HOW TO NEGOTIATE AGENT’S COMMISSION -What you don’t know

Warren Oberholser
Warren Oberholser
Published on December 15, 2020

So you need a realtor. In this article I’ll cover everything from where to look for one, what questions to ask them, how to negotiate the agent’s commission and most important, how to find a realtor that is right for you. It’s all coming up.

I’m Warren with eXp Realty. As a realtor my goal is to help both buyers and sellers get achieve maximum results for one of their biggest investments, their home.

So you’ve decided to sell your home and now you need to find a realtor. A better way to say this is you need to find a realtor that best fits your needs. When picking a realtor, there’s a few ways to go about it.

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One, you could use a realtor in the past, you were happy with.

Two, a referral from a family member, friend or a neighbor.

Three, an agent who advertises in your area.

Or four, an internet referral company or an internet brokerage. Let’s go through each one.

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You can choose an agent you used in the past that you were pleased with their services. If this is a realtor who represented you when you purchased your home, you want to verify that they’re proficient with listings or selling properties.

They may be good as a buyer’s agent and this is someone who can show properties, write a purchase agreement, but listing your home is a totally different situation.

The next is a referral. A referral can be a great source, especially if it comes from somebody you trust.

Then there’s the agent who advertises regularly in your area

and the last is the internet referral companies and brokerages. They tend to offer discounts on agent’s commissions and in some states there’s companies that offer to purchase your home in cash.

Before you contact any of these companies, it’s best to do some research first. Try to find an independent blog site that has some actual customers posting recent experiences or reviews with the company you are considering using. This can be very helpful in determining the type and quality of service the company actually provides as opposed to what the advertise on their website.

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So you’ve now narrowed it down to an agent you’re considering to hire.

The next step is the agent interview. The main goal of an agent interview isn’t about determining if an agent answers the question right or wrong. Rather, it’s a method for you to determine how this particular realtor you’re considering to hire operates. This goes back to my main statement, finding a realtor that best fits your real estate needs and in this case, it’s all about selling your home.

Experience. One of the first questions should be how long have you been in the business? As a rule, longer tends to equate more experience, which should be a good thing? However, someone who’s been doing this for decades, maybe getting a little burned out or is not up on the latest promotional methods available with social media or how to maximize your properties exposure on the internet.

Does the agent work full time or part time? Inquire if they’re working as a full time real estate agent? Some realtors work part time. It may be due to a time commitment. They may have to look after their family or they want to travel. For others, they may have a part time job to supplement their income. Real estate can be a difficult business and it’s no put down if an agent is working part time to generate income or they need it for their healthcare benefits. So finding out if an agent works part time isn’t a judgment call, rather it’s an understanding of how much actual time and energy they’ll have to dedicate to listing and selling your home.

To effectively and efficiently list and sell your home, there are several steps to take and there is massive follow through and follow-up to get the job properly and successfully handled.

What is the agent’s work percentage when it comes to listings and buyers? Is it 50/50 or do they focus more on one over the other? If the agent you’re interested in is part of a team and they primarily work with buyers, find out if they’re going to be involved with your listing or do they refer you out to an agent who handles only the listings?

This brings me to my next question. Teams. Is the agent you’re interested in part of a real estate team? Groups and teams are becoming very popular in real estate business and how they generally work is a busy real estate agent who wants to grow their business, will invite other agents to partner up with them. This allows the busy agent, more real estate agents to share the workload and hopefully take on more business. Now, this can be an effective way for an agent to do business when executed correctly.

However, not all teams operate the same and some complaints I hear is the agent I hire is never around. I always get this new agent who doesn’t seem to understand the business.

Home evaluation. Ask them what the value of your home is and how do they arrive at it? They should provide you with a report called a comparative market analysis, a CMA. This is an outline summary of your home’s value. It will contain recent sold comps for homes that are similar to yours.

Contract negotiations. Ask them how experienced they are with contract negotiations, especially with multiple offers. When an agent gives you their answer, see how comfortable and familiar they are with this subject as opposed to just saying, “Yes, I can negotiate a contract well.” A good experienced listing agent should get excited about answering this question and hopefully provide some examples of how they operate.

Home preparation. Ask the agent, what their recommendations are to prepare your home to sell. This is especially important if your home needs repairs. Find out if they have a referral network of contractors they recommend you use.

Staging. Do they recommend you move out and have your home staged or do they have a stager who can bring in some small accent pieces to enhance the look of your furniture?

TourID:2061683~ Warren Oberholser, 1808 Valley of the Moon Road 94550

Marketing. How do they market your home? This would include professional photographer, videographer, drone work for both aerial picture and videos. A great way to understand how they will market your home is to ask for some examples of homes they just sold. It’s important for you to see if what they show you compares to what they promise you.

The commission. Probably the most debatable and quite possibly misunderstood subject in residential real estate is the agent’s commission. Before I get started on this, I want to point out I’m in California, so an agent’s commission and fee structure might be different in other states.

 The listing agent’s commission is negotiable. As a general rule, when a property is listed on the MLS, the commission that is paid to both buyer and seller agent is paid by the home owner. This comes out of their sale proceeds. The agent commission is determined by an agreed upon percentage of the sale price of the property. Traditionally, the overall commission range is between five and 6% and from that two and a half goes to the buyer’s agent or brokerage.

