How to Cut a Commission
By Joan Caplin

(MONEY Magazine) – Members of the real estate establishment insist that commissions are negotiable—so take them at their word. Treat the quoted rate as a sticker price and haggle from there. No doubt your agent will serve up a three-act spectacle on why he's worth full price. Don't buy it. Here's a strategy for getting the best deal.

1 GIVE BACK SOME OF THE STANDARD SERVICES. Classified ads are an overrated—and expensive—marketing channel, so offer to forgo some in exchange for a better rate.

2 BUILD A PACKAGE DEAL. Offer the agent first crack at representing you on your next real estate deal in exchange for better terms.

3 BASE THE RATE ON THE VALUE OF YOUR HOME. If you're listing at $700,000, challenge your agent with, "Does it cost you twice the time and money to sell my house as it does a $350,00 house?" If your home has appreciated 20% since you bought seven years ago, try, "You don't have to do more work today than you would have back then (and in this market, maybe less)." If it's in a hot neighborhood, point out the likelihood of a quick sale.

4 PLAY BROKERS AGAINST EACH OTHER. Some websites, such as, allow you to select realtors through anonymous bids. And at, you can search for discount brokers by state.

5 NEGOTIATE AFTER A REASONABLE OFFER COMES IN. Explain to your agent that you need to clear the asking price minus the commission rate. You'll accept a lower offer if the agent will cut the commission enough for you to pocket your desired net. For example, the seller's net on a $265,000 home, minus a 6% commission, is $249,100. To net the same amount on a sale at $260,000, the commission rate would have to come down to 4.2%.

6 TAKE ADVANTAGE OF REBATE OFFERS. Sites such as HomeGain, LendingTree and ZipRealty reward consumers who find agents through them with rebates, frequent-flier miles or gift cards. Similarly, home buyers and sellers who use GMAC agents are eligible for up to 250,000 Delta or Northwest miles. Discount broker HouseRebate offers rebates to both buyers and sellers. —J.C.