How to Negotiate Your Commission as a Real Estate Agent in Ohio

Negotiation is one of the most vital skills to master as a real estate agent. You’ll negotiate on behalf of clients—buyers, sellers, or renters—to secure favorable prices and terms. Additionally, you must negotiate with your brokerage to determine how much of your income is shared with the firm. Lastly, you’ll need to negotiate directly with clients to establish how much you’ll be paid for your services.

You deserve to be compensated fairly for your expertise. Here’s how to negotiate your commission as a real estate agent.

Key Takeaways

• Real estate commissions are traditionally a percentage of the sale price. Still, alternatives like flat fees and tiered commissions are becoming more common, especially with recent industry shifts encouraging clients to negotiate.

• Agents should adjust their negotiation techniques based on the type of client, such as first-time buyers, repeat clients, high-value property clients, and corporate clients. Emphasizing value-added services and past successes can help secure better commissions.
• Timing and setting are crucial for successful negotiations. Agents should present their value with comprehensive data, personalized services, and a strong marketing plan while avoiding the common mistake of lowering their commission too quickly.

Understanding Real Estate Commissions

Real estate commissions are negotiable. However, due to recent industry discussions, your clients may now be more inclined to want to negotiate your fees.

Learn how to navigate the NAR settlement by requesting this free ebook.

The traditional real estate commission structure involves a percentage of the property’s sale price. For example, sellers may agree to pay 5-6% of the sale price, which is then split between the buyer’s and seller’s agents—each receiving around 2.5-3%. Agents typically share their commission with their brokerage, and this split varies depending on the agent’s experience and sales volume.

Other Common Commission Structures

Here are some alternative commission structures to consider in client negotiations:

• Flat Fees: Some clients prefer a flat fee over a percentage. This is common with discount brokerages but can also be used in unique cases.

• Tiered Commissions: In some instances, commission rates may change based on the final sale price (e.g., 6% on the first $500,000 and 4% on anything above). This structure is often used in commercial real estate.

• Buyer’s Agent Commission: The seller traditionally determines the buyer’s agent commission, but buyers must now sign agreements outlining their agent’s compensation.

• Listing Agent Commission: This fee covers marketing costs, photography, open houses, and the listing agent’s expertise.

• Rebates to Buyers: In some markets, agents offer commission rebates to buyers to encourage business. However, this practice is only allowed in some states.

Related Article: 11 Tips to Master Real Estate Negotiation

Factors Influencing Commission Rates

Various factors can influence commission rates, including the following.

• Your state and region

• Current market conditions (buyer’s or seller’s market)

• Agent experience

• Type of transaction (residential, commercial, etc.)

• Client type (first-time buyer, repeat client, etc.)

• The agent’s competitive edge

• Negotiation skills

Negotiating with Different Types of Clients

Negotiation techniques may vary based on the type of client you’re working with. Here’s how to approach different scenarios.

Negotiating with First-Time Homebuyers

To secure a higher commission from first-time buyers, emphasize your expertise, personalized services, and proven negotiation skills. Highlight your ability to guide them through the process and share reviews from other satisfied clients.

Negotiating with Repeat Clients

When negotiating with repeat clients, remind them of your past successes and offer tailored services, such as enhanced marketing or additional support to demonstrate added value.

Negotiating with High-Value Property Clients

For affluent clients, focus on offering a bespoke experience. Detailed market analysis, exclusive marketing tools, and access to a network of high-end professionals can differentiate your services in the luxury market.

Negotiating with Corporate Clients

With corporate clients, emphasize your experience handling complex, multi-party transactions. Present precise data and be flexible with terms to close high-stakes deals.

Strategies for Successful Negotiation

Here are some important reminders for effective negotiations:

Timing and Setting

Clients are more likely to negotiate after you’ve demonstrated your value. Present a comprehensive listing plan that includes a property analysis and marketing strategy, and ensure the conversation takes place in a distraction-free environment.

Building a Strong Case

Explain why you are the best person for the job by highlighting your local market knowledge and providing data to support your rate. Share success stories that showcase your ability to sell properties efficiently.

Effective Communication Techniques

Listen actively to your client’s concerns and use collaborative language to foster a sense of partnership. Confidently present your commission rate and resist lowering it too quickly.

Common Mistakes to Avoid During Negotiations

Avoid immediately lowering your commission when faced with resistance. Justify your rate by explaining the value of your services. Stay calm and professional if your rate is questioned, and focus on building trust.

This guide offers a snapshot of the negotiation process for real estate agents. Investing in professional negotiation training can help you further develop your skills. Consider enrolling in Hondros College’s Real Estate Negotiation Institute (RENI) to become a better negotiator. RENI offers two certifications – Certified Negotiation Expert and Certified Buyer Agent Expert. Enroll today and achieve greater success in Ohio’s real estate market.

Enroll in RENI Courses Today!