Should try to negotiate the commission?

Discussion in 'The Buying & Selling Process' started by roadworthy, 8th Jan, 2020.

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  1. roadworthy

    roadworthy Member

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    I'm looking to sell a vacant block of rural farmland. I've "interviewed" (chatted to) to a few local agents. The one who gets the vast majority of the major listings - and who sounds pretty on the ball compared to the other RE agents we interviewed - stated his commission is 3%+GST. The land should sell for around $700-900k.

    Some of the other agents I spoke to quoted as little as 2%.

    Should I try to negotiate his rate do you think? Is there a risk it will sour the relationship we have so far established with him? I feel like I might come across as insulting him if I do. Any thoughts? We are new to the selling process.
     
  2. David R Sutantyo

    David R Sutantyo Well-Known Member

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    No harm in trying I'd say, but you pay peanuts you get monkey, there's always going to be someone willing to do it cheaper out there.

    Things to consider for your negotiation will be, how high in demand your land is, how easy will it sell, etc.
     
  3. roadworthy

    roadworthy Member

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    how would you phrase the question to the agent?
     
  4. Trainee

    Trainee Well-Known Member

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    “Is there anything you can do about the commission rate?”
     
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  5. roadworthy

    roadworthy Member

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    is it sensible to mention that "some of the other agents are doing it for X%" or does that usually not go down so well?
     
  6. Morgs

    Morgs Well-Known Member Business Member

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    You could tell him that you like what he has proposed, but at the moment he is priced out of the range of the market. I'd phrase it along the lines of, if he can move to x% then he can have the business.
     
  7. Scott No Mates

    Scott No Mates Well-Known Member

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    If you go down this path back the decision don't then faff around with the other agents.
     
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  8. VB King

    VB King Well-Known Member

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    I am an agent.

    I do have flexibility on fee, some things I consider;
    - level of difficulty of the sale
    - absolute value of sale / commission
    - current listings and listings pipeline
    - how likely the sale will bring more business (eg owner occ style homes often attract more prospective vendors to open homes)
    - vendors circumstances

    When negotiating fee, I always want to make it clear the reasons I’m willing to negotiate, not that I’m simply happy to discount. After all, if you find an agent that can’t stand firm on their fee, would you expect them to stand firm with buyers on the price of your home?

    Your point on price negotiation is 3% of nothing vs 2% of something. Beware, a good agent that charges a little bit more could end up achieving a sale price that more than covers the difference in fee - the nett amount is what counts.

    I would recommend you get the agent of your choice to justify their fee. What do they bring that their competitors don’t that could make you feel comfortable they can achieve the best result?
     
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  9. Sackie

    Sackie Well-Known Member

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    Currently selling with an agent who charges 0.5% more than many agents. But the value they bring to the table I believe makes it well worth it. Cheapest person is not always the best. Usually its far from it.
     
  10. VB King

    VB King Well-Known Member

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    And should be able to squeeze at least an extra $5K out of a buyer on a $1mn purchase that more than compensates the extra fee.
     
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  11. roadworthy

    roadworthy Member

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    That's actually really helpful, thanks VB King (and the others who replied!)
     
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  12. Dean Collins

    Dean Collins Well-Known Member

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    My suggestion would something more along the lines of

    At the moment you are priced out of the market based on discussions with other agents, if you can do it for 2% commission you can have the business today however im happy for you to prove me wrong and it for you can sell it for $X dollars (eg 10% over his high point suggestion) in which case i'll happily pay your 3%

    Write a deal up like that and i'll happily sign it today.

    (and then hope he negotiates you to some happy medium eg 5% more than he suggested.......if he doesnt attempt it-he's probably going to be a crap agent selling for you).
     
  13. RoadRunnerPerth

    RoadRunnerPerth Active Member

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    Can it hurt to ask? That’s a serious question to agents on here ;)

    As mentioned above, I think the property in question has a lot to add to the answer; if you have a great property in a desirable location vs a ‘slightly below ‘’average’’’ property the agent is likely to consider any discussions regarding commission in a different light.

    The current market and number of properties for sale in the area at the time seem to make a difference. There aren’t a lot of properties in my area at the moment and a lot of letterbox drops by local agents chasing stock; when speaking to them they at the moment, they all seem very open to negotiation.
     
  14. GoOnAndTell

    GoOnAndTell Well-Known Member

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    Every agent i have come across is negotiable on the fee, and almost all use a line similar too"our rate is % and we believe its a fair fee however please put something too us ... "

    Typically we work out what we think is fair based off what we have paid in the past, if their ask is fair but high we offer, x% of the low end of their range (or the range we think is likely) and then yy% (often 10%) of $$ there after which means at the high end of the quoted range they make their full requested margin.

