A real estate broker reveals the best way to negotiate a commission

By Malcolm Carter  | March 12, 2012 - 7:48AM

Commissions always are negotiable, no matter what a broker may tell you.   That said, how successfully you can negotiate the commission on selling your apartment often depends on technique and circumstance.  

Here's the deal:

1. A good place to begin the discussion is to ask for a summary of the work that the broker promises to undertake. Be sure to express an understanding of the time, expertise and added value involved, and only then ask whether the broker would be willing to accept somewhat less the proposed amount.  At the same time, bear in mind that even a one-point reduction in a 6 percent commission is not as minimal as that number may sound: It amounts to more than a 16 percent reduction in the broker's income for that listing.

2. The most successful brokers may be less inclined to be flexible because of the high value they place on their track record.  The greatest flexibility will be for properties listed for seven figures. You may also gain some leverage if you are a repeat client and/or planning to use the same broker to help you buy your next home.  You'll have less leverage if your apartment seems likely to take a long time to sell for reasons including high monthly carrying charges, inconvenient location, eccentric layout, strange decor, poor condition and/or presence in a building with financial issues.

3. Traditional brokerage firms take anywhere from 25% to 50% of an agent's commission depending on sales volume. Some of the non-traditional newer brokerages, such as the one I am affiliated with, Charles Rutenberg Realty, may take no more than a couple of thousand dollars, no matter how big the sale--so these agents have a lot more room to negotiate. 

4. Brokers often respond to a seller's request by saying that buyers' brokers won't show properties with commissions below the standard amount, and there's some truth in that statement. That's why you can try asking your broker to shave, say, half a percent from her/his fee while offering the full amount to a broker whose buyer goes to contract and closes.

5. Brokers will often be more amenable to negotiating commissions on "direct" sales--i.e., where the buyer doesn't have a broker claiming half the commission.
Also worth negotiating is how to handle a buyer that the seller brings in. Brokers generally agree that if a potential buyer already has been in touch with the seller, a smaller commission than usual would be acceptable--such as a little over half the standard amount if the buyer does not have their own broker. However most brokers will only agree to cut their fees for buyers who contacted the seller before the listing agreement was signed. 

Beyond commissions, standard listing agreements are customizable in other ways as well by the seller or the broker:

  • The length of the exclusive listing.  A reasonably priced property can easily can sit on the market for six months. So while there's nothing unreasonable about a six-month listing agreement, you can certainly suggest a shorter period months with the expectation of renewal, provided the seller is satisfied with the broker's work.
  • Price cuts: When and by what amount (or how that will be determined) will the asking price be reduced should the property fail to find a buyer.
  • Staging/updating: What improvements will the seller will make to the property such as making cosmetic updates, remodeling or removing clutter.
  • Marketing and reporting: How much advertising will the broker buy and where? How often open houses will be held? How often will the broker give reports on viewings and what will they contain?


Former journalist Malcolm Carter is a Manhattan real estate broker who has seen it all and blogged about much of it.



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