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Sellers can negotiate real estate commission rates

As Denver’s real estate market evolves and home prices drop, will sellers turn more to negotiating commissions to maximize profits?

Before hiring a real estate agent, getting two or three quotes to find out precisely what services agents offer is critical.

“You get what you pay for,” says Shawn Li with 8z. “With at least two estimates, you can use the proposals as a litmus test to judge your potential agent’s abilities.”

Sellers typically shoulder the cost of commissions for both their agent and the buyer’s agent since those fees come out of the closing price. But because most sellers factor this sum into the asking price, buyers also help pay that cost.

With rates ranging from 5 to 6%, sellers may consider negotiating commission rates. Buyers also can negotiate commission rates but tend to do so less often.

Realtors may be more willing to consider reducing their commission rate if the property is new, requires minimal preparation, or is in a high-demand area.

Malisa Eakins with West+Main has been willing to negotiate her commission, especially with repeat clients.

But sometimes, it’s not worth doing that, especially with a previous client who was challenging. She walked away from a deal recently rather than reduce her fee. “My mental health was more important.”

Amount of work

During early 2022, when most homes were selling within days of listing, it may have appeared sellers’ agents had to do little work.

But buyers’ agents scrambled to help their clients find new homes, says Barry Willmarth, Willmarth Real Estate Services owner.

“They were writing dozens of offers, hoping and praying they were putting together something competitive.”

Flat-fee brokers

Flat-fee real estate agents and brokers set their services’ prices at the start, so the final sale price doesn’t increase what you pay.

But that cheaper commission may pose some risks, including:

  • Less attention: Flat-fee brokers may need to close more deals than traditional agents to make the same amount of money. That may limit the amount of time devoted to you and your property.
  • Potential conflicts: Because flat-fee brokers typically represent more clients, they may also represent both buyer and seller in the same transaction, which can create conflicts of interest.
  • Lower profit: Flat-fee brokers may be less experienced, and that lack of expertise could cost you in final negotiations.
    The flat-fee model works for some people, but selling real estate is more complex than putting up a sign and putting the home on the MLS, Eakins says.

Sellers need to work with an agent they trust and whose guidance they’re willing to follow.

For example, sellers sometimes must spend money before selling a house.

“It’s easier to make an appliance change rather than choke down a $10,000 price reduction because the buyer isn’t happy with the kitchen.”

Using an experienced, reliable agent can potentially save both sellers and buyers thousands, Willmarth says.

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