More than a third of homebuyers and sellers in the United States said they were unaware they could negotiate the commissions paid to real estate agents in transactions.
In a new report published by LendingTree, about 36% of buyers and sellers said they did not know it was possible to negotiate a real estate agent's commission, adding that they would have tried it if they knew. In contrast, 31% of buyers and sellers said they negotiated commissions with their agents. Among those who did, 64% said they successfully reduced the fees.
"Like most things in life, you won't know if your real estate agent will be willing to lower their commission fee until you ask," LendingTree senior economist Jacob Channel said. "Commission fees can vary significantly based on factors like who your agent is, what kind of home is being sold, where the home is being sold, and how much the home is worth."
The report, which polled 2,034 U.S. adults in mid-January, also found that 48% of buyers and sellers admitted not knowing what percent commission their real estate received in their last transaction. When asked what they believed a typical commission fee is, 37% of Americans said 3.00% to 4.99%, and at least 30% said 1.00% to 2.99%.
Negotiating Real Estate Commissions
On average, real estate commissions amount to 5% and 6% of a home's sale price. The sum is split between the buyer's and seller's agents, meaning each party walks away with 2.5% or 3% of the sale price. However, that number is not set in stone and can be reduced through negotiation.
In most cases, Channel said homebuyers can simply ask agents upfront why they are charging that much in commission and if there is room for a discount. There are now laws governing how much or how little agents can charge, which means they can ask for as high a percentage as they want as long as they disclose this to the other party upfront.
"Neither party should be waiting until the last minute to add something or take something away," Channel told CBS News. "You can't suddenly say, 'I don't want to pay you as much as we agreed upon."
In other cases, Channel said buyers and sellers should outline their budget and explain why it might be hard for them to work with an agent charging a high commission fee.
READ NEXT: Real Estate Agents Could Lose $30 Billion in Commissions Under New Model
