Improve Your Negotiations With The 5 Golden Rules.   LEARN THEM

Most real estate agents consider themselves pretty good negotiators. After all, home buyers and sellers have been hiring agents for years to negotiate the purchase price of their homes (often the biggest financial transaction of their lives).

Recently, however, agents’ worlds have been hit with a tsunami. As a result, many agents will need to take their negotiation skills to the next level to even stay in business.

What happened? The National Association of Realtors settled a lawsuit and agreed to eliminate the way it has historically maintained agents’ commissions at 6% of the home’s sale price (where sellers paid 3% to their agents and 3% to the buyer’s agents)

This basically means that real estate agents must now negotiate their compensation with home buyers and sellers. Their livelihoods are now, in effect, on the negotiation table.

The result of this unleashing of market forces, according to many experts, will almost certainly result in a substantial drop in agents’ commissions (with some suggesting they might even go down 50%, closer to the 1-2% norm in many countries).

So how can agents most successfully negotiate their compensation in this new world? Get my book Gain the Edge! 😊 It’s less than $20 and will be a great investment.

Seriously, here are four keys to negotiating compensation in this environment (two here and two next week).

1. Lead with your value proposition

When I bought my first house in 1996, I was happy my agent received a 3% commission. Why? Because she brought two premium skills with her: 1) a comprehensive market knowledge of my target neighborhoods, and 2) proven negotiation skills (which I learned from her references and a partner at my law firm).

She was also a deep listener and, before ever trying to find a house for me, extensively questioned me about my goals, needs and interests and explored what kind of house might be best for me.

Only then did she preview possible houses and show me some.

This saved me a ton of time – one of my core interests – and led me to finding the right house.

Today, home buyers and sellers might want to nail down their agents’ compensation right off the bat. Resist. Instead, first explore your potential clients’ fundamental goals and interests and demonstrate your true value and expertise.

And if they ask, say “I am happy to discuss compensation. But let’s initially ensure we are a good fit and I really understand what you want to accomplish.”

2. Be open to creativity in pricing and structure

Twenty years ago, my wife and I bought a summer lake place in Wisconsin since summers are brutally hot in Phoenix (my in-laws live across the lake – so you know how my negotiation with my wife went!).

Since we found the house ourselves and only needed minimal help regarding the local market and paperwork, I didn’t want to pay a full 3 percent.

So I negotiated to pay an agent on an hourly basis. It was a generous rate, and it was worth the agent’s time, but we paid a lot less than 3%. The seller also agreed to reduce their asking price by the 3% they otherwise would have paid our agent.

This was highly unusual. But it may not be in the future.

My point? Be open to creative ways of structuring your compensation. Commission-based fees might be here to stay. But maybe not. So consider other compensation methods, like a minimum fee based on your time plus a bonus, a set fee, an hourly rate, or something else.

You might even have to negotiate who pays, the buyer or seller (or both).

Latz’s Lesson: Real estate agents in the future will be negotiating their own compensation – so highlight your true value first and be open to creative options.

 * Marty Latz is the founder of Latz Negotiation, a national negotiation training and consulting company that helps individuals and organizations achieve better results with best practices based on the experts’ research. He can be reached at 480.951.3222 or

Share This