With discount brokerages and iBuyers on the rise, Realtors are confronted with new challenges, including fierce competition with cheaper options. Here are three techniques to incorporate into your strategy when sellers bring up the topic of discount brokers.
With discount brokerages and iBuyers on the rise, Realtors are confronted with new challenges, including fierce competition with cheaper options. Listing appointments are taking on a whole new meaning these days, especially when the topic shifts to the commission.
The typical homeseller mindset is something like this: Realtor sticks a sign in the front lawn, takes fancy pics of the house, throws them on a website and bam! Home is sold!
This is the reason discount and flat-fee Realtors are even an option; most sellers don’t know what separates them from you, so it’s up to you to show them.
Here are three techniques to incorporate into your strategy when sellers bring up the topic of discount brokers.
1. Show your value
When sellers tell you they are considering another agent who’s charging less, use that moment as an opportunity to show your value.
For example, when the sellers say, “I’m speaking to another agent who only charges 1 percent,” take advantage of this moment with a response like: “That commission is less, no question. But I’m curious — why do you think they charge less than I do?”
I used this method when a seller pitted me against a lesser-priced option, and it worked like a charm. In most cases they respond with, “I don’t know why.” Then you can elaborate on the importance of a full-service experience.
If they say, “Well, they probably provide less service,” this is good. But don’t leave it there; go over the details. “Yes, so I want to get clear on what the difference in service is and why it matters.”
2. Ask questions
Ask them what the other agent plans to provide. Odds are, the seller doesn’t know. Resist the urge to speak poorly of the competition. It makes you look bad. At the same time, the seller still doesn’t know what you do that’s so special.
Instead of listing how awesome you are, ask them what the other agent is offering. Will the other agent work weekends? Are they covering the cost of the photographer, providing vendors, hosting open houses, negotiating all the offers, etc.?
Ask who will be showing the property when the seller is not home and the buyers don’t have an agent representing them. You’re essentially asking all the questions the seller never considered. This paints a more accurate picture of the service you provide in comparison.
3. Lower your commission
If you can’t beat ’em, mimic ’em. I’m not suggesting you become a discount broker, but you can market in a similar fashion. Some discount brokers promote a 3 percent listing fee. We all know the 3 percent only covers the seller’s broker so the marketing is technically accurate, but they drop the bomb at the listing appointment by mentioning the buyer’s agent isn’t factored into that amount.
Promoting you sell homes for 3 percent as an opportunity to get sellers to contact you might get your foot in the door, but it requires savvy skills to convert the seller into a 6 percent commission client. Be transparent and clarify what is covered when the seller pays 6 percent versus 3 percent.
The buyer’s agent will expect compensation, therefore, the most advantageous option is to choose the 6 percent. Only promote this if you are prepared to only list for 3 percent. Otherwise you’re lying in your advertising.
Ultimately, your mindset must be in the right place to compete. Your awareness of what you bring to the table and confidence in your value is required to separate you from your competition, discount or not.
Remember, there is a reason you charge 6 percent — you’re a full-service agent! You give your customers a 6 percent experience, and the lesser price agencies are giving a lesser experience. The best option when competing with discount brokers is to know your value and leverage it when you can.
Stef Shock is a broker, performance coach, speaker and author. She is also the creator of Broker Flow; a collection of online courses for Realtors at every level of this industry.