    I also recommend checking the marketing schedule as fees for admin and handling, copy (if they do it in house), etc... if any work is being done by then in house then literally this is what they are earning a commission for, i also read over the other costs and consider them closely.

    We are fine to pay above odds for above odds results but i light to link the two together, we have always gotten the agent we wanted to sell the house. My advice is find the agent who you think will be the best and then work with them on a deal you can sleep at night with.

    Have you been to opens run by that agency before? Did the agent show up on time, did they take your details, did they actively try and sell you the house (well), did they manage objections, did you receive a follow up call, did the avoid dropping lines such as 'owners in a rush' 'think we could haggle down'. Will the agent that has shown up and is pitching to you be the one selling it? How many people will be at every open. If its an auction what is the auction team like (go watch them!). As I said we pick the agent then negotiate from there.
     
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  15. 1hive

    1hive Member

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    bit of a thread necro, but having worked a lifetime in sales, management and coaching, here are a few points that may be helpful for others finding this in the future:

    Talk is cheap. Don't ever pay anyone for their ability to talk the talk, link the reward to performance. So he says he's the best (you believe it too), propose a win-win. This could well be a sliding scale (where he gets 2% if the final sale price is at your lower end, 3% if the final sale price is at his estimate, 4% if the final price exceeds expectations, etc..).

    Don't negotiate from a place of conflict. I see people approach negotiations from a place of anxiety and conflict - it's not a war, it's a peace negotiation (be approachable and fair, don't be afraid to voice your reservations and fears - you are entering into a partnership, if the other party is right for you - they will want to make sure you are comfortable with the partnership's terms).

    A win must be mutual, both parties should ideally be invested into the deal and share the risk and reward. Offering to pay above market rate without anything tied to performance is presenting the agent with all the reward and none of the risk.
     
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  16. kaibo

    kaibo Well-Known Member

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    What I have done is get your shortlist of agents (no more than 3), let them do the spill but when it's over and getting to commission. "Look we are committed to selling and will spend a bit on marketing, staging and an auction campaign, We are going to pay 1.5% (insert your number here) plus GST which is fair in this market for both parties to the agent who we think will do the best job"

    Even if your proposed rate is on the lower part of market rate in my experiece no agent has tried to negotiate it up or walked away

    Note that I have only sold and bought multiple properties in Melbourne but should apply everywhere unless there is some type of monopoly/cartel going on then the market rate is set by these cartels
     
  17. Fargo

    Fargo Well-Known Member

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    Yes you should negotiate fees, make sure they can earn a handsome fee, and that they aren't costing you profits. If the agent really believes he is worth his salt he should be happy to accept 2% up to a price point, say, 2% up to 750k and 5% for what ever is over, or 2% for 800k and 10% for over that. An agent needs incentive, some will just try to get a sale quickly so they can get paid, and be able to concentrate on other sales and so make more money..
     
  18. Archaon

    Archaon Well-Known Member

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    honestly, PC vendors should know what their property is worth based on comparables in the area.

    I haven't experienced any agents getting prices far and above what's expected, i constantly see them sold under-market locally.
     
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  19. TMNT

    TMNT Well-Known Member

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    In my experience with agents , i dont do well with negotiations, i just get the, "oh we will do better in "insert some generic sales pitch", thats why ours is higher spiel
     
  20. Ricky Adelaide

    Ricky Adelaide Well-Known Member

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    "While occassionally I might make a strategy based decision about the professional fee I charge, the vast majority of business i list is full fees". This is sales lingo for fee is negotiatble, but dont expect me to drop my pants. If they will under sell their pay cheque then they will under sell your property to the first offer. You want the agent who has got you to spend the most you would on a agent, because hopefully they are going to do the same with your home. If the agent is over promising or under charging your bond to get a less than good outcome. As an educated vendor (seller) you can know your local recent sales and have an idea about where you should sell but that is often the best outcome. Now you need to look at the reponsiveness of the agent, their knowlegde of the property/area, are they going to provide a great buyer experience and do they follow a repeatable process to give you a predictable outcome. Each time they are missing on any of these points you are losing money of your final sales price and the cheaper the agent the more likely they are not executing. Great agents who get great outcomes dont need to take cheap business, so point your self to get a great agent that has fun with negotiating you to a fee that you is higher than you would like but knowing is worth the investment - you can also throw a spanner in and ask to have the commission sliding based on the result :)
     
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