Listing Agents HATE This: 3 DIY Tricks to Save Thousands!| Ep. 24
What To Do When the Listing Agent Won't Give You a Commission Discount
Picture this: You've learned how to successfully represent yourself as a home buyer. You find the perfect home and you're ready to put in an offer. You explain to the listing agent that since you're doing the heavy lifting by representing yourself, you'd like a 3% discount because the seller won't have to pay a buyer's agent.
But the listing agent stops you and says, "That's not how this works."
They explain they have an agreement with the seller for a 6% commission. If there's a buyer's agent, they split that commission 50/50. But since you're not an agent, they'll keep the full 6% for themselves.
What kind of BS is that? Unfortunately, unrepresented buyers run into this situation far too often. In this article, I'll talk about what to do when you face this challenge.
Who Am I?
If you're new here, my name is Nick. I host the DIY Homebuyer podcast, and I'm all about empowering you to successfully represent yourself as a home buyer and skip out on the costly buyer's agent.
Yes, part of that is saving you money. But even more importantly, it's because I believe that knowing how to represent yourself makes for a better home buying experience. A typical buyer's agent is incentivized to push you to buy a home quickly and spend as much as possible because that's how they make money. When you represent yourself, you remove that conflict of interest and have a more empowered buying experience.
Understanding Cooperative Compensation
The issue here is something called "cooperative compensation." This is an agreement where the listing agent has a deal with the seller for a certain commission (often 6%). In about 95% of cases over the past 20-30 years, the listing agent expects to split that commission with a buyer's agent.
From their perspective, they're only planning to make 3% as the listing agent. If there's no buyer's agent, that's just a windfall for them.
The Department of Justice and other legal groups are fighting against this arrangement. If you're removing a party from the transaction, it's not like the listing agent is suddenly doing twice as much work to justify a 6% commission instead of 3%.
Smart brokerages are already moving away from cooperative compensation. And if you're selling your home, don't agree to any sort of cooperative compensation. Set your fee with the listing agent as one thing, and if you want to offer anything for a buyer's agent, make that a completely separate discussion.
Mindset Shift: You Are "Self-Represented," Not "Unrepresented"
In real estate contracts, you'll notice they'll have you check a box that you're "unrepresented," which sounds negative. I want you to shift your mindset here.
You are not "unrepresented" as though something is lacking. You are "self-represented." And you need to understand how important you are to the sales process. You are the only one bringing money to the transaction. Without you as the buyer, there's no sale, no commissions, and no five-star review for the listing agent.
They need you, which gives you tremendous power and leverage. Remember this as you talk with listing agents.
Practical Strategy: How to Approach the Conversation
When you're ready to put in an offer, start by gathering information about the listing agreement between the agent and seller, especially the compensation details.
Frame the conversation from the seller's perspective: "Hey, since I'm representing myself and doing the bulk of the heavy lifting, does that save your client, the seller, any money by me not bringing a buyer's agent to this deal?"
The listing agent might respond in several ways:
"No discount, I keep the full commission." This tells you they have a cooperative compensation arrangement.
"Yes, my seller offered 3% for a buyer's agent, but since you don't have one, my seller keeps that 3%." This is good information you can leverage.
"My seller pays 6% if there's a buyer agent, but only 4% if there isn't one." This means there's a 2% savings to the seller when you're self-represented.
"I'm not telling you anything." If this happens, consider walking away or be prepared to make your best offer without much help from the listing agent.
How to Leverage This Information
If the seller was already willing to offer a 3% buyer agent commission, you can leverage this in two ways:
In a competitive market, your offer is automatically 3% more attractive than someone with a buyer's agent who wants compensation.
In a less competitive market, you can reduce your offer price by 3% or ask for a 3% credit toward closing costs.
Remember, sellers primarily care about their bottom line. You can use this 3% to your advantage.
When the Listing Agent Resists
If the listing agent is taking the full 6% (or only giving a 2% break to the seller), push back. Tell them you want to write your offer with a 3% credit that comes from them.
In real estate, everything is negotiable. While agents will tell you that you cannot be paid a commission (which is true since you don't have a brokerage), agents can give up concessions from their commission to get deals closed.
The process might be convoluted—the agent gives a credit to the seller, who then gives it to you through a price reduction or closing cost credit—but it's definitely possible.
Negotiate by:
Asserting your confidence as a self-represented buyer
Pointing out that the listing agent isn't doing much extra work for you versus a buyer with an agent
Reminding them of your crucial role in the transaction
Asking if keeping the full commission is really fair to their seller and to you
What If They Still Say No?
If a listing agent refuses to budge, consider calling their bluff and walking away, especially in a non-competitive market. The seller will likely ask their agent what happened to the interested buyer, putting pressure on the agent.
You can also remind the agent that you're a serious buyer, and losing you means they'll likely have to do a price reduction later or accept another buyer with an agent (meaning they'll only get 3% anyway).
Don't worry about being "blacklisted" by agents in your area. The agent community isn't that tight-knit, and most agents are motivated by selling homes and making money. Each deal is its own thing.
Conclusion
While I can't promise that every conversation with every listing agent will go perfectly, positive changes are coming to the industry. The DOJ will likely rule out cooperative compensation altogether, making it easier for DIY home buyers in the future.
Even now, you have strategies to negotiate a discount based on not having a buyer's agent. Remember that you're not asking for anything unreasonable—you're just claiming money that was already being offered to a buyer's agent.
You are the most valuable piece of every transaction. Your request for a discount because of your extra efforts is completely reasonable, and it doesn't cost the seller anything extra.
