Buyers, why you should negotiate with your agent on commissions

I've talked about negotiated flat fee professional service fees for buying clients many times before. Here is one such example.

Well today I will use three extreme examples of listings that better make my point. Extreme because they are new listings that have a very large price tag. I'll post the list numbers so you can use the search for property link on the sidebar to see these listings for yourself.

Here is the first property. List number 790083. This is a very nice home in a great location in Kingman. In fact I own property near there and plan to build a home when I can truly afford it around those parts. No it will not look like this one, not even close as I wouldn't want to vacuum nearly 4000 square feet of floor.

This is a 5 bedroom, 4 bathroom home with 3,750 square feet of living space on 2.25 acres. Plenty of garage parking as well. The asking price is listed at $799,999. What you won't see is the commission offer to the buyers agent because it is a public site. I will say that it is a very fair 2.5% of the final sales price.

So let's make a virtual offer shall we?? Let us say that you the buyer and the seller agree that $780,000 is a fair deal. This means that as your virtual agent you have agreed to pay my brokerage $19,500. Remember that I do not split commission's with my broker so I'll end up with practically the entire amount after my office fees that pertain to closed transactions.

Where will I be spending your money?? Bass Pro Shops for sure, some of it anyway. Maybe a new golf club or two, probably take the wife on some extended weekend. Then I'll put the rest away for a rainy day.

Why did I say your money?? Because it is. We could have just as easily negotiated a much more affordable rate of commission before we ever wrote the offer. My buyer flat fees are $4,000 at the present (always subject to change though). So while you and the seller agreed that $780K was a fair deal, you really left $15,5000 on the table. You could have used that money towards your down payment, for non reoccurring closing costs, to buy down your interest rates, or to simply pick up a check for that amount at closing. We'd only have to disclose our fee agreement to your lender and the escrow company, the seller or listing broker need not be bothered.

Again, it is your money. Anytime you bring money to purchase anything... it is your money. How do YOU want to spend it??

Here are two more examples...

1. List number 788783; a 4 bedroom, 3 bath, 4091 square foot home on the golf course listed for $949,000. This one offers me a 3% co-broke commission. But you and I already agreed that I would represent you for $6,000 (see prices can go up). You and the seller agree to transact for $900,000 (it is a buyers market). Congratulations, you have another virtual $21,000 to mess around with.
2. List number 789766; a 7 bedroom, 9 bathroom, 5800 square foot home high atop the Hualapai Mountains on 24 plus acres listed for $2,950,000. This place used to be an inn and someday I hope I have a client that wants to see it, so that I can see it. Wow. You ready for the co-broke rate?? A whopping 6%. Again, buyers market so you and the seller agree to a virtual transaction amount of $2.5 million. Before you did that though, you and I agreed that my commission will be $20,000 (so I can go to Bass Pro Shops, AND take my wife on that extended weekend). You now have a virtual $130,000 to apply towards the costs of your virtual purchase.

The point is simple really. You don't care how much I spend at Bass Pro Shops, you care about getting the best priced property for your needs. My motivation based on final sales price and the percentage of the commission is taken out of play because I'm ready and willing to represent you for the amount we already negotiated.

I'm also not judging these particular listings in any way. They may be great listings, at this time I don't have any buying prospects that are looking in this price range. I'm only using them as examples. I think the co-broke commission offers are plenty fair, and do not have a negative thing to say about the agents or brokers representing these sellers.

For more average priced single family homes (think the $200,000 range), it still pays to negotiate with your professional representative. I realize that the sound of getting $15k to $130K back in some form at closing is incredible but it is not always realistic. A home purchased in the $200K range, through a professional representative that you have negotiated a fee arrangement with, could still land you a couple of thousand dollars in the transaction to help offset costs. You just have to be willing to have that negotiation.

It is your money!!