Here's how you pay your realtor a lot less commission

Realtor commissions are a much hated factor of buying and selling a home, but it is possible to negotiate those fees down.

Real estate commissions tend to be made up of a percentage of the final sale price and used to compensate agents for helping buyers and sellers through the process.

However, these fees are not a fixed charge and are always open to negotiation. 

Realtor commissions have always been negotiable but the new rule changes as a result of the National Association of Realtors settlement now emphasize transparency and negotiation.

Both buyers and sellers are able to haggle as commissions are not regulated by the law and can vary by location.

Redfin recommends five top tips for negotiating a lower fee with your realtor. 

1.  Do your research

It is important to know the rates that tend to be paid in the area in which you are either buying our selling your home.  

Fees can be more or less expensive depending on the local housing market, the type of property concerned, and the agent’s own experience.

Knowing as much about these factors as possible will put you in a strong position to know whether you can negotiate the fee down.

2. Introduce competition 

It is possible to interview multiple agents and use their competing fee offers to arrange a lower commission.

Agents who know they could lose your business to a competitor may be more willing to negotiate.  

3. Mention your situation 

If you know that you are, for example, selling a high-value home or buying in a hot market it pays to mention this to your agent. 

The prospect of a quick sale or a higher price point may encourage a realtor to lower their fee. 

4. Discounts for repeat business 

If you are planning to buy or sell more than one property in the near future ask your agent if they would consider lowering their fee for offering them more business.

5. Be clear about your budget 

If you make it clear to your agent that you are working on a tight budget they may be willing to lower their commission to close the deal. 

 'Real estate commissions have always been negotiable, and that remains true even after the recent real estate commission changes,' Redfin expert Alison Bentley said.

Negotiating real estate commissions can seem intimidating, but it’s a perfectly acceptable and often beneficial part of the home buying or selling process.

'By doing your research, comparing agents, and understanding your leverage, you can potentially lower fees and save money,' she explained. 

The past year has seen the biggest upheaval to the real estate business in a generation. 

Before August 17 an agent working on behalf of a seller would charge their clients a fee of around 5-6 percent, far more than almost anywhere else in the world. 

For example, selling a home worth $1 million would rake in $60,000 in commission for the selling agent involved. That fee was then usually shared with the buyer's own real estate agent. 

These fees became baked into house prices, helping to inflate values and realtors pushed buyers towards homes with larger commissions.  

After a series of successful lawsuits that argued the practice violated antitrust laws by allowing brokers to collude in order to raise commission prices, the National Association of Realtors (NAR) settled for $418 million and agreed to amend the rules.  

The first change will stop agents from putting compensation information on the so-called multiple listing services (MLSs). 

Only fee-paying members  of the NAR are allowed to call themselves 'Realtors' - and only they can access the MLS database of properties available for sale.

Previously those databases required the seller's agent to list the amount of commission their client is paying. 

That, in theory, enabled the buyer's agent to 'steer' buyers to houses on which the commission is higher and through which they can profit more in the event of a sale.

Now however, the compensation details can still be shared, but must be done in person or over the phone. 

The second amendment to the rules requires buyers' agents to be upfront about their compensation.

After August 17 the agent and a prospective homebuyer must enter into a written agreement together before even touring a property for sale.

The agreement will outline that buyers could be responsible for paying their own realtor's fees if a seller chooses not to cover that cost. 

Some analysts argue the changes will give prospective buyers more power to negotiate with real estate agents during the process.