Commission shoppers beware

How will you decide who is the best person to market your property? If you're shopping exclusively based upon commission, you could be making a very costly mistake.

Recently I was speaking with the CEO of a well-known real estate firm. He shared his frustration about what he was hearing from many of his broker-owners. Apparently, a large percentage of buyers are calling various real estate offices and asking, "How much is your commission?" If the person answering the call says, "Six percent," the caller hangs up.

Another version of the same scenario sounds like this, "We just talked to Joe Agent who works for the same firm you do, but he was willing to take our listing for 5 percent. We really like you, but unless you cut your commission to 5 percent, we're going to list with Joe."

Research from the National Association of Realtors shows that about 15 percent of all sellers select their agent exclusively by how much commission the agent charges. About 5 percent decide based upon their desire for premium service. The other 80 percent make their decision based upon price (i.e., commission) and value. Value includes the price plus the other services provided in conjunction with that price.

What many sellers fail to realize is that the real issue is not how much commission you pay, but how much you net at the close of your sale. The way you obtain the maximum amount from your real estate sale is with maximum exposure to the marketplace. Thus, as an informed seller, the first step you must take is to interview several agents.

Ask the agents to bring you a written copy of their marketing plan. Also ask the agents to provide you with the names of three of their past sellers along with their contact information. If the agents are unwilling to do so, look elsewhere.

When you look at the agent's marketing plan, does it include a staging strategy? Does it include a Web marketing plan including posting on Realtor.com, the local multiple listing service, and online real estate portals? Does the agent have a strategy for marketing to people in your local area using traditional approaches such as open houses and print advertising?

Does the agent have a strong online presence, such as a blog, and is the agent active on Facebook, LinkedIn and Twitter? Does the agent use an 800-number or text-messaging system that automatically captures the phone numbers of people who call off your for-sale sign? Agents who have all these systems in place will generally help you achieve a better net price because of the high degree of exposure they provide for your listing.

While an agent can have a great marketing plan, unless he or she has strong negotiation skills you can still end up netting less than if you hired an agent with strong skills. When you interview the agents, there is nothing wrong with asking them to cut their commission. What you're looking for, however, is how the agent responds to this objection. ...CONTINUED

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