(This is Part 2 of a two-part series. Read Part 1, "Just say ‘no’ to commission-cutting.")
According to Consumer Reports, 67 percent of agents will reduce their commission simply because the seller asks them to do so. Do you know what to do to earn the full fee you deserve?
Last week’s article looked at five strategies to earn a full commission. The key point is to focus on value rather than price. After the sellers hear about the wide variety of services that you provide, they may still test you to see whether you’ll lower your fee. According to the National Association of Realtors, 73 percent of sellers interview one agent and another 14 percent interview only two agents. In other words, 73 percent of the time the only person keeping you from receiving your full fee is you. Another 14 percent of the time, you have competition from only one other person.
When a seller asks you to reduce your fee, it normally means that you have not illustrated your value. You can often circumvent this question entirely by discussing four or five of the key elements on your premium marketing plan. After explaining each item, ask the seller, "Is this a service that you want?" They will normally say "yes!" to each of these services. If the sellers then ask you to reduce your commission, respond by saying, "I work only with sellers who want premium service, since that is the best way to help you achieve the highest possible net price in the shortest amount of time. If you want to lower the commission, I would be happy to refer you to an agent who provides less service."
Here are some other tried and true ways to answer the commission objection.
Mike Ferry has two very simple scripts he trains for overcoming the commission objection. When someone asks you to reduce your commission, Mike recommends saying, "No — next question." If they ask, "Aren’t commissions negotiable?" his reply is, "Yes, would you like 7 percent, 8 percent, 9 percent or 10 percent?"
Here’s one of the toughest objections to overcome:
"We would like to hire you but John Agent from your company offered all the same services for a reduced commission. Would you be willing to lower your commission to get the listing?"
Here’s a proven way to overcome that objection:
"Mr. and Mrs. Seller, in order to obtain the highest price possible for your property, you need someone who is a powerful negotiator — isn’t that correct? (The obvious answer is "yes.") So if you hire an agent who can’t even negotiate a full commission on their own behalf, how effective do you think he will be in negotiating the maximum price for your property?"
Wait for the seller to respond. There’s an old adage in negotiation that the first one who speaks loses. Ask the question and let them draw their own conclusions.
Here’s a slightly different variation that works equally well:
"So John Agent was willing to reduce his commission by 17 percent, is that correct?" (Wait for their response.) Hmmm, I wonder if he would be willing to give away 17 percent of your equity just as easily as he gave away 17 percent of his commission."
Again, wait for the sellers to respond. The large majority will want the services you offer and will agree to hire you.
Another strategy is to help sellers understand the cost of hiring someone who takes longer to sell a property or who sells their listings for a lower percentage of the sales price than you do. To use this strategy, track your personal "days on market" time as well as your "list-to-sell ratio (i.e., the ratio of initial asking price divided by the final sales price.) For example, if you normally sell your listings in 60 days and the average market time in your area is 120 days, you save the seller money in several important ways. First, if sale prices are declining, then each month the seller stays on the market means that his property is worth less. In cases where the seller is relocating, the family may have to carry the costs of maintaining two residences. Even in a good market, properties that sell early in their listing period normally net the seller more money than those that stay on the market for an extended period of time.
Competent agents also save sellers money by doing a better job negotiating the transaction, handling any challenges that occur while the property is under contract, as well as holding the transaction together when there is an appraisal or title problem. This results in a higher list-to-sell price ratio.
The bottom line is that most people want premium service, especially if you can demonstrate how it helps them to net more money. Even more importantly, 73 percent of the time the only person keeping you from receiving your full commission is you.
Bernice Ross, national speaker and CEO of Realestatecoach.com, is the author of "Waging War on Real Estate’s Discounters" and "Who’s the Best Person to Sell My House?" Both are available online. She can be reached at email@example.com or visit her blog at LuxuryClues.com.
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