Most real estate investment guides will advise would-be investors to negotiate real estate commissions. This is an often-heard piece of deal-making advice. But, is possible and more importantly, is it wise?  There are risks and gains and some situations that make commission negotiation acceptable.

As a seller there is more opportunity for dealing. In markets with far more buyers than sellers where the competition for listings is fierce and the time on the market is short most agents will negotiate heavily.  But, in a market like South Padre with seasonal buyers and predominantly second homebuyers it is less likely to be very flexible. Mostly that is due to the costs a realtor must incur to market a listing. But, a seller can negotiate a commission when making a listing agreement. Often the seller will ask for 1% less commission and .5% less is split paid to the selling agent and the listing agent. Obviously selling agents do prefer full commission splits. So if the listing is in a competitive category it may not receive as many showings.  If multiple listings are offered then the selling agent may agree to a smaller commission as a single marketing budget can result in multiple commissions. This is often true for developers selling lots or condo complexes.

On the buy side there are fewer opportunities to reduce commissions as the purchaser is not paying directly. However, it is not unheard of for the agent to negotiate their commission in order to make the deal happen. Realtors have been known to pay for air conditioners, inspections, Home Service Warranties and more. In Texas realtors are not allowed to make direct rebates like in other states nor can they pay part of their commissions to an unlicensed person. Even closing gifts can only be offered if they are under a specified amount.

Just remember that your real estate agent is a professional. There is a lengthy learning period required to do the job well and gain a client base. Additionally, there are costs involved and significant time invested in successful and failed dealings. Real Estate agents are required to pay monthly PLS dues, heavy advertising costs, personal marketing costs, broker fees, licensing fees, office fees and the costs of maintaining a vehicle, office and image.

Like any small business owner a realtor must invest their time wisely and focus their energies on the most profitable aspects of their business.  It never hurts to ask, but, be sure your quality of professional or professional services are not diminished for 1%.