Realtor commissions are fees real estate agents charge for finding tenants. Local customs dictate whether the property owner or the tenant pays these fees. Fees vary, though typically amount to a month’s rent. As a commission percentage isn’t set by law, you’re free to negotiate if you need to pay this fee. Negotiating for a lower commission reduces your out-of-pocket costs when securing a new rental property.
Be polite and respectful
The way you present yourself can greatly influence the outcome of your negotiation. Studies show it takes just seven seconds for someone to form their first impression of you. Once they’ve formed that first impression, changing their mind will be difficult. Seven seconds is not a lot of time, so it’s important to make the most of your initial contact. Above all, keep in mind that you want to be polite and respectful. You can achieve this in several ways:
Dress professionally
The way you dress can show that you respect the real estate agent you’re dealing with. You don’t need to wear a suit, but other clothes you’d wear to a job interview are appropriate. Make sure they’re ironed, clean, and presenting a professional image.
Be warm
Greet the real estate agent with a handshake and warm smile. Keep your body language open and approachable. Give the real estate agent space to speak without interruption. When it’s your turn to talk, speak in an even and polite tone that shows respect.
Show you’ve researched the rental market
Rental markets across the country have peaks and valleys: times when properties move quickly and periods where real estate agents have a surplus of rentals they struggle to fill. So, research the local market before you start negotiating a realtor commission. Showing you’ve done your research puts you on equal footing with the real estate agent and strengthens your case.
Real estate agents are usually more willing to negotiate when their business is booming. When rentals fill up quickly, they know it won’t take too long before they secure their next commission. Monitor the real estate market and see how long it takes for vacant rentals to find new tenants. When you see properties are moving fast, note this when you’re negotiating.
If you need to sign a new lease during a slow patch, don’t get discouraged. While real estate agents may be more reluctant to move on their commissions, you may still have some wiggle room. Receiving a discounted commission from you is better than no commission at all. You might say something like, “I know the local rental market is slow right now, so your commissions are hard to come by. I’m willing to give you a commission, but I don’t want to pay what you’re asking. Could we all be happy with a 10% discount?”
Promise repeat business
Your real estate agent may be more willing to budge if they think you can bring more commissions their way. You could do this in several ways. You could promise you’ll search for the agency’s listings when you rent your next property or buy a home. If you’re loyal to the real estate agent, you’ll likely pay the commission several times.
You could also promise to promote the business to others. For example, you might offer to refer your friends to their agency if they reduce your commission. People trust the recommendations their friends give them, so encouraging your endorsement can be a great way for agencies to grow their business. You may have extra leverage if you have a large social media following.
Suggest an alternative arrangement
Most real estate agents charge a single realtor commission for the life of the lease. If you’re struggling to afford the commission, suggest an alternative arrangement where you’d pay a commission whenever you extend your lease. This sort of arrangement makes budgeting your finances much easier. Your real estate agent may agree to a smaller commission now if they know that you’ll pay these extra commissions over time. If you have compelling reasons to stay in the area, such as moving to be closer to family, share these so the real estate agent knows you intend to stick around.
Appeal to their emotions
Real estate agents are people too, so don’t be afraid to play on their emotions. While logic usually trumps sentiment during negotiations, a sincere emotional plea can help seal the deal. Consider the reasons you want to save money on your commission and put them to the real estate agent. Perhaps you’ll have large moving expenses because you’re moving to another state. Share circumstances that might make the real estate agent more sympathetic to your plight and willing to drop their commission.
Say you’ll find another rental
If all else fails, suggest you’re ready to keep looking. Real estate agents don’t want to miss out on a guaranteed tenant, so most will happily lower their commissions, even by a small amount. Often reminding a real estate agent that you have other options is all it takes to sweeten the deal.
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