Knowledge is Power, Knowledge is Your Money

What is the commission you pay to a real estate agent on a house? Most would say 6%, split between the buyer’s and seller’s agent, but what if you knew that it was all negotiable? And, you could save some of that money to buy more house or keep your hard-earned equity?

Over the years, the real estate industry has created the belief that there is a “standard commission”. While some homeowners don’t mind paying that rate because they believe their agent has earned it, most would be happy to know they could negotiate that commission to benefit them in their home buying or selling process.

With the use of technology, homebuyers are able to find their dream home online easier than ever before. Why would you have to pay a REALTOR® 3% if you found your own home? Some would say it is because of the work that goes into it after you are under contract, not just opening a door, and to that we say “touche” but a question to ask yourself when it comes to commissions is, “Is my agent truly earning their commission check?”

On a home that is $400,000, with the buyer's REALTOR® making 2.8% commission (the “standard commission” in Colorado), that equates to $11,200. On a home that is $850,000, the REALTOR®would make 2.8% commission, totaling $23,800. Why should an agent who is going through the same procedures for a homebuyer on a $850,000 home as the $400,000 home earn $12,600 more?

These days there are quite a few brokerages that are offering their services for a flat fee vs the “standard commission”. If you are a buyer who is looking at a home listing that is offering less than 2.8% commission (ask your agent if they don't tell you!), the sellers probably know that commissions are negoitable and are trying to save their hard earned equity - just like you could.

What you should also know is you don’t have to pay the difference to get your agent 2.8% commission. A REALTOR® can take a reduced commission and we see quite a few agents who do in order to get the deal done for their client.

REALTORS® have been known to tell a homebuyer, “Don’t worry about the commission, the seller pays it anyways.” If that is indeed the case, you should ask them to take a commission less than 2.8% to strengthen your offer. Some will say “OK” and unfortunately some will say the dreaded line, “If they don’t pay me the 2.8% commission, you owe me the difference,” which then voids their statement of “Don’t worry about the commission, the seller pays it anyways.”

Did you know that there are many ways you can either save your equity or buy more home? If you are a seller, you can negotiate the listing agent commission as well as the commission you are offering the buyer agent who successfully brings a buyer! You can use those savings for retirement, your kid's tuition, or our personal favorite... a kitchen remodel! Also, if you are a buyer and searching for a home, you can submit an offer with a reduced commission to strengthen your offer, or you can negotiate the commission with your buyer agent. If they are offering 2.8%, you can use the excess to pay for your closing costs or reduce the amount of your loan. Who doesn’t love a smaller mortgage payment!?

It is always best to ask as many questions as you can, so you can be fully equipped with the most information before purchasing something, especially a home! Buying a home is a big investment and selling your home is stressful enough without thinking about how much you’re spending on a REALTOR® vs the actual house. We believe you should always live in curiosity, and you shouldn’t let anyone else tell you how you spend your money. Knowledge is power and in this case, knowledge is money.

Live in the light, not the dark.

For more information on how you can talk with your agent about commissions, visit