Tips and Traps When Negotiating Real Estate: Negotiate the Commission

Negotiate the Commission

I have a good friend who to this day is fond of recalling the first time he ever listed a house with an agent.

“She came in, we talked a little while, and then she said she wanted a 7 percent commission. I was flabbergasted. I knew that other agents in the area were charging only 5 percent. She was 2 percent higher. When I began to protest, she wiggled her finger at me and said, ‘You’ve got a miserable little house in a crime-ridden neighborhood. You should be glad I’m willing to list it at all!”’

There’s usually a pause in the story at this point where I’m sup­ posed to ask, “So what did you do?” He’s a good friend, so I usually go along.

“Why, I threw her out! I told her I didn’t need to sell. We lived there another five years and then I sold it myself for twice what we paid! Now that’s getting a good deal.”

I suppose this story is supposed to have several morals, one of which is that agents are greedy know-nothings and another is that my friend is a real wheeler and dealer. The truth of the matter, how­ ever, is that I knew him when he lived in that house and it indeed was small, miserable, and in a terrible neighborhood. I can under­ stand why an agent would want a bigger commission to sell it.

Further, because he didn’t list, he had to live there another five years until all real estate took a big hike in price and any fool could have gotten twice the purchase price of five years earlier.

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My own moral here is that negotiating the real estate commission with the agent doesn’t necessarily mean you will want to lower it. You may want to raise it to get a quicker sale!


Beware of any agent who says that the “fixed” or “standard” or “regular” commission is a given amount. In all parts of the country, the rate of commission paid to a licensed agent to list your house is entirely negotiable between you and the agent. There is no set rate. It’s whatever the two of you agree upon.