“All we need is the REALTOR® to lower their commission…”

We’ve heard it time and time again; “We are so close to where we need to be on this house. Why can’t the REALTOR® lower their commission to make the sale?”

The reason…

The commission is written into the terms of the Listing Agreement between the seller and the Brokerage. This is a contract which provides compensation to the brokerage for providing a service and is typically based upon the amount of marketing and expertise the seller’s agent brings to the selling party.

Typically, the listing broker will offer a buyer’s agent a percentage of the commission offered by the seller.   There seems to be a thought process by buyers that if they purchase a home using the listing agent and not having their own buyers agent that they will “get a deal”.   What they don’t understand is that the listing agent is still going to earn the commission as per the contract with the seller, and that they may cost themselves more money in the long run by not having their own representation. 

If the buyer is not represented, the REALTOR® would be acting as a dual agent, which in reality can be more difficult for the REALTOR®.  Besides having to make sure that they are being fair to both parties in negotiations, they have to do twice the work with scheduling home inspections, working with the buyer on financing, etc. 

REALTORS® only receive compensation when a home actually settles which can sometimes be a long process.   So when you really think about it, is it really fair to ask someone to reduce their paycheck for your benefit?  This also holds true when negotiations may come to a standstill between a buyer and seller.  Sometimes they look to the REALTORS® to pitch in to make it happen.  Again, as a professional, would you appreciate someone reducing your pay?

Keep your budget in mind when searching for a new home.  If you are looking at houses where you are asking for an agent to reduce their commission, you may be out of your price range.  Remember that a buyer’s agent will help guide you to the houses that fit within your budget.