Negotiating Real Estate Agent Commission: 11 Expert Tips to Reduce Commission

Negotiating a lower real estate agent commission – which currently averages 2.89% across Australia - can lead to big savings.

Even trimming a small percentage off the agent's fee can have an impact. For example, real estate agent's fee from 3% to 1.5% will save you just over $10,000 on a $780,000 property in Australia.

Unfortunately, negotiating a lower commission with a real estate agent isn't always easy. Only about 22% of recent home sellers discussed commission rates with their agent and managed to negotiate a reduced fee.

This shows that while it's possible, it requires a well-planned approach and some negotiating skills to succeed.

To help you navigate this process, we've compiled 11 expert tips to make negotiating more manageable.

One effective strategy to reduce agent commissions is to use a service that negotiates commission rates for you.

For example, Minty Real Estate can connect you to experienced agents from well-known agencies meaning you'll get the expertise of top agents while paying only a 1% listing fee, about half the standard rate.

💰 Get a 1.5% commission fee — no negotiating required

11 steps to negotiate real estate agent fees

1. Determine your negotiating power with market analysis

Real estate agents may be more open to negotiating commissions in the current housing market with higher interest rates and fewer active buyers and sellers.

"Start by estimating how long selling might take (shorter for starter homes, longer for luxury properties), then calculate the typical commission an agent would earn and break it down into an hourly rate." a past home seller said.

For example, a house expected to sell in two weeks might only take a real estate agent 30 to 40 hours of work. Earning a commission of $20,000 would equal an hourly rate of $500 to $667.

This calculation helps you determine a fair fee to propose to your agent, relative to the standard commission.

Factors impacting your negotiating power

Your home’s value. Higher-priced homes, especially in the luxury market, often attract lower commission rates without the need for negotiation. This is because even a smaller percentage of a high-value property can yield a substantial commission.  

A small slice of a $1 million pie could be a lot bigger than a large slice of a $350,000 pie — but both may take the same amount of time and effort to sell. Homes with a lower market value might not offer as much flexibility in rate negotiation.

Your home’s desirability. The appeal and condition of your home can influence an agent's willingness to negotiate their commission.

Agents might be more inclined to lower their rates to secure your listing if your home is desirable – well-maintained, in a prime location, or featuring popular amenities.

Homes that present challenges in selling, such as needing significant repairs or having unique features that might not appeal to the general market, could mean agents are less open to reducing their fees.

Your local real estate market. The state of your local real estate market is another crucial factor. In a seller's market, agents might be more flexible with their commission rates. The quick turnover of properties means they can afford to accept a lower rate for a faster sale.

"For example, if properties in your area are selling rapidly, often within 30 days, the agent's marketing expenses are likely lower, which could be a point for negotiation," says one of Minty's agents in Sydney's inner-west.

In slower markets, agents may reduce their rates to attract scarce business.

The sale season. The time of year you choose to sell your home can also impact your ability to negotiate commission rates.

During peak selling seasons, when the market is bustling with activity, agents might have less incentive to lower their rates. During slower periods or in markets with low inventory, agents may be more open to negotiation to secure any available listings.

2. Know the average commission rate in your area

Real estate commissions can vary by state, city, and suburb. What's reasonable or a good value in one market may seem expensive in another.

A clear understanding of the local average commission rate provides a solid foundation for your negotiations. This knowledge ensures that your discussions with potential agents are grounded in the realities of your local market, leading to more reasonable and agreeable terms.

» Find the average commission rate in your state

3. Shop around for the best possible value

The real estate market is filled with diverse agents and agencies, each offering unique pricing and service models.

While some are firm on commission rates, others may be more flexible, adjusting their fees and services to better align with your specific requirements.

Consider exploring discount agencies or agent matching services, which can provide built-in commission savings without negotiating. However, be mindful of potential differences in service quality.

Do your homework to find the right agent or service for you. Interviewing at least two to three agents or agencies can help you gauge who offers the best combination of cost-effectiveness and quality service, ensuring you find the right fit.

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4. Invest in your home to improve its appeal

Consider investing in pre-listing improvements to make your home more attractive to buyers. Simple enhancements like repainting, landscaping, or carpet cleaning can boost your home's appeal.

By investing in these upgrades, you not only make your agent's job easier but also potentially increase your home's value. In return, your agent might be more inclined to negotiate a lower commission rate.

For a more comprehensive approach, consider paying for a pre-listing inspection before making any improvements. Identifying and addressing potential issues early can streamline the selling process and prevent delays or complications during negotiations.

5. Create value for the agent

Selling a house involves more than just listing it; agents invest time and often cover upfront costs like professional photography and marketing. When discussing commission rates, consider how you might help reduce these costs or add value in other ways.

For example, if you're indifferent to hosting open houses or creating 3D tours, let your agent know. Or, if you have connections, like a professional photographer friend willing to take listing photos, this could be a valuable contribution.

Remember that the agent wants to sell your home fast and for the best possible price. Opting out of essential services to cut costs might backfire, making them reconsider the partnership. It's about finding a balance that benefits both you and your agent.

6.  Can you avoid paying a buyer's agent?

To bypass the buyer's agent fee, you can target unrepresented buyers. This scenario might occur if you already have a potential buyer in your network, encounter an interested party through social media, or find a buyer through other direct channels.

Another option is to consider selling to a company that buys houses for cash. These buyers don't need any real estate agent involvement, eliminating both listing agent and buyer's agent fees.

However, cash home buyers often propose lower purchase prices than the traditional market. Weigh the potential savings in commission versus a lower offer price to see if this route aligns with your goals.

7. Negotiate with an established agent

Opting for newer agents with less than two years of experience might not always be the most strategic choice.

