Lower commission rates put 3.75 million dollars back in the pockets of Gilbert Arizona residents.

In the first 9 months of this year Gilbert home buyers were able to negotiate a savings of more than $3.75 million dollars of residential real estate commissions when selling their homes. The most common commission rate that sellers were able to negotiate was 2.5%. I suppose some of you are scratching your head right now wondering what I’m referring to.

Most home owners don’t realize that the first negotiation should be with your agent. Still scratching your head I see. Residential real estate commissions are negotiable. There, I said it. The easiest and most common place to negotiate commissions with your real estate agent is on the buyer’s agent commission. It’s 100% at your discretion as a home seller. The most common myth from residential realtors is to tell their prospective client: “My agency doesn’t discount commissions.” Is this possible they don’t negotiate? Yes, but NOT probable. For instance, in 2016 roughly 17% of buyer’s agent commissions in Glendale were discounted below 3%. By the first nine months of 2020, a whopping 46% of buyer’s agent commissions for Glendale property sales were discounted below 3%. Could this be an anomaly? Not likely. In 2020, 47% of buyer’s agent commissions were discounted below 3% in Gilbert, 44% were discounted in Mesa, and 54% were discounted in Avondale. Imagine, if you are paying 3% commission in Avondale, you are now in the minority.

I know what’s going through your mind. Won’t agents want to avoid my home because it has a smaller commission? First, it is illegal for an agent to do that. Second, if a buyer sees something on Zillow and they can’t figure out why their agent is steering them away, perhaps that is a red flag. Most important, let’s look at the data itself. Let’s look at Gilbert again. The average number of days on the market for a house in Gilbert offering less than the “standard” commission of 3%, is just under 33 days. If discounted commissions are having an impact, it’s certainly not happening in Gilbert.

Is it like that everywhere in the Phoenix Metropolitan area? No. There are a couple areas that don’t follow the paradigm shift. The outliers are Paradise Valley and Scottsdale. Interesting phenomenon wouldn’t you say? It’s one of the few areas of our economy where having more money doesn’t equate to better negotiations or a better deal. So what does it look like in PV? Interestingly enough, in 2016 only 5.5% of buyer agent commissions were discounted. By 2020, they were still hanging in there and discounted only 5% of the time. In Scottsdale in 2020, only 18% of sales were negotiated to less than a 3% commission for the buyer agent. Are people in Paradise Valley that bad at negotiating? Do people in Scottsdale have so much extra money that they don’t care to negotiate? I seriously doubt it? However it does give you food for thought.