Real estate consumers who choose to negotiate commission rates charged by agents are mostly successful in lowering the amount they pay — and customer satisfaction does not appear to be related to cost.
That’s according to a survey released Monday by Consumer Reports, based on responses to an annual questionnaire of 3,753 readers who sold or tried to sell a home, 4,029 who bought one, and 7,368 who both bought and sold a home in the past few years.
In all, 9,141 responses were received from those who sold or tried to sell a home using real estate agents from 2004-07, and the total doesn’t include those who bought or sold homes without a broker.
Some companies were more willing to negotiate fees than others, the survey revealed, and there was a 71 percent success rate for sellers who attempted to negotiate a lower commission price.
In a typical real estate transaction, the seller agrees to pay a commission rate to the listing broker that is a percentage of the home’s selling price.
The listing broker shares a portion of this — typically about half of the commission though this can vary — with a broker that is representing the buyer’s side of the transaction.
Agents involved in the sell-side and buy-side of the transaction share a portion of this commission with the brokers, and the agent share can vary based on company, experience and productivity.
The survey found that 46 percent of sellers actually attempted to negotiate for a lower commission rate.
"Sellers who paid commission rates 3 percent or lower were just as satisfied with their brokers’ performance as those who paid 6 percent or more, suggesting that haggling can’t hurt," Consumer reports announced — and there were no statistically meaningful differences among rated companies in customer satisfaction.
RE/MAX and independent agents "appeared to be a bit more willing to deal" in offering lower commissions to sellers, the report revealed — about 77 percent of sellers who attempted to negotiate down the commission rate were successful when working with RE/MAX.
About 67 percent of Century 21, Keller Williams and Prudential agents agreed to lower fees at the request of sellers, the survey found, and 64 percent of Coldwell Banker agents lowered their commissions in response to seller requests.
"We found that paying an agent a lower commission rarely had any effect on the sales price," according to the report, which is published in the September issue of Consumer Reports magazine.
People who paid a higher commission rate "were more likely to say they had regrets about the selling process. The biggest regret? Nearly one-third said they should have been more assertive in negotiating their agent’s fee," the survey revealed.
About 81 percent of the sellers who paid 3 percent or less said the agent provided a competitive market analysis of their home, compared with 87 percent of those who paid 6 percent or more. CMAs can be useful in gauging the state of the market by examining other sold and for-sale home in a given area.
About 82 percent of respondents sold with the help of an agent, and they received an average of $5,000 below asking price, according to the survey results. Meanwhile, about 17 percent of respondents sold their homes without an agent, and they reported that they received roughly the asking price for the homes.
The 66 percent of respondents who used an agent in buying a home paid an average $5,000 below the list price, while buyers who negotiated their own deals paid close to the asking price. In these deals, the listing broker and listing agent can earn the full commission because no broker or agent is involved on the buyer’s side of the transaction.
Of those survey participants who put their homes on the market, 86 percent completed a sale, 8 percent took their homes off the market and the rest were still attempting to sell at the survey’s conclusion.
Independent agents (those not affiliated with major brands) tended to provide the fewest services, according to the report, "but sellers who used them were just as satisfied."
Some other differences revealed in the report: 85 percent of Keller Williams Realty agents advertised homes on the Web, compared with 75 percent of Century 21 agents and 76 percent of RE/MAX agents, according to the survey results.
Survey participants’ customer satisfaction scores for real estate companies occupied a narrow range: from 81 to 79, with 80 representing a "very satisfied" rating and 100 representing a "highly satisfied rating."
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