I just lost my first listing opportunity because of one simple factor: Greed.
Not so much due to greed on the seller’s part, but the greed of my own brokerage firm for refusing to permit me to charge a 5 percent commission instead of the standard 6 percent.
This whole situation is so utterly stupid, so terribly frustrating, that I’m not sure if I can explain it.
But, I’ll try my best.
For a year now, I’ve dutifully knocked on at least 200 doors a week in my “farming area” in the hope of landing my first listing. I’ve spent nearly $3,000 on flyers and other giveaways, like notepads and those ubiquitous refrigerator magnets.
Door-knocking–or “farming,” in Realtorspeak–is one of an agent’s most tedious jobs. But many, including the manager of the brokerage I work for, also believe it’s the cornerstone to build a successful career in real estate sales.
I don’t know a single Realtor who starts a day of door-knocking with the expectation that it will garner a quick listing. Instead, the main goal is to keep both your name and your face in front of local homeowners so, when they eventually decide to sell, they’ll call you instead of a competitor.
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It takes me about six hours to rap on my 200 doors a week. I obtained my real estate sales license last fall, which means that I’ve already spent more than 300 hours–the rough equivalent of eight 40-hour workweeks–pounding the pavement in search of my maiden listing.
So, perhaps you can imagine how excited I was when someone in my farming area finally called me last week and asked me to make a listing presentation for his home.
Within a few hours, I had put together a marketing plan that even the most veteran Realtor would be proud of and then presented it to my prospective client that same evening.
My prospect was so impressed by my proposal that he accepted it on the spot, with only one condition: I would charge him a 5 percent sales commission instead of the usual 6 percent.
It seemed like a reasonable request by the owner, especially considering that homes in the area are still selling in a matter of weeks and many properties still fetch more than their listing price.
Although my brokerage firm doesn’t like to take listings for less than 6 percent of a client’s sales price, our office manager will sometimes agree to a 5½ percent commission if the property is priced accurately and will result in a quick sale.
My manager, however, made it clear to me that taking a listing at 5 percent was absolutely out of the question.
“If I let you take the deal at 5 percent, then somebody else is going to walk in tomorrow and say they want to pay 4 percent,” he said. “I have to draw a line to protect us.”
I told him how the property should sell fast, which would mean that the savings in our advertising and other marketing costs would more than offset the money we’d lose by taking the listing at 5 percent instead of 5½ or 6 percent.
Shortly after he dismissed that argument, I did what many other Rookie Realtors would do in a similar situation: I started to beg.
“Please let me take this listing [at 5 percent],” I said. “I’ve been working this neighborhood for a year. And if I can make this sale, it’ll help me get other ones.”
My manager stood his ground. If my seller wouldn’t agree to pay at least a 5½ percent commission, he told me, I’d have to turn down the deal.
I went back to my prospective client and explained the situation. I told him how the highly personalized service I could give him would be well-worth paying an extra half-point in commission, and how my detailed marketing plan would ensure that his home fetched top-dollar.
“I’m sorry,” he said, “But if you won’t cut your commission to 5 percent, there are plenty of other Realtors who will.”
Two days later, a for-sale sign from one of my biggest competitors was posted in his front yard. I’m told the property garnered four offers within 48 hours after being listed–two of which are for the full asking price, and another for even more.
If my brokerage firm had agreed to take the listing at 5 percent instead of demanding 5½ percent, we still would have grossed more than $30,000 in sales fees.
Though the commission probably would have to be divided four different ways–half being split between the firm and agent that represented the buyer, the other half split between my brokerage owners and myself–each of us would still walk away with more than $7,500.
True, if the seller had agreed to pay 5½ percent, each of us would have made about $500 more. But now, by losing the listing over my broker’s refusal to accept 5 percent, we aren’t going to make anything.
I’ve always believed in that old saying that “half a loaf is better than none.”
And, you know what? Even 5 percent would be better than none–especially for a hungry rookie Realtor like me.
Got tips, ideas or advice for the Rookie Realtor? Send them to Rookie@inman.com.