Hello everyone and welcome to Debbie’s Daily Tips!
Today we’re talking about how to hold the line on commission. Now of course we all know that commissions are negotiable by law. So therefore, as a great salesperson, it falls to you to really prove to the seller that you are worth the rate of commission that you are asking them to pay.
Now we all know that a real estate transaction today is far more complicated than in years past. And it’s not unusual for sellers to ask for listing agents to pay for expensive marketing, home staging, and of course there is the legal liability that goes along with each and every transaction.
So in other words, when you do a terrific job marketing and selling a property, you have invested an enormous amount of time and money.
That’s exactly why you need to determine the rate of commission that is acceptable to you and allows you to do the proper job for the seller. And then it’s up to you to explain all of this to the seller and negotiate with them what you feel is appropriate.
As I speak to agents across North America, of course the average rate of commission paid can vary drastically. Sometimes even inside of a state or a county. I do even still see markets where 6 and 7% is commonly paid, and yet I see others where 4 and 5% is more the norm. So as I said, it does vary drastically.
Let’s talk about this: why is it that most sellers today will usually expect to grind on commission, sometimes grinding so much that it causes them to end up with a cut rate agent that will not provide the services and exposure needed to sell the property at the highest price possible?
Here are a few potential reasons:
They’ve had a bad experience and they really don’t think much of real estate agents in general.
Maybe they’ve not seen a presentation that inspired them and they just didn’t feel the agents were worth the fee they were asking.
Maybe they felt the home would sell easy and they don’t think the agent will have to actually earn their money.
They could just be unreasonable and difficult to work with.
Or, they feel as a savvy consumer they should ask the question, just in case the agent would be willing to cut it down a bit, knowing if they like the agent and feel they bring value they will pay more but still feel the need to ask.
Now maybe they have low equity and they’re looking to the agent for help make the deal work.
Or maybe they feel because they are doing multiple deals or transactions with the agent that there should be some incentive.
I probably covered most of them, right?
Again, as professionals we know the law, that commission is negotiable. That doesn't, however, mean you need to accept a rate that is less that you feel you are worth.
You need to learn to present more powerfully, to negotiate more aggressively, and to stand your ground on what you are willing to accept.
Your failure to stand your ground when you take the listing will likely increase the chance that they will keep coming after you, nit picking more money out of you as the transaction progress.
Also, if you make a habit of cutting commission below what you are worth it erodes your profit, your confidence, and can quickly become a pattern that is hard to break.
Also consider this. If you take a listing at a low rate, there is a chance that other sellers in the area are going to find out about it, and of course will expect you to do the same.
You’ve got some work to do. So remember: you are worth it, you deserve it, so let’s go out there and convince them.
I look forward to talking to you on the next Debbie's Daily Tips and we’re going to continue on in our series on how to hold the line on commission. Talk to you soon!
