Over the weekend, I had a listing appointment for a home that had been on the market twice before and did not sell. About 90% of my listings come from expired listings.
The appointment and presentation went great. The home was in an area of Cleveland, OH that has seen many foreclosures. However, the home was nicely updated and with views of Lake Erie from the bedrooms. We agreed on a price that was competitive for the location and the views.
I began to get out my paperwork to get the listing agreement signed. We began to go over the contract and got to the section on commission.
I am always very upfront about my commission rates if a customer asks. I know some other agents will not discuss their commissions until they get face to face with the homeowner. Even if a customer asks on our first phone conversation, I tell them what I charge. I have 24 listings right now. Will I take more if they are priced correctly? Absolutely. If the customer chooses not to list with me or meet with me because of my commission rate, that is fine. I have 24 other happy customers who did not see an issue with it.
When we began talking about commission, my listing appointment took a very negative turn. Without discussing the actual rates, his previous agent had charged him 3% less that I normally charge. Mind you, his previous agent did not sell his home.
The homeowner asked what rate I would negotiate down to. I responded that my commission rate is not negotiable. He actually got up from the table and starting jumping around. He said, "I thought commission rates were always negotiable".
I responded that some agents do negotiate their commissions. but that I did not. My company provides me with a contract that has our commission rate preprinted. That is the rate that I am expected to get when I turn in a listing. That rate is needed to provide my company the funds to cover the cost of doing business, etc. It is needed to provide the buyer's agent with enough compensation to motivate them to show and sell the house. And after my commission split with my brokerage, it is needed to cover my expenses and put food on the table for my family.
The homeowner was in shock. He stated, "In this economy, real estate firms should be dying for my business". Again, mind you, his home had not sold two times previously. This is not an area of town that homes are jumping off the shelf. And we are in Northeast Ohio, where the market is still very much in recovery mode.
Needless to say, I did not leave the house securing the listing. And I am ok with that. I value what I do. I value my brokerage and what they need to me get. And I have 24 other customers who did not have an issue with what I charge. I have secured three new listings since, none of whom had an issue with my commission because they saw the value in actually getting their home sold, not just letting it sit on the market.
**One final note, please do not discuss any specific commission amounts in your comments. My commission rate is set by my brokerage, and is not based on any "standard" rate in our market.