- Lose a family, lose a generation -- that kind of long-term, big-picture thinking grows increasingly rare in today's real estate business world with so much emphasis placed on the commission.
- We all want the most commission, but things have changed and sometimes it needs to be on a case-by-case basis because each transaction is distinctly different.
- But I believe that holding firm to a set 6 percent commission -- as most big firms do -- will cost you dearly.
My grandparents owned and operated funeral homes throughout their working lives.
They were the most generous, compassionate people I’ve ever known. If someone could not afford a funeral, they believed it was their responsibility — honor — to take care of them.
The greatest lesson they taught me was to be truly understanding of the people you serve — no matter what business you’re in. I’ve embraced it ever since. As they often cautioned, “Lose a family, lose a generation.”
That kind of long-term, big-picture thinking grows increasingly rare in today’s real estate business world with so much emphasis placed on the commission.
I think it’s clear that real estate is no longer a one-size-fits-all business, but a lot of big real estate firms still haven’t gotten the memo.
With how easy people can access information and all the changes in real estate, the “Lose a family, lose a generation” philosophy needs to be considered seriously.
It led me to believe that commission rates should be flexible.
We all want the most commission, but things have changed and sometimes it needs to be on a case-by-case basis because each transaction is distinctly different.
So whether you’re handling both the sale and purchase or you have a personal relationship with a prospect who’s the perfect buyer, looking at what work is needed to get the deal closed is critical and varies on each transaction.
Of course, we would all like to say that our commission rate is 6 percent, and we do not negotiate. But I believe that holding firm to that philosophy — as most big firms do — will cost you dearly.
Here is a recent case history that illustrates what a mistaken doctrine that is:
It involves a client we spoke to who had done several transactions (one large $5 million lot) with an agent from one of the top local firms.
When the client approached this agent to list his residence, the agent automatically wanted to charge the full 6 percent commission.
What were the agent’s reasons for keeping this ironclad policy in place? She said it was because she would advertise the listing in the newspaper, make sure the listing is on the Multiple Listing Service (MLS) plus buyer sites such as Zillow and Trulia, and put it on her private network.
And, naturally, the agent promised a top-dollar sales price.
When the seller gave the agent some pushback on the commission amount, the agent then went on to say she gets only one-half of the commission, and her broker takes the other half. What a stupid answer.
So how does all this look through the client’s eyes? Here’s what this client was thinking:
- Really? You still think print advertising is effective?
- It’s my issue that you have overhead? So does my business.
- You’re so greedy and ungrateful for the business I’ve given you.
- When I went to purchase my new car, I received a buyer loyalty incentive. Even car dealerships show some appreciation for my repeat business.
The seller, who had already paid tens of thousands of dollars in past commissions to this agent, just wanted to be shown a little appreciation for his loyalty.
And, surprisingly, the agent was shocked when the client did not list with her.
The seller was referred to me, and I listed his residence for a 5 percent commission and offered the buyer’s agent 3 percent. The home sold within 14 days, and the seller has now referred me to three other customers — his mother, his son and a friend.
The big firms out there might be turning a blind eye to this, but these days, sellers have numerous options to attract and secure buyers.
Whether a seller is looking to list with a Realtor and negotiate a commission, the big firms might want to heed my grandparents’ philosophy.