Can You Negotiate
Your Agent's Fees?

Question: In our area, some brokers charge 7% -- even though houses in our neighborhood sell in a matter of days. I hate the thought of paying an agent $30,000 to $40,000 for a few hours' work. Can you suggest some alternatives to a straight 6% or 7%? A house very similar to ours recently sold for $500,000. Why should the broker get full commission if all he does is match the going rate in the market?

I want to offer our agent the following deal: If he gets a buyer offering the $500,000 or less, he gets 4%. If he finds a buyer offering $500,000 to $520,000, he gets, maybe, 5%; $520,000 to $540,000 -- 6%; and so on. Does this make sense?

Kevin: I understand your frustration, however, I'm not sure your commission structure makes much sense. It's important to remember that the listing agent is usually not the same agent who brings in the buyer. You might be better off by offering the buyer's agent a bonus for a higher priced offer. Keep in mind, however, that the price the buyer offers, ultimately, is determined by the market. Your house is worth either $500,000, $520,000 or $540,000, but not all of the above. The only time you'd likely get more than market price is if there's a shortage of homes and buyers get into a bidding frenzy over yours.

The hot housing market in most parts of the country has called into question the traditional commission structure for sales. Although this is a taboo area that most agent don't want to think about, we are seeing a proliferation of discount, partial-service listing agents operating both on the Internet and in the bricks-and-mortar world. These agents, for example, might list a property for a 1% commission to themselves and a 3% to 3.5% commission to the buyer's agent (4% to 4.5% to you). The buyer's agent gets the traditional amount (typically half of a full commission) and, thus, is eager to bring buyer's by. However, for a short 1% commission, the seller's agent offers few of the traditional services. You would probably need to pay for your own advertising, show the home yourself and do some or all of the negotiating.

It all comes down to the fact that you get what you pay for. However, in a hot market, you might find that you'd be willing to do some of the work involved in a sale in exchange for paying a lower commission rate.

Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent book is "Buy Your First Home," (Dearborn, 2000).

Submit your question about residential real-estate and home-improvement issues to homes.wsj.com. Please include your first name, city and state.

Kevin, Montclair, N.J.

Email your comments to rjeditor@dowjones.com.