Who's the right agent for you?

Compare, research and shortlist now.

Compare Agents

Are real estate agent fees negotiable?

Profile photo of Samantha Thorne
Written by

Samantha is a Sydney-based real estate and home improvement writer. She is currently Head of Marketing at OpenAgent.

Learn more about our editorial guidelines.

When you compare real estate agents, you will find a possibly bewildering range of commissions and fees. Are they fixed or are they negotiable? Fortunately, commissions and fees are negotiable. You need to do your homework first, though. Then you will be in a position to negotiate lower fees and commissions.

Commissions and real estate agent fees

Since commissions were deregulated, real estate agents can charge whatever they choose to charge. Competition has kept commissions fairly low, but they can still vary from around 2.0 percent to 3.5 percent of the value of the home. If your home is valued at $800,000, you will be paying approximately $16,000 commission at 2.0 percent. If you pay 3.5 percent, you will be paying your real estate agent $28,000.

It's not likely the spread in your area will be that drastic. In most areas, commissions vary by around one-half to one percent. It can still make a difference. Half a percent on an $800,000 home equals an extra $4000.

Fees are a different matter. Fees are fixed, but some real estate agents may charge more for marketing fees than others. In some cases, they may charge a higher commission, but offer some advertising for free.

It won't be the full package, but you won't have to pay your basic marketing expenses such as signage and a listing on your agent's website.

How to negotiate real estate agent fees and commissions

If you're wondering how to negotiate real estate commissions like a pro, we've got you covered. By their very nature, real estate agents are competitive. They want your business, but you may need to convince them to lower their fees or commission. The best way to do this is to be informed when you meet them.

OpenAgent makes it easy for you to become informed. From the comfort of your home, you can compare commissions and fees before you approach real estate agents. Some things to look for include:

  • The commission they ask for
  • Whether some advertising is included in the commission
  • If advertising is included, what type of advertising is included?
  • What are their marketing fees for different types of advertising?
  • Do they expect upfront payment or do they deduct advertising after they sell your home?
  • Do they have a "no sale, no fee" policy?

Get information from at least three real estate agents in your area. When you visit and interview them in person, you will be armed with information. If one charges 2.5 percent commission and doesn't include any advertising, you can ask them why they don't do as their competitor does and include some advertising for the same commission. If their commission is half a percent higher than their competitors, ask them why. This puts them on notice that you've done your homework and are aware of local fees and commissions.

Your negotiations should extend beyond the costs of selling your home. For example, you have choices when you choose a real estate agent:

  • You can choose an open listing and list with more than one agent.
  • You can give a real estate agent exclusive authority. If you do this, the agent gets a commission even if you find a buyer for your home.
  • Sole agency differs from exclusive authority. If you find a buyer, your agent may not be entitled to a commission.

One mistake home sellers often make is to not read the fine print. You may get a good feeling about a real estate agent, only to be disappointed after you've put the house on the market. You want to find another agent, but didn't notice the "six month" clause in your agreement.

This is one thing that you can easily negotiate. Start with one month or 60 days. That will give you enough time to know if your real estate agent is acting on your behalf.

Can you over-negotiate?

It is understandable that you want to pay a lower commission and lower fees, but that shouldn't be your sole consideration when comparing real estate agents. Some real estate agents will charge a lower commission and lower marketing rates because they want to attract more clients. It isn't always true, but sometimes it may be because they have a bad reputation in the community.

If a real estate agent is too quick to accept your lower offer, is it because they need a client? If so, they may not be the best choice. A reputable real estate agent may charge a higher commission, but work harder on your behalf.

Real estate marketing fees depend on the amount of marketing a real estate agent does. They will always be willing to let you choose the extent of marketing you want to do. In general, marketing costs between one half to one percent of the cost of the home. It might include:

  • Signage
  • Professional photography
  • A flyer or brochure
  • Online advertising
  • Newspaper advertising
  • Advertising in real estate magazines
  • Distributing to a network of potential buyers on the agent's database
  • A video or drone footage

You have the option of accepting or declining any type of advertising. A good real estate agent will discuss all your options with you. If you skimp too much on advertising, you may be shooting yourself in the foot. Today, online advertising is the most effective form of advertising. Your agent will give you some online advertising options:

  • They may suggest hiring a professional photographer to take photos of your exterior and interior.
  • They will want to advertise your property on their website.
  • They may recommend advertising on real estate websites that have a greater reach.

If you have a good camera and are a good photographer, you may be able to take flattering photographs of your house. If not, hiring a professional photographer will ensure your house is presented in its best light. The photographs can be used online and when you produce a flyer or brochure, so it can be money well spent.

Almost all real estate agents have websites today. However, their reach may not be as great as the reach of sites like Domain and realestate.com.au. While the cost of advertising on these sites can be relatively high, the ads will attract more potential buyers.

The most important thing is to find a reputable real estate agent who will work on your behalf to sell your home at the highest possible price. If you choose the lowest commission and fee you're offered, you might save a few thousand dollars, but you also may lose when your property sells for $20,000 less than it is worth.