5 Ways to Get a Better Deal From Your Realtor

Since Aug. 17, 2024, all 1.5 million members of the National Association of Realtors® (NAR) have had to change how they charge clients. The move is part of a $1.8 billion settlement following the association’s loss of a hard-fought court case.

Complainants had claimed that the average 5-6% commission charged to sellers on most transactions amounted to price fixing.

The association says, “NAR does not set commissions, and commissions were negotiable long before this settlement. They are and will remain entirely negotiable between brokers and their clients.”

Real estate agents who are not members of the NAR are not directly affected by the settlement. However, they will likely fall in line with the new model following such a fundamental shift in their industry.

The new paradigm could open challenges, but also opportunities. Can buyers and sellers capitalize on the changes?

5 Ways to Get a Better Deal From Your Realtor

Most of us aren’t keen on negotiating. It makes us uncomfortable. But now is a perfect time in real estate to do it. It can save you thousands, whether you need a listing agent or buyer’s agent

1. Create Competition

You shop for cars, hotel rooms, and if you’re savvy, mortgage rates. You should also shop and create competition among agents.

Explain that you’ve selected several local agents whom you believe to be similarly effective, professional and ethical. And say that you plan to choose between them based mainly on price.

Invite them to tell you the lowest commission rate they’re prepared to give you. If you secretly prefer one who doesn’t come in as the least expensive, call him or her once you have all the quotes and ask if he’s willing to match the lowest.

Remember, they’re almost as inexperienced in — and unsure about — the rapidly shifting real estate landscape as you are. So, you have nearly as much power as they do in this new environment.

2. Ask for Limited Services

Many agents are already creating a la carte services for their clients. Need full service? That’s 3% of the home price. Just need a contract drafted and some negotiation with the seller? It could be a lot less.

3. Find Flat-Fee Agents or Lawyers

Some Realtors are already changing to a flat fee model. You have to shop around to find the services you can afford.

If all you have is $5,000 for an agent, ask what they can do for that amount. Check what other agents will do for the same and compare services. In some cases, a lawyer to draft paperwork could be enough. Smart lawyers will soon see the opportunity to offer very limited services for a relatively low price compared to agents.

4. Find Sellers Who Will Pay Your Agent

It did not become illegal for the seller to pay your agent. They just can’t advertise it on the MLS. It’s harder now, but you can still find homes where the seller will pay your agent’s fee. The homes may be less desirable or in need of repairs. But at the end of the day, having the seller pay for your agent could be worth it.

5. Be Decisive

Perhaps the biggest time suck for a buyer’s agent is indeciveness. Agents won’t give you a discount if you come across as 1) not sure you want to buy a house, and/or 2) seem like you will look at 100 homes before deciding on one.

Communicate that you’re pre-approved, serious about buying, and know exactly what you want in a house. A Realtor will want to work with you and may even cut their fee, knowing that you won’t take up all their time.

Related: 5 Questions to Ask Your Realtor Now That You Might Be Paying Their Commission.

How Things Used To Work

Before the settlement came into force, the seller’s agent (“listing agent) shared a 5-6% commission with the buyer’s agent.

This was fantastic for buyers, who usually got the services of a buyers’ agent at zero cost to them. Sellers often grumbled about high commission rates but most ended up accepting the long-standing model.

By the way, in the second quarter of 2024, the median sale price of a home in the U.S. was $412,300. At an average commission rate of 5.49%, the commission payable to the listing agent on that would have been $22,635.

No wonder sellers weren’t fans of the model. And buyers took it for granted. But then things changed.

How Things Now Work

Under the settlement, sellers no longer pay for buyers’ agents’ commissions. So, that immediately slashes in half the average $22,000 to $11,000.

However, most sellers are buyers, so they don't save anything on the deal.

A bigger problem arises for those entering the housing market as first-time buyers. They already face significant challenges in saving enough for a down payment and closing costs. If they now have to add several thousands of dollars to that for a buyers’ agent’s commission, that could be the hefty bale of straw that breaks the camel’s back.

Yet it is first-time buyers who most need the expertise of their own agent to help them find a home, negotiate its purchase, and hold their hands through to closing.

In any event, buyers now have to pay for their agents themselves. It’s still unclear whether Realtors will work for less than they were getting before the settlement.

Can Sellers And Buyers Drive Down Agents’ Commissions?

On Aug. 23, 2024, The Wall Street Journal ran an article, The New Etiquette of Negotiating With Your Real-Estate Agent.

It said, “Agents and buyers are still learning the steps of this new dance. Just how much agents are willing to negotiate remains unclear and could vary widely depending in part on where you live. The going rates are similarly still being ironed out.”

And it continued, “That uncertainty makes it important for buyers to review contract terms carefully before casually signing and consult a lawyer if unsure, consumer advocates say. At a minimum, ask around about the most common rates in the area.”

Both sellers and buyers have a strong case for negotiating down their agents’ commissions. When The New York Times checked in March 2024, it found:

“The typical commission in the U.S. has been almost 6 percent, compared with 4.5 percent in Germany, 2.5 percent in Australia and 1.3 percent in Britain. As a recent headline in The Wall Street Journal put it, ‘Almost no one pays a 6 percent real-estate commission — except Americans.’”

How Much Might Things Change?

No doubt, Realtors and real estate agents hope that, when the dust has settled, their commissions won’t have changed too much. But whether that’s the case will largely depend on consumers.

As a 2024-2025 homebuyer, you may be helping set the tone for future generations.