Contrary to common assumptions, newer agents don't necessarily charge less. They often face higher agency fees and closer supervision, limiting their flexibility in offering competitive commission rates, says Nelson, a Sydney real estate professional.

"More established agents with less overhead and agency fees might be more flexible with negotiating commission rates," he says.

Additionally, the limited experience of newer agents can be a big disadvantage. They might not have the comprehensive market knowledge, negotiation expertise, and established track record that seasoned real estate agents offer.

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8. Avoid paying costs fees

Be vigilant about paying "junk costs" such as agency, administrative, or transaction costs, says Nelson. They're added to the commission and can increase the total cost of selling your home.

These types of fees are not mandatory and can often be negotiated. Here are some tips to avoid paying these fees.

• Ask questions in the interview. Don’t hesitate to ask why each fee is being charged and how it contributes to the sale of your home.
• Negotiate. Remember, every aspect of the agent's fee structure is open for discussion. Discuss a fee with your agent or agency if it seems unreasonable or unclear.
• Compare agents. When interviewing agents, ask about all potential fees. Choose an agent who is transparent about not only their commission rate, but all fees charged.
• Seek legal advice. If you're unsure about any fees, consider consulting a real estate attorney for clarification.

Working with a discount real estate agency like Minty Real Estate can save you all this work. Minty carefully selects agents based on their performance and commitment to transparency, ensuring you won't face hidden or excessive fees. Minty has also successfully negotiated a competitive 1.5% listing fee with top-rated agents, offering you big savings without compromising on service quality.

» Find top local real estate agents

9. Sell and buy with one agent

Engaging the same agent to sell your current home and buy a new one can be a smart negotiation tactic. This dual arrangement presents a more lucrative opportunity for the agent, as it doubles their potential earnings from you as a client.

In such scenarios, agents are often more open to discussing reduced commission rates. While they might accept a lower percentage for the sale of your home, the combined income from both transactions can still result in a large fee for them.

Finally, this approach also offers the convenience of working with a single professional who becomes deeply familiar with your preferences and needs. It can be a win-win situation for both the agent and their client.

10. Explore dual agency

Dual agency, where one agent represents both the seller and the buyer in a transaction, can lead to reduced commission rates. In this setup, the agent earns the entire commission, incentivising them to offer a lower combined rate.

This situation often arises when a seller finds a buyer independently or when a buyer without representation shows interest in your property. By handling both sides of the deal, the agent can streamline the process, potentially reducing costs.

However, dual agency comes with its own challenges, including potential conflicts of interest, as the agent must balance the needs of both parties. It's crucial to understand these risks, and it's worth noting that dual agency is not permitted in some states due to these complexities.

For more detailed information on dual agency and its implications, research and understand your state's specific regulations and guidelines.

11. Be prepared to walk away (if necessary)

Any negotiation aims to reach a mutually agreeable outcome that benefits all parties involved. However, it's equally important to be prepared to walk away if the terms don't meet your needs or expectations.

Before setting firm boundaries or deal-breakers, ensure you're prepared to end negotiations if those lines get crossed. A bluff can backfire, leading the other party to push harder, and diminishing your chances of reaching a satisfactory agreement.

Being able to walk away gives you a bit of an edge in negotiations. But, use this power wisely and with a bit of strategy. You've got to stand your ground on what you need, but also be ready to bend a little so everyone ends up happy.

How to ask a real estate agent to reduce commission

Discussing commission rates with your agent can be a delicate matter. It's crucial to approach this conversation with the right timing, respect, and understanding.

Here's how to effectively negotiate agent fees while maintaining a professional relationship.

Know the right time to negotiate. Timing is everything. Start the conversation about commission before signing any listing agreement.

Typically, commission discussion happens during your initial contact, an in-person meeting at your property, or after receiving a comparative market analysis (CMA) report. Wait for the agent to bring up the topic of fees, then get into the negotiations.

Maintain professionalism. Approach the conversation with respect and courtesy. Remember, you're dealing with a professional, so try to be polite and considerate in your request.

Acknowledge the agent's value. Agent's often incur out-of-pocket expenses for their services and rely on commissions as their primary income. Recognise the value and effort they bring, so they don't feel undervalued.

Share your circumstances. Be transparent about your financial situation and why a commission reduction would be beneficial. For example, if you need extra funds for a down payment on your next home, explain how a lower commission could help meet your financial objectives.

Be prepared for compromise. Enter the negotiation with an open mind and be ready to find a middle ground. While you might not get everything you ask for, a willingness to compromise can lead to a good deal for both parties.

Who pays agent fees?

Sellers typically cover agent fees for both their agent and the buyer's agent.

The current average real estate agent commission is 2.89%.

The commissions for both agents are usually included in the home's final sale price. For example, on a $1,400,000 home with a 3% total commission rate, the seller would pay the agents $28,000 from the sale proceeds at settlement.

How much can I save by negotiating real estate agent commission?

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Even a 0.25 to .50% reduction in your agent's commission rate can translate into thousands of dollars of savings, so trying to negotiate is worthwhile.

For example, reducing the total commission down from 2.50% to 2.00% on a $500,000 home sale would save you $2,500.

Most agents talk about compensation with their clients and are open to negotiating.

Additionally, discount services like Minty, with built-in low rates, continue gaining market share and reshaping consumer expectations about what a real estate agent's services should cost. Minty, for example, offers a 1.5% listing fee.

As a result, many agents and brokers are becoming increasingly flexible on pricing and service structures — particularly when attracting sellers with desirable properties in high-demand markets.

Try our calculator to see how much you could save by paying a lower real estate agent commission.