Negotiating one's real estate commission is a critical part of being a real estate agent. As any agent knows, there is no "salary" in real estate - only commissions.
While there aren't fixed rates of commissions (that's illegal actually), there are typical rates in different areas all over the world. Agents will know what the going commission rate is in their field.
Setting the Stage
Before any contract is signed and the process of listing a home begins, seller's agents typically negotiate their commission with the seller. Depending on the listing price of the home, seller's may have a hard time offering higher percentages like 6% or so.
This is where agents must remember their value and worth and respectfully negotiate. Especially if a listing requires agents or their brokerages to spend a lot of marketing money, that needs to be accounted for. Highlight exactly the services you offer an as agent when negotiating a commission.
Occasionally, during the closing process - a seller might want to reduce the commission they pay. This is a very tricky time to be an agent. On one hand, if an agent doesn't agree to a lower commission, the deal may not close at all. Which, of course, means no commission.
How Commissions Break Down
First things first, seller's and seller's agents determine the commission rate. Then, a split is decided. Split for what? The buyer's agent! The selling agent kicks a percentage of the overall commission first to the buyer's agent.
But that's not all. After sending some money to the buyer's agent - a selling agent typically has to split some of the remaining funds with their brokerage. Again, this amount is predetermined and usually the same for each transaction an agent closes.
Agents need not worry too much - the more deals they close, the more they will earn. But, this can understandably be daunting during market downturns or other times of slow business because no money is coming in.
Keep in mind to persevere, know one's worth, and do your best and the success will follow.
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