One more thing without getting into too much detail, the brokerage the agent is associated with, also takes a percentage of the agents sale commission. If the listing agent is proposing to charge you 6% and again the buyer agent is getting two and a half percent, so the listing agent would be netting 3.5%, you should definitely ask what does all their services include for this amount. Does a 6% agent pay for some repairs, staging, pre-inspection and extensive promotional package, et cetera? These are straightforward questions that you should ask the agent and if they are providing these additional services like staging, some repairs, pre inspections, then the agent most likely will need to be paid at a higher level.

Another thing to understand about commission, agents do not get paid until the close of escrow. So if they’re putting out money, they have to make sure that they’re getting properly reimbursed to cover all their upfront expenses.

If the listing agent is proposing 5%, you should still inquire what does this include? Is there a promotional package and if so, what is it? At 5%, they should have a professional photographer take the pictures and if warranted, they’ll need an aerial drone for video and pictures.  They should also be available to handle two to three weeks of regular hosted open houses. Other promotional items that may be included are glossy colored flyers and postcards sent out early advertising coming soon.

Now when the percentage is going below 5%, let’s say 4.5 to 3.5%, again the buyer agent is still getting two and a half percent, this now leaves the listing agent with less and less funds for promotion and operational costs, especially because the broker still takes their percentage.

Yes, we do see some agents, internet brokerages and referral companies advertise that they will sell your home for less commission. What you need to be very clear on is what do these agents or companies actually provide for you and what do they not cover.

So I’m not going to fall back on the old saying, “You pay for what you get,” rather know what you were paying for before you get it. The three big areas for successfully selling your property is preparation, promotion, and negotiation.

In addition to these questions I just went over. I would recommend generating a few questions that are specific to your home. For example, if it’s a condo, I would want to know, have you ever sold a unit in my development or are you familiar with the HOAs?

If your home has some unique or intangible feature like a view or amazing outdoor living space, I would want to know, “Hey, have you ever sold a home like this before and if so, let me see your marketing.”

 Once you finish your questions, the next one is reviews. You should be able to find an agent’s reviews online. If you can’t, you may want to ask them do they have any testimonial letters they can share with you?

The last is recommendations. Ask for a few past client references. If it’s possible, see if you can speak with them. I find a conversation can be very helpful in getting to understand how the agent works with their clients. You can ask the same questions we just went over.

Congratulations. You just completed my How to Find a Real Estate Agent That’s Right for You video. So what’s the next step? You need to go out and vet a few real estate agents to see who will be the best fit for you.

Before you go, let’s do a little practice for is by vetting myself.

Experience. I received my license back in 2009. I have always worked full time and I am extremely passionate and if you can’t tell, excited to be a realtor.

Warren’s Listing to buyer ratio

My percentage for listings versus buyers, it’s now currently about 55% listings versus 45% buyers. When I first started out, I was 80% listings, 20% buyers and this was because the majority of my work came from flipping homes with investors. This was an amazing opportunity for me to gain valuable knowledge and experience from home preparation, staging, marketing, and of course contract negotiations, especially with multiple offers.

This experience allowed me to develop a unique method or formula to handle the three main areas for selling a home; preparation, promotion, negotiation. Selling numerous homes over the years in different counties from Alameda to Santa Clara, gave me the unique ability to assess a home by just walking through it and then calculate what the return of investment would be if some repairs or renovations were performed.

Home value. I’ll provide for you a detailed CMA, comparative market analysis report, showing you the value range of your home.

Teams. I do not work in a team. I operate as a single agent. However, I do have an extensive staff through my brokerage, which handles all my clerical, promotional, social media and internet support.

I also have my own video production unit that operates inside my real estate business. This allows me to produce one of a kind high quality real estate videos for my listings. These videos are posted throughout on social media and real estate websites allowing maximum buyer exposure.

Reviews. Please see: Warren’s testimonialsWarren’s Zillow reviews

Recommendations, I’m more than happy to supply you with names and contact information for prior sellers

Commission. If I have the opportunity to sit down with you and discuss listing your home, I will definitely go into great detail what my commission rates are and what they cover. You will find my rates are very competitive and I always go the extra mile to ensure seller satisfaction.

If you’d like to know more about my real estate services, please reach out to me directly.  [email protected]

I hope you enjoy this article. Please email me any questions you may have. [email protected]

๐ŸกHome buyers guide ๐Ÿก

๐Ÿ’ฐ Free Mortgage Calculator ๐Ÿ’ธ

๐Ÿก E-book guide getting your house ready to sell ๐Ÿก

๐Ÿก De-clutter your home ๐Ÿก

๐Ÿ“ธ How to Prepare your home for the photographer๐Ÿ“ธ

[email protected]

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Warren Oberholser

eXp Realty

[email protected]a.net

(925)980-4603

DRE # 01861944

ALL MATERIAL PRESENTED HEREIN IS INTENDED FOR INFORMATIONAL PURPOSES ONLY. THE INFORMATION CONTAINED HEREIN HAS BEEN OBTAINED THROUGH SOURCES DEEMED RELIABLE BUT CANNOT BE GUARANTEED AS TO ITS ACCURACY. SUBJECT MATERIAL MAY HAVE ERRORS, OMISSIONS, CHANGES OR WITHDRAWAL WITHOUT NOTICE. ANY INFORMATION OF SPECIAL INTEREST SHOULD BE OBTAINED THROUGH INDEPENDENT VERIFICATION.

                                              

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