WBS_worth_commission

How to Answer the Commission Question

Are you worth the commission you charge for representation?

Some home buyers and sellers believe they need to negotiate your commission in the same way that they will negotiate the price of their next home. Part of your job as a real estate professional is to master the right language to handle commission objections. It’s not just about making the money you earn, but also protecting your self-esteem and sense of worth as well.WBS_worth_commission

The problem is that savvy home owners and buyers are constantly being bombarded with real estate tools on the web. They can easily find home value calculators, download contracts, and arrange for financing online. So why should they pay your commission?

If you’re looking for a better answer to that question, you should pick up Mark Hunter’s book, High Profit Selling: Win the Sale Without Compromising on Price (AMACOM, 2012). In it, he teaches sales professionals how to handle commission objections and build understanding of their contribution to the value of the transaction. Potential clients likely don’t understand how you as a real estate professional can save them thousands by recommending the best services, guiding the valuation process, meeting the closing date, eliminating title problems, and more.

Most home buyers and sellers don’t understand all of the tasks that a full-service real estate professional accomplishes on their behalf. Hunter suggests making a list of all of the things you do that are important to the customer, totaling up the value for completing or not completing the task, and then showing it to the customer if they try to negotiate the commission. Also, add up how much time it takes to perform each task and ask the customer if they are willing to give up ___ days/weeks of their year to buy or sell their house on their own.

In the end, every time you cut your commission you are throwing away profit. That profit could be used to reinvest into your business and/or bolster your children’s college savings fund.  Every time you accept less, you say to yourself you aren’t worth the money. This will eventually cripple your belief system.

So the next time a buyer or a seller tries to negotiate your commission, what will you say? Really you only have two choices. You can demonstrate the value of what you can do for your client, or you can sacrifice your future and self-esteem by accepting less than you deserve.

Doug Devitre

Doug Devitre is a Certified Speaking Professional of the National Speakers Association and has been inducted into the National Association of REALTORS® REBAC Hall of Fame for being one of the top educators in the industry. He has helped organizations in 37 states, across Canada, and anywhere else with an Internet connection to achieve faster results using these ideas.

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Comments
  1. Flo Sayre

    When I am asked to reduce my commission, I ask the person this: “Is your salary negotiable?” They say, “Yes.” I say, “Do they ever go down?” They answer quite adamantly, “NO, of course not!” And I smile and say, “Neither do mine.” Then I hand them the pen to sign the listing agreement. DONE!

  2. Usually Sellers are the ones wanting to negotiate a commission reduction to achieve a higher net. I try to explain to them that the only thing I have to sell is my time and there are no upfront guarantees to me as to how much time I must invest in selling their home. If I offer a discount, what portion of my service would they expect me to reduce in order to save them money.

  3. What about relatives who expect yout services for free? Like a son or in law who wants lots of time and attention totally free or. At best, 1/2. Of 1 per cent. This is not expected from any other family members.
    They are happy I am receivin the commission
    I receive from other clients.
    I’m really stressed about this one transaction that I let go because I value my time and experience. Comments appreciated

  4. Kevin Coburn

    Hi Miriam, What I have done in the past when it comes to close friends and family is I refer them to other agents. This way if for some reason things go south it is not really on me and I get a nice little referral fee when things go through. Friends are worth more than a commission why risk it for a few dollars. Use them for networking.

  5. George Schrempf

    In my state, the seller pays both agents’ commissions.
    What do I say to a seller who wants to negotiate my buyer’s agent commission? It’s easy for me to justify the many hours of work I did on behalf of the buyer, but to be honest a large portion of that work does not directly involve their transaction.

  6. George, this is an easy one for me. I assume you are talking about the listing presentation. There are numerous answers to that question, my question is how often that comes up with your sellers? I am not one of those HGTV agents that sells multi-million dollar homes, I sell your average “middle class America” house :) That being said, it’s only come up once for me. I said that it will have to be displayed in the MLS as such (which actually contradicts the MLS in Florida) and to be quite honest, no one is going to take me or the sale seriously with that deal. Think about it, and have them think about it. I’m asking you to bring me a buyer for my listing but I want you to know you are worth 1/3rd of what I am. Now, to tell anyone that, they won’t take me seriously as an agent and move along, “steering” their client away. I know I would.

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