Sellers love to hear what all you will do for them in order to sell their home and get the best price for it that you can. But when it’s time to discuss how you’ll be compensated for all this work, sellers can suddenly forget all the services and expertise you bring to the transaction. You know how much money it takes to provide the services sellers demand. And you realize you’re asking a fair price for your expertise. But how can you gently counter their request and get them to understand?
First, don’t get bent out of shape or offended if potential clients ask for a lower commission.
Only a small number of consumers won’t listen to your explanations, and these people are shopping for a bargain without regard to the quality of real estate services. Most people simply want you to justify your price. So crow a little bit about your expertise, even before sellers get a chance to talk commission. Tell potential clients what’s so great about listing with you. And rehearse responses to sellers’ requests to lower your commission. Here are some ideas to help you defend your commission.
“I’m good enough. I’m smart enough. And doggone it, people like me.”
You may not need to stare into a mirror and recite a daily affirmation to feel confident about your fee, but you should believe in your product and your price. Consumers will feel the confidence you have in yourself.
Give the impression that your price is final, even if it’s not.
Avoid phrases like “I usually charge” or “my normal fee is.” Those constructions and phrases imply that sometimes you charge a different commission. You may on occasion lower your fee, but you should control those occasions. Before you walk into a potential client’s house, know your price. Are there instances when you can afford to lower your commission? Outline a clear policy of when you negotiate commissions and know exactly how low you can go before you talk to sellers.
Focus on justifying your value as a real estate professional before you discuss your fee.
It will be easier for sellers to digest paying you a percentage of their purchase price if they know what they’re getting for their money. Try to discern what potential clients perceive as the most valuable service to them. Is it advertising? Negotiation skills? Open houses? Find out what they want most and emphasize how you’ll provide it.
It’s harder than it looks!
If potential clients fail to grasp the value you provide after hearing your presentation and still request a lower commission, be prepared. Having several responses for challenges to your fee makes it easier to stand your ground and appear confident in your abilities. When sellers ask for a discount, revisit all the services you provide for that fee. You need to stress that fact to sellers and let them know that someone willing to work for a discounted commission may not provide the same level of service.
Answer the question with a question.
Ask sellers who challenge your commission why they deserve a lower rate. Throw the question right back at potential clients. If asked to lower your commission, always ask why they feel you need to reduce your commission?” Usually, sellers stammer and eventually mumble something about the downpayment on their next house or moving expenses. Turning the question around makes them realize that everyone has expenses to cover and,it puts them on the spot.
Show them the money trail.
Dispel the myth that you get rich off every transaction. Show potential clients where the percentage of their sales price really goes. Explain, in simple terms, the distribution and splits of commissions and the expenses that you incur in order to complete a typical transaction. When sellers realize that real estate agents don’t actually take home the entire percentage, most seem to be understanding.
Give and take.
Maybe you have the power and inclination to discount your commission based on what a seller brings to the table. If so, make sure you get a concession by potential clients in return for adjusting your fee, such as a longer listing period or lower price. Let the seller know up front that you take all the risks of listing a house and maybe they would want to pay half your commission in advance and you therefore can reduce it. Tactfully explain how lowering your commission reduces your profits by X percent. But if the sellers are willing to lower their list price by X percent, then you will gladly reduce your commission.”
“I am worth my fee.”
However you choose to handle commission-lowering requests, be consistent in your approach and don’t set a bad precedent. You may please one seller with a commission reduction, but any referrals generated from that client will also expect that reduction. Be confi dent and assert that you charge only what is fair given the high level of service you provide. Most consumers understand the value you provide, or else they wouldn’t be talking to you in the first place. People need to be reassured that they’re getting good service for their dollar.
Help them see your worth!
Explain your services in relation to their home, list your accomplishments, explain your designations and how they help you serve clients, tell them how last month you sold two houses in their neighborhood within 30 days of listing them (only say that if it’s true, of course). But if you run up against a seller who listens to your sales pitch, refuses to concede anything to you, and still demands a discount, say this : “I won’t take the listing. I am worth my fee!”