Regardless of how long you’ve been in the industry, you’ve probably had at least one client ask you about your commission. How do you handle this question in a way that protects your income and grows your clientele? Here are some thoughts to consider when asked to lower your commission.
Mulling Over The Commission Question
When potential clients ask you to lower your commission, you need to remember that it’s just that: an ask, not a command. They want to find out if a lower commission is in the realm of possibility.
It’s your job to begin an open dialogue with any potential client who raises the issue.
Find Out Why They’re Asking
It’s important for you to determine the client’s motivation for asking. The client may know someone else who got a deal, money may be tight, or they just might not have a full understanding of what real estate professionals do.
Listen to Them Carefully
Clients want to know that they can put their faith in you and you’re not just looking to make some easy cash. When you ask your clients why they want you to cut your commission, make sure you genuinely listen to their answer with empathy.
Restate Their Concerns
When handling the commission question, John Grimes, a REALTOR® with Better Homes and Gardens Real Estate Metro Brokers, scales back the situation: “I paraphrase their statement to make sure that they understand I’m hearing them. That often calms people down. People are desperate to be heard and understood.”
Acknowledging your clients’ concerns aloud will make them feel as though you understand where they’re coming from.
Address the Issue
If your clients’ problem is financial, help them understand how much money they’ll potentially spend and earn at the close of the transaction. They may feel better about the commission when they realize what they stand to gain.
When the issue is that your clients don’t fully comprehend what agents do, you must walk them through the process. Your clients may think that your job begins and ends with listing their home on a multiple listing service (MLS) and putting a sign in their yard. You need to explain the value you bring to the table.
Demonstrate Your Worth
Be sure to up your merit with evidence.
Show them proof of your recent sales, including what your houses sold for compared to the asking price and how long they were on the market.
Providing your clients with testimonials from those you’ve previously worked with is another excellent way to help convince them of your worth.
The commission question doesn’t have to be a point of contention. If you pay attention to your clients’ concerns and explain your business clearly, it can be an opportunity to impress them.
For more information, check out the full article on the Quicken Loans Zing Blog.
Simply put…..find out why they are asking!
The answer should also be about the worth of the company an agent works for. This should be a large part of the justification for hiring a particular agent. The agency’s standings in the marketplace, the reach of the agency’s marketing including on-line reach which is where most buyers search, the way leads are followed up with, how often you will be in touch with feedback including any changes in the local competition. This is a most important discussion to have, even when your commission is not being questioned.
I would also add that the seller commission fee is split 4 ways, assuming there is 2 traditional brokers and 2 licensed agents.
Comment : Ask the seller, ” If you have another agent willing to give away their own money, how quick do you think they will give away yours?” “Is selling your home a big deal and very important to you?” “Would you look for a heart surgeon to do the operation for a discount?” “Do you think most people do as good a job when you offer them less money?”
Comment
You can say you will reduce your fee. Or, you can decline to accept a commissionectomy. Or, you can use a trial close: “If I reduce my fee, would you list with me today”? Or, use a gambit such as, “Are you more concerned about what I make, or what you net”? Prepare your response in advance. “If I reduce my fee, what does that say about my ability to hold firm on your price”? That’s another great script.
If you go prepared and explain up front what you do, if/when they ask that you cut your commission, ask what parts of the service you provide they can do without. “Which parts of the job could you handle yourself?” Trust me, if they are convinced that you bring value they won’t want to give up anything, nor should you.
I’ve read some really sappy replies to this. I customarily charge above average commission. The few times I faced this situation I simply said my commission is not negotiable. If it appeared they were really fixed on paying less, I suggested they should find an agent worth less than me. This question is also a huge red flag – it tells me the prospect may either be unable to close if they’re the buyer (if you can’t handle 1 point on a 200K sale you have a problem) or if a seller they’re going to present more problems down the road. I run a for-profit real estate sales business. On average, I’ll probably spend about 1/2 of earned commission getting the deal to a closing so in reality, I’m merely recouping what I already spent. I learned long ago the difference between making a living and making a dying.
The answer I gave a prospective client was: this is what my broker charges. Unfortunately they went with someone else. People pay attorneys full price. Why should agents have to cheapen their work, because of a few agents that under cut their commission. Also, I believe there could be a liability down the road. Usually these agents are not in business long.