Real Estate Agent Commission

[Preston C.]

I know this probably varies based on location, but I was curious if any Realtors had tried competing on commission percentage. Or at least used lower commissions to incentivize sellers to use you.

When I got my license (KS and MO) I remember learning that you can't fix commissions and it is supposed to be negotiable, yet every local brokerage I know has a fixed 6% commission. Very few go below that and may do 5% but it's rare. My current broker won't typically allow less than 6% for listings, so I was thinking about switching to a brokerage that allows flexibility in commission so on higher end listings I could offer a better deal to sellers. It seems crazy to me how normal it is in the industry to do a flat 6% commission whether it's a 50k lot or a $1 million listing. When the majority of the time the cheaper listings are more work.

[Marcus Auerbach]

The question is are your clients paying for a service or for results?

If you just want a service to take photos and list on MLS you can find a flat fee service in your area. You will still offer 3% to the buyers agent - you'll shoot yourself in the foot if you cut that. It incentivices agents to stay clear of your listing and if they don't the buyer has to pick up the difference. Flat fee listings are often at 4% or 5% total - of which 3% go to the buyer agent.

If you pay for results - meaning your bottom line, what you pay in commission does not matter so much. Its the outcome you are interested in. I know that I make my clients on average more money than I cost. People who hire me, do that for a reason: they pay me for my experience and for results. They are not willing to save 5k on comission (1%) and risk a 20k or 30k lower result, that could have been avoided by an experienced agent. 

Agents who negotiate down their own commission typically do not fight very hard for their clients money.