Can you negotiate the buyers commission on a sell?

[Brandon Patrick]

Hello,

I am interested in selling my two Airbnb properties and buying an apartment complex.  After that I don't plan on doing any other transaction for a couple years unless it is to sell my primary residence for a bigger home with a growing family. I was thinking of getting my realtor's license for my own deals, but I don't think I have the time since I am a full time Loan officer. 

Right now a lot of selling agents are offering 1% commission with the buying agent receiving 3%. Both of my investments are located in a Lake Town valued between $550k-$600k. My question is can I or should I try to negotiate the commission with the buying agent or agents of my two properties? Lets just say in today's market I sell both of my homes for $1M. That would be a total of $40,000. 

Side note. I know some people might have different opinions on Airbnb's and apartments, but as Airbnb owners know it can come with alot of work. Especially since mine are 200 miles away from where I live in vacation town. Party goers in the summer and snow birds in the winter. It just takes too much of my time dealing with routy guest and damaged property.  Instead of hiring a management company 20% in the summer and 15% in the winter I prefer to just roll both of them into an apartment complex near by that I can easily maintain even if it means less of a return.

[Curtis Bluth]

Quote from @Brandon Patrick:

Hello,

I am interested in selling my two Airbnb properties and buying an apartment complex.  After that I don't plan on doing any other transaction for a couple years unless it is to sell my primary residence for a bigger home with a growing family. I was thinking of getting my realtor's license for my own deals, but I don't think I have the time since I am a full time Loan officer. 

Right now a lot of selling agents are offering 1% commission with the buying agent receiving 3%. Both of my investments are located in a Lake Town valued between $550k-$600k. My question is can I or should I try to negotiate the commission with the buying agent or agents of my two properties? Lets just say in today's market I sell both of my homes for $1M. That would be a total of $40,000. 

Side note. I know some people might have different opinions on Airbnb's and apartments, but as Airbnb owners know it can come with alot of work. Especially since mine are 200 miles away from where I live in vacation town. Party goers in the summer and snow birds in the winter. It just takes too much of my time dealing with routy guest and damaged property.  Instead of hiring a management company 20% in the summer and 15% in the winter I prefer to just roll both of them into an apartment complex near by that I can easily maintain even if it means less of a return.

Hi Brandon,

Technically the buyer agent’s commission should be negotiated with their buyer client, however in practice it’s typically half (or a specified portion) of the commission that is agreed upon by the listing agent with the seller. So for example, if a listing agent negotiates the industry norm of 6% to list, it’s very likely that the buyers agent will get 3%.

That said, there is definitely an art to commissions and I would caution you on simply pushing for the lowest number. There are plenty of agents in the world, and they’re not all built the same. You may get a lower price on paper, but you’ll also likely receive less experience and assistance that you would normally get with a better agent that likely ‘know their worth’ and don’t take listings under their preferred commission split.

Myself for instance, I always recommend 2.5% or more going to a buyers agent since they do a lot of work during a transaction and should be compensated accordingly. In the past I’ve gone as low as 2% as the listing agent depending on relationships, competition, or potential future business that could come from the listing. 

You should also consider the reality of our current marketplace and the ability to sell properties is getting frothy with the rapidly changing debt markets. Agents like myself know that we’re valuable now more than ever getting properties sold for sellers hoping to cash out, and expected to be compensated for it. Plenty of 1-off agents are already disappearing, so the true producers will be the ones left.

my advice? Pay for quality service, and expect quality service. An agent should be an advisor and a team player, not a used car salesman. And if you hire a great agent that helps with the negotiating on deals, you can expect them to help you get a great deal on your apartment purchase as well.

Best of luck and hope this helps!