The first thing most people do when they’re thinking about selling is the discussion around real estate agent commission. Many people think real estate commissions are excessive, given the flashy style of most agents and there is always a consistent theme amongst homeowners that they do not want to overpay on their commission.

The trouble with negotiating commission with an agent is that they are often expert negotiators, and this may be the first time you have negotiated commission rate. Even worse yet, you may not even know where to start and what the average real estate commission is.

The tips below on how to ask a real estate agent for lower commission can help you find the market rate, improve on that rate and potentially save you thousands of dollars. Imagine two homeowners in the same suburb, both selling their property with a 10% to even 30% difference on commission rate. For a house worth $2,000,000 that could be a saving of over $10,000!

5 Steps - How to Negotiate Commission with a Real Estate Agent

1. Let the agent anchor

One of the most effective negotiation strategies is to let the other party anchor the conversation by stating their offer first. When negotiating real estate commission, this means allowing the agent to present their proposed rate before you counter. You simply need to ask “and what is your commission rate?”. Most agents will give your their standard commission rate, typically ranging from 1.5% to 3% for the selling agent’s side. By letting the agent anchor, you gain insight into their expectations and can better gauge how much room there is for negotiation.

Tip: Ask the agent if this is inclusive, or exclusive of GST

Once the agent provides their rate, ask questions about the service and whats included in that rate. This will help you understand the value they bring and give you leverage to negotiate. Regardless of the number of services the agent provides you should always find some wiggle room in the commission. If the rate is higher than others you can use this as a leverage point to lower the commission.

Letting the agent anchor ensures that you don’t overvalue the agents commission by negotiating from a figure higher than the agent was going to propose.

2. Compare multiple agents

To negotiate effectively, it’s essential to compare commission rates from multiple agents. In Australia, marketing costs and other services are typically negotiated separately, so focus on the commission rate alone when comparing agents. This will give you a clearer understanding of standard commission rates in your area and help you identify agents who may be open to negotiation.

When comparing agents, ensure that you gather as much information as possible about their track record, market knowledge, and negotiation expertise. Some agents may have higher commission rates, but they could justify this with a proven history of securing higher sale prices.

Once you have multiple offers in hand, you’ll be in a stronger position to negotiate. At this point you need to use the information gathered to secure not only the best rate, but the agent you want. If agent B is your choice, but agent A has a lower rate, see if you can get agent B to list your property at agent A’s reduced rate.

3. Ask a question; then a hypothetical

Giving ultimatums is never a good way to go about negotiations. In this example, it would be more effective to pose a question rather than make a demand. Asking open-ended questions like, “Can you explain why your commission rate is higher than the average in this area?” or “What is included with your commission?” encourages dialogue and keeps the negotiation friendly.

Questions invite agents to justify their rates and potentially offer alternatives without feeling pressured. By keeping the tone cooperative and inquisitive, you show that you value their expertise while also advocating for your own interests. Following on from these questions with a hypothetical is a great way to sway an agent into agreeing to your terms. For example you could say “I would really love to work with you and your team. You have the strongest market share and I think that’s important. If hypothetically we could agree on a commission rate of (insert percentage, well under quoted rate) I would certainly engage you.”

There are a myriad of ways this hypothetical could go, however, your goal remains the same; that is, to show the agent you are willing to work with them, but they need to shift the needle to meet your commission expectations.

Tip: Don’t be afraid to call the agent at a later time or date to negotiate fees. A fee stated at an in-person meeting is very likely to be varied at a later date over the phone.

4. Sliding scale or other motivators

If an agent is reluctant to lower their commission outright, consider proposing a sliding scale or other performance-based motivators. A sliding scale means the agent earns a higher commission only if they achieve a higher sale price. This can create a win-win scenario where the agent is incentivized to get the best possible price for your property. Sliding scales can also allow you to stack the deck in your favour by starting the commission rate lower where you feel the property will actually sell.

For example, you might propose the following sliding scale:

• 1.5% commission if the sale price is $2,000,000 or lower

• 1.85% commission if the sale price is between $2,000,000.01 and $2,200,000

• 2% commission if the sale price exceeds $2,200,000.01

Tip: If you can get the rate to end on a whole number you will likely pay less. Properties often sell for a whole number. In this instance, rather than 1.85% ending on $2,199,999 you want it to end on $2,200,000.

Most people will tell you that this approach motivates the agent to work harder for a higher price while ensuring that you only pay a premium commission if they deliver great results. While this may push the agent to get a slightly higher number to meet a higher commission rate it’s important to note that the goal of this strategy is to get the likely commission rate you are going to pay lower.

5. Use an expert

If you’re uncomfortable negotiating on your own or feel unsure about market norms, consider consulting an expert. This could be a real estate consultant, vendor advisory service, lawyer/conveyancer, or even a friend or family member with experience in the industry.

An expert can provide valuable insights into what constitutes a fair commission in your area and help you craft a strong negotiation strategy. They may also be able to directly negotiate on your behalf, ensuring that you get the best possible deal.

Knowing the above tips is great, but putting them into action is another thing. At AgentLink we know what commission agents should be charging and can help secure you a potential discount.

At AgentLink, we’re all about making property decisions easier for everyday people. We’re former agents and started this business because we know how overwhelming it can be to choose the right real estate agent and we believe it doesn’t have to be that way. We’re passionate about simplifying the process, providing real, honest advice and helping property owners feel confident in their choices. Whether it's through our personal experience or by working closely with the best agents, we’re driven by one thing—getting the best results for you.

To find out if you’re paying too much, or if you want to see if you can get a better deal, have a free chat with us today. Click the button below

Callum Docker - AgentLink Director