As Denver’s real estate market evolves and home prices drop, will sellers turn more to negotiating commissions to maximize profits?
Before hiring a real estate agent, getting two or three quotes to find out exactly what services agents offer is critical.
“You get what you pay for,” says Shawn Li with 8z. “With at least two estimates, you can use the proposals as a litmus test to judge your potential agent’s abilities.”
Sellers typically shoulder the cost of commissions for both their agent and the buyer’s agent since those fees come out of the closing price. But because most sellers factor this sum into the asking price, buyers also help pay that cost.
With rates ranging from 5 to 6%, sellers may consider negotiating commission rates. Buyers can also negotiate commission rates but tend to do so less often.
Realtors may be more willing to consider reducing their commission rate if the property is new, requires minimal preparation, or is in a high-demand area.
Malisa Eakins with West+Main has been willing to negotiate her commission, especially with repeat clients.
But sometimes it’s not worth doing that, especially with a previous client who was challenging. She walked away from a deal recently rather than reduce her fee. “My mental health was more important.”
Amount of work
During early 2022, when most homes were selling within days of listing, it may have appeared sellers’ agents had to do little work.
But buyers’ agents scrambled to help their clients find new homes, says Barry Willmarth, Willmarth Real Estate Services owner.
“They were writing dozens of offers, hoping and praying they were putting together something competitive.”
Flat fee brokers
Flat-fee real estate agents and brokers set their services’ prices at the start, so the final sale price doesn’t increase what you pay.
But that cheaper commission may pose some risks, including:
- Less attention: Flat-fee brokers may need to close more deals than traditional agents to make the same amount of money. That may limit the amount of time devoted to you and your property.
- potential conflicts: Because flat-fee brokers typically represent more clients, they may also represent both buyers and sellers in the same transaction, which can create conflicts of interest.
- Lower profits: Flat-fee brokers may be less experienced, and that lack of expertise could cost you in final negotiations.
The flat-fee model works for some people, but selling real estate is more complex than putting up a sign and putting the house on the MLS, Eakins says.
Sellers need to work with an agent they trust and whose guidance they’re willing to follow.
For example, sellers sometimes have to spend money before selling a house.
“It’s easier to make an appliance change than choke down a $10,000 price reduction because the buyer isn’t happy with the kitchen.”
Using an experienced, reliable agent can potentially save thousands of sellers and buyers alike, Willmarth says.
“A good agent can help head off potential roadblocks and provide diligent execution of the transaction.”
Marketing homes keeps changing
Technology is changing how real estate agents work. The quality of a home’s online presence is crucial.
“For most buyers, the search begins at home or on their phones. They are cruising through Zillow or Instagram and may see the house of their dreams,” Eakins says.
That means staging, professional photography, and even videography are becoming more critical.
The news and editorial staff of The Denver Post had no role in this post’s preparation.