Can You Negotiate With a Broker When Selling a Condo?

Condominium sales involve commission payments for agents working with buyers and sellers.

All real estate commissions are negotiable. The advantages in negotiating a reduced commission when selling a home or condominium include cash savings, but the reduction in fees may make your condo offering less attractive to real estate agents with qualified buyers looking for a full-commission sale. Although state laws forbid setting predetermined fees, typical commissions average 6 percent, with the fees divided evenly between the brokerages representing both the buyer and seller.

Real Estate Commissions

Although a group of real estate agents work on salary or on flat-rate contracts, commissions provide a major source of income for the majority of real estate agents representing either the buyer or seller, or both, in a condominium or home sale. Mark S. Nadel, attorney and federal government policy advisor, notes in the “Cornell Real Estate Review,” that real estate commissions “are strangely unrelated to either the quality of the service rendered or the value provided.”

Brokerage Commission Division

State real estate laws allow commission payments for residential sales transactions, including condos. The seller pays the commission fees to the escrow company, a neutral party holding funds in the condo transaction. The escrow company divides the commission fees according to the terms of the signed listing and sales agreements, and the escrow firm issues checks to the brokers. The broker then removes a fee for the real estate firm from the total commission amount and pays the agent according to the legal working agreement made with the real estate agent.

Seller's Commission Fees

In most real estate markets, including California, Ohio and Indiana, the seller typically pays commission for both agents in a sales contract involving a condominium real estate transaction. This amount is negotiable at any time during the sales transaction. Other states, including New York, allow buyers to contract and pay real estate agents to represent buyers exclusively, without any financial commission ties to the condo sellers.

Sellers involved in this type of transaction pay fees directly to the agent's real estate brokerage. The seller's agent receives payment from their brokerage firm based on the contract the agent negotiated under initial hiring agreement with the brokerage.

Fee-For-Service Brokerage Firms

Brokerage firms offering fee-for-service real estate actions contract with buyers and sellers for a flat fee for specific transactions. Condo sellers have the option of paying for preparing the listing agreement for the real property, placing the property on the Multiple Listing Service and advertising the listing. Other services offered include showing the condo to prospective buyers, writing sales contracts, negotiating with a buyer and opening and supervising the escrow process, once the two parties agree to contract terms. The fee-for-service real estate firms list each service separately with a set fee for each activity. Condo sellers can pick and choose their representation and pay the assigned fees, depending on their personal budget.

References

• MSN: Three Ways to Pay Lower Real-Estate Commissions; Debora Vrana
• CNN Money; Negotiating Real Estate Commissions; Gerri Willis; March 2006
• CBS News; Chipping Away at Realtors’ Six Percent; Daniel Schorn; February 2009
• “New York Times”; You Don’t Have to Pay 6% Broker’s Fee; Susan Stellin; January 2011
• “Cornell Real Estate Review”; A Critical Assessment of the Traditional Residential Real Estate Broker Commission Rate Structure’; Mark S. Nadel
• National Association of Realtors; Field Guide to Compensation Plans for Real Estate Agents; October 2010
• CNN Money; Who's Working for You?; Sarah Max; August 2004
• Nevada Revised Statutes: Chapter 692A -- Title Insurance