What Does “Commissions Are Negotiable” Mean?
Short Answer: Real estate commissions are negotiable because there is no commission rate set by law or by the industry. You can set your own fee and hold firm. What you cannot do is coordinate pricing with other agents or brokerages to create a standard rate.
It means there is no law, rule, or industry standard that sets commission rates.
Every commission is simply a term agreed upon between the brokerage and the client.
You Can Set Your Own Fee
You are allowed to decide what your services are worth.
You can say:
- My fee is 6%
- My fee is 7%
- My fee is a flat $X
- I do not discount my fee
That is completely legal and correct.
Your fee is your business decision.
“Negotiable” Does Not Mean Discountable
Most agents misunderstand this.
They think “negotiable” means they must lower their fee if the client asks.
That is wrong.
Negotiation means:
- The client can accept your fee
- The client can reject your fee
- The client can hire someone else
You can also say no and keep your price.
That is still negotiation.
The Only Rule You Cannot Break
You must set your pricing independently.
You cannot coordinate pricing with other agents or brokerages.
Do not say:
- “We all charge 6%”
- “This is the standard rate”
- “Nobody goes below this”
That is price fixing.
The Difference Explained Simply
You can fix your own price.
You cannot fix the market’s price.
Independent pricing is allowed.
Group pricing is not.
How to Explain This to Clients
Use simple language.
Example:
“Commissions are negotiable because there’s no set rate by law. My fee is X% for X level of service. You can accept it, counter it, or work with someone else.”
This keeps you compliant and confident.
Bottom Line
“Commissions are negotiable” does not mean you must lower your fee.
It means:
- There is no commission set by law
- You set your own pricing
- The client chooses whether to accept it
That is how real estate compensation actually works.