Wherever there’s a strong seller’s market, you can count on commission nibblers pulling out their knives and forks to carve up your commission. You can avoid being their main course by not putting your commission on their plate in the first place.
How can you stop commission nibblers in their tracks? Here are five proven strategies to keep your money off the chopping block.
1. Take them to the all-you-can-eat buffet.
The adage “The best defense is a good offense” is certainly true when it comes to commission nibblers. Here’s what you do. First, you need a strong USP (unique selling proposition) that outlines at least 15 steps that you take to help the sellers achieve the highest possible price in the shortest amount of time. To make your USP stand out from those of your competitors, provide the same services your competitors provide plus two or three services your competitors don’t provide and that most sellers would want.
The No. 1 item I would include on my personal USP today is a property tour using the Matterport 3-D camera. Although it’s pricey at about $4,500, it creates a wow factor that sellers want.
The second item would be to create a single-property website using the property address as the URL (234ElmStreetYourTown.com). On this site I would post my photos, videos and other marketing materials. The second step would also be to create single-property sites using a similar format on a Facebook business page, Instagram and Pinterest.
The third step would be to post my Matterport video across the various video platforms, including Vimeo and YouTube.
If the seller still asks to take a bite of your commission, respond by saying, “I work only with sellers who want to achieve the highest possible price by using our premium marketing plan. If you would like to reduce the commission, I can refer you to an agent who does not provide these premium marketing tools and systems.”
When you take the sellers to the buffet, most of them want all the choices and will opt for the “full” commission meal.
2. Avoid insatiable gluttons.
When I wrote “Waging War on Real Estate’s Discounters,” the research showed that about 15 percent of all sellers would select their agent exclusively upon the amount the agent charged in commission. Within this group of do-it-yourselfers, there is an insidious subgroup — the insatiable gluttons. In fact, the folks at Assist-2-Sell and Help-U-Sell report that these gluttons ask them to discount their already discounted commissions. The bottom line is that when you spot an insatiable glutton, exit immediately — their goal is to slice your commission to the bone leaving you with next to nothing.
3. When they ask for chocolate, they usually get a grub worm.
Costco and other discount department stores have made “discounts” as irresistible as chocolate. Consequently, avoid using the word “discount” because sellers see discounts as being as tasty as chocolate. Instead, educate the sellers that when they ask for a discount, they’re not getting “chocolate” — they’re getting a grub worm. Here’s what to say:
“Mr. and Mrs. Seller, if you would like to reduce the commission, I would be happy to refer you to a limited-services agent who does not provide this level of premium service.”
Although everyone likes discounts, no one wants to trade premium service for limited service.
4. There’s a reason hamburger costs less than steak.
If you are a premium agent who provides superior service, demonstrate how your services help the seller to net more money than they would with a limited-services agent. A simple way to do this is to take the average list-to-sell-price ratio (the final selling price as a percentage of the listing price) for your multiple listing service (MLS) and then compare it to your average list-to-sell-price ratio.
For example, one agent’s MLS was averaging 101 percent of ask price. Because of the premium services he provided, his average was 109 percent of ask price — a whopping 8 percent more. His “steak” put a lot more money in his client’s pockets as compared to his competitors’ hamburger.
5. When the Cookie Monster wants you to give up your cookies.
The typical seller knows 12 real estate agents. Consequently, the probability is high that at least one of those agents is a close friend or relative. When the seller says, “I would like to hire you, but my sister-in-law is also an agent for this area,” here’s what you say: “Mr. Seller, please compare my premium marketing plan with that of any other agent you interview, and then decide which agent will help you net the highest possible price for your property.”
Usually, this approach knocks out the competition because most agents lack a premium marketing plan. If the seller is still uncomfortable, you can offer to pay the friend or relative a 10 to 25 percent referral fee.
So here’s the bottom line: The next time the sellers whip out their knives and forks to carve up your commission, bite back with a strong USP, your premium marketing plan and your list-to-sell-price ratio.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles and two best-selling real estate books. Discover why leading Realtor associations and companies have chosen Bernice’s new and experienced real estate sales training for their agents at www.RealEstateCoach.com/AgentTraining and www.RealEstateCoach.com/newagent.