Most new agents are terrified about the prospect of discussing their commission with a potential seller. If this is the case for you, you're going to need to be 100% comfortable with the commission fee you're going to propose. If you aren't, you're dead meat. If you have concerns that you're overcharging for your value, it will be crystal clear to the seller prospect. In my first year, almost all of my listings were taken at a very low percentage because that's all I thought I was worth, due to my inexperience. As my experience and expertise grew, I became more comfortable proposing (and sticking to) a higher fee.
I'm not being real helpful yet, am I? On one hand, I'm shooting down your confidence, yet on the other, I'm telling you that you must HAVE confidence to negotiate effectively! Well, that's the cold hard truth. But I won't leave you hanging... here's what to do.
You need to convince yourself that you're worth it before you can ever convince a seller.
On your first few listings, commit to yourself that you will go way above and beyond what is typically expected of a listing agent in your area. Commit to yourself that you WILL earn your fee, if not with your experience, with your enthusiasm and effort. Spend your own money marketing your listing if you have a great idea that you think might work. Spend as much time as you need to properly price the house. Do open houses all weekend long. Pay for a home-stager to consult with your seller. Include a home warranty. Be willing to bring in help if you'll need it - even if you have to pay for it.
In short, take this opportunity not only to blow the sox off your seller, but to actually experiment with various listing techniques to see what actually works. If, at the end of the day, you spend your whole paycheck on your experiments, that's really okay! The lessons you learned and the impression you made on that seller will serve you well in your future... and pay you back many times over.
Another way to help make the commission discussion go smoothly is to disclose your fee upfront - on your website if you have one. This is what I've done for years and it works beautifully. I don't beat around the bush about my fee - I simply direct the seller to my website where I explain how I charge and what I do for that money. You can check it out here.
The Confident Rookie Series:
- Know Your Systems
- Practice with Your Printer (sounds silly, I know)
- Preview, Preview, Preview
- Drive Your Route Ahead of Time
- Cheerfully Waste Your Time
- Find a Handyman
- Let Your Seller Prospect Do Most of the Talking
- Get Comfy with Your Commission
- Admit that You're New
- What to say when you don't know the answer
Stay tuned...
Funny, as a new agent I was never uncomfortable with the commission. In retrospect, I guess I skipped a step! :)
Jennifer. This is an excellent series. I like the publication of your fee. There is a very successful listing broker in our area that has done the same thing for years.
I also advertise fees for sellers. Shucks, what's the big secret??
Of course, the agents to whom I refer home sellers know full well that they do not have to take overpriced listing that are referred by me and, in fact, I encourage them to avoid overpriced listings.
Heck, I feel like I am worth every penny of that commission! If you are a GREAT listing agent then you will sell that house and THAT my friend is what they are paying you to do. I feel bad for the home owners with signs in their yards for months and months...
I had retail stores for 16 years, and I trained my salesman to not discuss the purchase price until the end. Why? Because if the customer was not satisfied and not motivated to buy, the price didn't matter. Commissions are all about the end, and serice is all about the process. If the prospective seller puts commission upfront in the discussions, you know that you have to try to explain to them that if the house is not marketed correctly, priced correctly, and all details followed through on, what is the difference between full commission and commission at half the price. It's no sale. Commission at that point is like a lottery ticket purchased at a million to one odds, it really doesn't matter.
Colleen - good for you! No, you didn't skip a step - you're just already confident...
Joe - that has not been my experience, although others have said the same thing. I do not attempt to sell myself or my service at a listing appointment - I treat it as an opportunity to see if I can help. If I'm the right man for the job, there's a fee for my service and I'm upfront about it. I just don't like the whole concept of treating my fee as some big secret - I don't like it when other salespeople do it to me, so I don't do it to my clients. And since I've taken this approach, my commission has been pretty much a non-issue.
Stephen - Absolutely! But a brand new agent probably has no clue how to sell a house, so it stands to reason that he might feel a little nervous about promoting himself as an expert.
Lenn - EXACTLY! I hate it when a salesperson (of any kind) won't tell me how much it's gonna cost me. Until I know that, I'm on edge throughout his whole dog & pony show.
Jennifer,
Congratulations on your feature; it's SO well deserved! I've never heard anyone make your point about being comfortable with your commission. This is your best of the series so far.
Mike in Tucson
Great post with great information. I'm enjoying your blogs, congrats on the feature.
Thank you!
Portsmouth NH Real Estate/ Patricia Aulson
Feature??? Thanks for pointing that out Mike & Patricia!! And thanks for the kind words!!!!!
A good agent knows they are worth every dime. I often tell people they can get cheap fees, you get what you pay for in life!
Good post and information for the beginning realtor.
