Defending Your Worth: Compete With Discount Agents and Win!

There is one lesson I am consistently reminded of; the self-employed spend a lot of time defending their worth. When you're a realtor, this happens during the "What's your commission?" conversation.

Picture this, you’re at the dining-room table in the home of a potential client. You’ve discussed the comps and the price you plan to list their home for. They look over your marketing material, they laugh at your jokes, you are certain the listing is yours and it probably is. Then comes the big question...

“What is the commission you’re going to charge me?”

This question can elicit cold sweats and nervous energy from both the seller and the realtor because most people get nervous discussing money. That being the case, the more comfortable you are when talking about money, the easier these conversations will be.

Odds are high the seller is going to try to negotiate the commission down to the lowest possible rate therefore, when the broker says 6%, the seller is ready to ask for 4% in hopes you will find a middle ground and that's 5%...but there are brokers who work for less. At the end of the day, accepting a commission below 5% implies two things, you think you are worth less than another realtor, or you're afraid they will give the listing to someone else assuming they will charge less. It’s understandable to have these insecurities but that’s exactly what they are... insecurities. So let’s do the opposite and gain some security here.

An agent once told me a seller was demanding to only pay a 2% commission because he already had a buyer lined up and he just needed a broker to run the transaction, not the marketing. We had to brainstorm how to procure a commission relative to the labor involved. I advised him to itemize the commission so the seller will see that the majority of the deal isn’t in the marketing, it’s in the transaction. There will be a contract to go over with the buyer, there will be an inspection which will change the dynamics of the deal, the buyer might want some last minute changes before the closing happens...etc. Once we discussed the whole scope of what the deal involved, he felt more confident going back to the seller and managed to get a 4% commission on the deal which the agent and the managing broker felt was reasonable.

So many things happen during the length of the deal that have little to do with marketing and open houses, but most sellers don’t know that. They think this is a walk in the park for us. They think the realtor shows up, takes pictures, makes a cute website and BOOM, property is sold. You have to show them the process of the deal so they will understand what exactly it is they are paying for. Check this scenario out...

Seller- I don’t know...I think 5% will do. I just think that this market is hot and it will sell superfast so 6% seems a bit much. I mean that’s a difference of $_____. You see what I’m saying, right?

You- Well, first of all, getting a buyer might seem like the easy part but finding the IDEAL buyer out of a stack of offers is an art. I can understand where you’re coming from so I think I should offer some clarity with the commission in order for you to see why the standard is 6%.

...then detail all the steps that happen within a typical deal. Once you outline the amount of labor that goes into selling their home, they will have a harder time debating your commission. Since you’re a practicing agent/broker, you already know the steps but in order for you to articulate on the deal, be clear on that list.

Staging- Preparing the home in order for it to appeal to buyers is the first step in marketing the property. "Buyers must be able to see themselves living here. Therefore we must minimize any personal effects and clutter. Let's turn your home into a commodity&quo