upon an agent to facilitate real estate sales, those who chose not to did so because they wanted to save money.

This trend apparently arose due to the fact that the inventory of homes for sale nationwide remains extremely constricted, according to Bloomberg News. That fact puts sellers at an advantage in negotiations. However, it might also be that homes still go for such high prices in comparison with where they were a few years ago that sellers' agents don't necessarily mind taking a slight cut to facilitate a deal. Elizabeth Weintraub, who leads a team of agents in Sacramento, California, and has been in the field for 40 years, told the news agency the tenor of meetings with would-be sellers have shifted sharply in recent years, as they come to the table almost expecting agents to take less in commission.

What can agents do?
In some cases, the expectation of negotiations seems to come because sellers are skeptical of the value they can provide, according to Realtor Magazine. There are a number of arguments against lowering a commission, but the one that might work best is that if agents don't take as large of a commission, they won't have as much money to properly market a home and get it sold as quickly as possible. Often, people may think agents just put every cent of a commission right into their bank accounts, rather than using it to help fund their business operations. Because that isn't the case, clearing up the misconception is vital to agents commanding as large a commission as they can.

"Homeowners aren't saving money by getting a lower commission," real estate trainer Darryl Davis told the magazine. "They're actually cheating themselves out of marketing exposure. You need to explain that."

Moreover, agents should work to highlight why their skills are valuable, showing off everything from their abilities to properly price a home so that it moves quickly to how to market it across a number of platforms. That, too, is something sellers might not think about or simply take for granted.