Tom Larsen
www.nypropertyinsurance.com
Thank you so much for this series. I really appreciate it
Jennifer: Thanks for the post. I appreciate it! It took me about a year in my business to define how I got paid. When I was able to do that, people (including myself) started to take me seriously. I believe this is the most important step in anyone building their business. We cannot be shy about how we get paid! Thanks again!
Very encouraging. If you ever have doubt, keep track of the hours you spend on a client and you will beleive you are worth it. It's an eye-opening experience.
I agree, a good agent is total worth the commission. I also hate when a listing sits and sits. When I was a new agent I got very confortablevery quickly about commsion becuase I lost a listing at the beginging of my career. So I learned from that mistake.
KEEPUP THE POST.
Ben
Jennifer - This is great information! Thanks for sharing and your willingness to help! :)
Jennifer.. Great information... I/m very comfortable with my commission. I offer options and usually get what I'm looking for.
I'm with you! I was so nervous about asking for full commission in my first year. To get over it, I stopped using the standard listing presentation that was provided by my office, created a new one that really felt like me... and the services I provide. Once I had what I considered to be an exceptional presentation, it really helped me -- and the potential sellers -- to believe in my serivces and my commission.
Jennifer, I just took a peek at your commission structure and I love the two options. As agents, we are often taking a big risk when we list a home and I know I usually spend $300 to $600 in the first week it is on the market, so the $500 fee is a nice option.
I'm a blog behind reading your series and I'm thoroughly enjoying your insight. This was great! I'm getting all sorts of ideas from different Realtors on their approaches to presenting the commission and most of the agents say that once they show the seller on paper how it is broken down and divided up between everyone involved, they are OK with it.
Sheila - glad you're enjoying it! I actually don't like that approach of breaking down the commission as a strategy, although I do understand it. I feel that we need to demonstrate to the sellers WHY the fees are what they are, not just whine about how little we end up with at the end. I do agree that the seller needs to understand that we don't get the whole thing - so when I create my net sheets, I divide out my commission from the co-op. At least then I only have to "defend" my half!
Kerry - I love this strategy! I don't try to convince my seller that I'm going to spend the $500, though, because I might not. I just explain that it's a buy-down of risk and most understand that.
Maybe it is my 13 years. Maybe it is my 4 kids. Maybe it is the company overhead required to do what we do well. regardless, I am totally comfortable with what I charge.
Hi Jennifer -- Great tips. I have my commission spelled out on my website -- 100% total transparency. Sellers love it.
Jennifer: Great post and congratulations on the feature on Active Rain.
Good post -- and you are right -- one needs to be comfortable with what they are charging.
I think you really hit the nail on the head about what new agents are worried about, i would konw i am a new agent.
Jennifer: Great post! It is tempting for new agents to undercharge but if they do they hurt themselves and their sellers. If you don't charge enough you cannot effectively market the property nor go the extra mile when needed!
May I add: New agents, and their sellers can benefit from realizing it's not about them. YOU don't charge 7% for YOU. It's not about the individual Realtor. And you Don't take 7% away from the seller.
The Practice of Real Estate is a COMPLETE SYSTEM that adds value to the house. The SYSTEM includes your board of realtors, MLS, your access to other agents, Broker reputation, location, brokerage support and broker experience.
Here is a great listing close that might help you SEE the value of something bigger than yourself... I call it the ROLEX CLOSE.
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Mr Seller, if I gave you a real ROLEX watch, and I gave another to a local Jeweler, who do you think could sell that watch for the most money? (picture streetcorner thug - "Hey Buddy, Wanna Buy A Watch?")
When seller says THE JEWELER, ask WHY? Seller will say Reputation, Location, Clientelle...
BINGO! That's what the Realtor does. Realtors bring things to the table that allow them to charge more for the house than the seller can. And in so doing, we ADD VALUE, or EARN our COMMISSION.
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Great informative post. Congrats on both your series and your featured star.
Great advice Jennifer, Often people forget to invest in themselves and their career. This is a good reminder, and there must be a way to voice that to your sellers... That you are spending $ and time to sell their home!
I tell sellers that I do not work for free, have bills and food to put on the table. Plain and simple; if they want a discount brokerage they can go some where else.
Jennifer - I don't have any issue with the commission we as realtors get for doing our jobs. There are many times we do things for free in this industry. I have never detailed my commission on my website, but do see where it makes sense to explain how commission works. Not so much to justify you are worth it, but just so the consumer understands where the money goes.
This is good advice. You need to believe in your worth before anybody else can.
Very impressive Jennifer. I like your serious for rookies. As a broker/owner I will use some of your ideas in sales meetings if you don't mind.
We follow the "ninja path". I'm sure you're familiar with The Group in Fort Collins, right? Ninja's are soulful agents.
Anna - please do! And yes, I"m familiar with The Group - in fact, I mention Larry Kendall in my book.