After narrowing your hunt for a listing agent, you'll be faced with the next task of the home seller: negotiating a listing contract.

Negotiating Fees

A typical fee is 6% of your selling price but can increase to 10% depending on area, market, and even an agent's track record. The listing agent is responsible for paying the commission of the buyer’s agent in addition to all broker fees. Be mindful that your listing agent is paying for all the marketing and listing expenses out of their pocket.

An agent may accept a reduced commission if:

• You're in a seller's market (there are more buyers than houses available), your house is in mint condition, and your location is to die for.

 

• Your house sells within the first week of being listed, sparing your agent time and money.

   

• He or she represents both you and the buyer (acting as a "dual agent") or represents only you but produces the buyer. In these cases, the commission isn't shared with a buyer's agent (who normally receives at least one-half of the selling agent's fee). In a dual-agent scenario, try negotiating for a 4.5% fee. But remember that your agent now has twice the work and stress because he/she is responsible for both parties.

   

• You perform some of the services that would normally be done by an agent, such as arranging and paying for promotions, such as “just listed” postcards, stamps, copying fees for flyers, signs, etc. Typically I spend $500-1000 on marketing.

   

Negotiating for higher fees You may actually benefit from offering a higher commission fee or a bonus in some situations—for example, if you need to sell quickly or your home is in poor condition. If an agent has a stellar track record, it can be a worthy investment.

If you're selling in a "buyer's market," where there are more houses available than buyers, consider offering a bonus on top of your agent's commission. Their loyalty could affect whose house sells—yours or your neighbor's.

Selling to a "return buyer” If your house doesn't sell during the period covered by your listing contract, but you later sell to a buyer who was found by your agent, you may still owe the agent's full commission. This post-expiration period is called the "protection period," often described as 60 to 180 days after the contract expires. Request that the protection period be 90 days or less.

Choosing a new firm or agent. If your original contract has expired, you may end up choosing a new agent or firm. If you then sell to a buyer who was shown your home by your first agent, you could end up paying a commission to both agents unless you add a protective clause to your contract.

Canceling your contract. Request the right to cancel your contract. You can make this request more palatable by offering, say, a two-week written notice to terminate if you do so for any reason. If your agent really messes up (i.e. lies, steals, cheats), you should be allowed to terminate immediately (it's called "terminating for cause"). In the latter case, you won't be liable for the commission, but you might still owe the agent for costs and possibly a penalty fee.

Start at the beginning. During your first telephone contact, ask agent candidates if their full fee is negotiable if justified by special circumstances.

Put all agreements in writing. Include every change or addition you and your agent agree upon in your contract. Enough said.

Ask questions before you sign. Ask your agent to rephrase any language in the contract you find confusing. If you still feel like you're in over your head, consult a real estate attorney before signing.

Don't deal yourself out of a sale. Bargain, but within reason. A good agent will be working hard for you. If he or she ends up having to choose among house showings, you don't want to be neglected in favor of a higher-paying client.