Question Details

Carrie Crowe…, Real Estate Pro in Southaven, MS

How do you defend your commission if needed when on a listing appt.?

Asked by Carrie Crowell, Southaven, MS Thu Aug 23, 2007

If you are on a listing appointment and the subject of commission comes up, as it must if we want to get paid. How do you qualify your fee? What works best for you? Would love to get some discussion going or hear some great stories!!!!! In a CRS class one instructor said he sometimes gets an 8% commission, but he also gives alot for it, ie appraisals, carpet cleaning, home inspection, minor repairs etc. you get the idea. Has anyone ever tried this tactic?

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I have 4 different service levels. The actual marketing services I perform are in writing. The top level includes physical labor and or hiring of appraisers etc. I can lead the client to choose the service level I feel is appropriate for sale of their particular house. Client choices are the key to success in any sale.

One of the 4 levels is the discounted service. I tell them right up front that I don't perform that service because I know it won't sell their house in this buyer's market.

I have several listings in the 8-10% with a few of the properties listed in the $500k range. I've only been in the business since Dec 06 and I am one of the top listing agents in my office of 300 agents. The cool part is that I don't have to break anyone's arm (so to speak) to get them to do business with me.

I have been taught the script of "if an agent backs down on their commission, how can you trust them not to back down on the price of your home" tactic. Frankly, I find this tactic argumentative. A real sales pro will use finesse in a negotiation situation, not a frontal assualt. A statement such as, "Mr. Johnson, my experience has taught me that people look for three things when hiring a real estate agent to represent them. They often look for an effective marketing plan, quality client service and a low fee. Isn't true Mr. Johnson, that there is yet to be a real estate company that can really provide all three? I'm curious, of the three, quality, service, and low price, which one are you willing to give up?
6 votes Thank Flag Link Fri Aug 24, 2007
Someone told me this method, but I have not tried it - You take out a dollar bill and say something like - "this is my 6% (or whatever) commission" then you fold it in half and say "this is what my commission looks like after I pay the buyer's agent" then you fold it in half again and say "this is what I have left after I pay my taxes, insurance, brokerage fees, license fees and all other overhead and expenses" then you fold it in half again and say "and this (by now only 1/8 of the dollar) is what I have left after I pay all my marketing expenses particularly for the sale of this home - do you really expect me to reduce my commission when this is what I am actually earning?" It is supposedly more dramatic when your rip the dollar, but then the client might just think you are an idiot for wasting money!
3 votes Thank Flag Link Fri Aug 24, 2007
Oh this is easy. I consider this an interview that showcases my negotiation skills, among many others. If I back down on this issue, then am I going to back down as I negotiate to get you the best price for your property?

I'm a full service agent (though no carpet cleaning - sorry) and this is my fee. I am defending my fee in the same way that you can expect I'll defend your price. If someone else is willing to take a cut, consider that an immediate red flag. Great negotiators don't fold.

Great question!
3 votes Thank Flag Link Thu Aug 23, 2007
My best tactic when they ask for a reduced commission? I just stare at them and say nothing. I don't care how long it takes. They ALWAYS back down. Try's scary the first time but it works!
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3 votes Thank Flag Link Thu Aug 23, 2007
The Hagley G…, Real Estate Pro in Pleasanton, CA
I like the 8% tactic!

I tell them that commissions are negotiatable, I am a full service broker and my commission is %. I am not a discount broker and do not negotiate. If I fold here on commission it will folding and picking up costs along the transaction.
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2 votes Thank Flag Link Thu Aug 23, 2007
Pam Winterba…, Real Estate Pro in Danville, VA
I sell in a very high end market where average home sales are over $1million. I will cut my commission from 5% to 4% if I sell the house as well as list it. Not for all listings, though. Not on anything overpriced for sure. Not on anything under $1 million. There have been a lot of new agencies in this area who are doing "full service" for 3-4% so I have to be competitive.
Ken, I too would love to see your 4 levels of service. Your speech to the homeowner is something I plan on using next time. Great ideas!
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1 vote Thank Flag Link Fri Aug 24, 2007
Ken, I would like to know more about your 4 levels! Sounds intersting! Cindi a stare down! Sounds a little like meeting at high noon in Dodge City! LOL
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1 vote Thank Flag Link Fri Aug 24, 2007
All those are Fantastic ideas!
But, if all else fails.. Get a pen & paper, and start writing out a list, of ALL the things that must be done once you take a listing. From entering it in the MLS, to advertising, to COE..
I've gotten to item #100 before I was stopped, and then thanked in advance for all my hard work.
Be sure to point out to Mr & Mrs Seller that you do ALL of these things, free of charge, assuming it will sell in the period of time suggested.
People dont balk when I say 6, so maybe I'll take Ken's advice and start asking for 10%!
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0 votes Thank Flag Link Sun Dec 23, 2007
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