I'm hiring a broker to sell my apartment and wondering if I can negotiate the broker fee. Could I stipulate in the listing agreement that if the buyer has no broker, my agent gets a 3 percent commission, the same amount they would get if the buyer has a broker (in which case my agent would split the 6 percent commission equally)?
Broker fees are not set in stone, so you can negotiate them down, but it may not be in your best interest to do so, our experts say.
"In a commission agreement, everything is negotiable," says Jordan March, director of sales with Mirador Real Estate. "Feel free to create terms that allow you incentivize your broker, while [creating] scenarios that would allow you to maximize your net profits."
Typically, if there is a seller's broker and buyer's broker, the two will evenly split a 6 percent commission.
In the absence of a buyer's broker, it makes sense that you would question whether it makes sense to still pay the full 6 percent, so you can try to lower that amount in the listing agreement. But there may be a risk in going too low with the fee you set.
"Many agents will reduce the commission from the original 6 percent if a buyer comes directly to the property and no other agent is involved," says Deanna Kory, a broker with Corcoran. "But remember, when you have two agents on the property, the buyer's agent handles compiling and presenting the paperwork of the buyer, which is often a very time consuming and sometimes quite difficult task. And the seller's agent just reviews it, but doesn’t compile it. However, when there is no other agent involved, the exclusive agent does both sides of the transaction, which includes reviewing, compiling and presenting the package."
This amounts to a significant amount of responsibility, and your broker may find that a 3 percent commission fee won't cover the time and effort they invested in selling your property. More often, Kory says, agents will be willing to lower their fee by a percentage point in the case of a direct buyer, but are unlikely to go as low as 3 percent.
"A listing broker absorbs a lot of expenses, more so than the buyer's broker," points out Mark Chin, team leader at Keller Williams NYC. "They have to host events at the place, and my top agents often do the staging. They handle photography and cold calling to inform potential buyers of the listing. Frankly, once you add all that up, a 3 percent fee is not that profitable."
For many brokers, he adds, it's a matter of simple math. They might only sell two apartments per year, so naturally, they'll pursue—and devote more effort to—the jobs that will pay the best commissions.
"My strong suggestion is that you pay the full commission," Chin says. "If you want a professional team giving you full service, no discount broker is providing that."
Trouble at home? Get your NYC apartment-dweller questions answered by an expert! Send us your questions at [email protected].
For more Ask an Expert questions and answers, click here.
You Might Also Like