I recently travelled to Las Vegas for Keller Williams Family Reunion.  Family Reunion for those of you who don't know is a 5 day training event with an uncountable amount of classes.

One of the classes I took was on negotiating with clients.  After taking the class I thought a lot about some of my approaches to negotiating.  I would like to share with all of you some of mine and some I learned in that Las Vegas class room.

ne·go·ti·ate      /nɪˈgoʊʃiˌeɪt/ Pronunciation Key - Show Spelled Pronunciation[ni-goh-shee-eyt] Pronunciation Key - Show IPA Pronunciation verb, -at·ed, -at·ing. -verb (used without object)

I think we often confuse negotiating with winning.  I doesn't mean that we are going to get our way on every issue.  That would be selling or convincing the consumer.  To negotiate, both parties will need to feel "whole" at the end of the transaction, we call that a WIN-WIN.

Example: Seller wants a lower commission

First step would be education.  It is our job as real estate agents to educate our clients on how commissions work.  The media has done a great job of portraying real estate agents as over paid.  In todays market (most of us are in a buyers market) it takes more time, more marketing, and most importantly more money paid by a realtor sell a home.  Explain first off that when an agent charges a 6% commission it is divided in the following manner

I choose to demostrate this with 6 business cards or 6 one dollar bills.

Of a 6% commission 3% right off the top goes to the agent that represents the buyer.

Of the 3% that is left it normally gets divided three ways

1. I pay as a real estate agent around 1 % of my total 3% to my broker for the opportunity to work at XYZ

2. I spend 1% of my total 3% on marketing your home. 

3. The last one 1% of the my total 3% is what I live on

Feel free to ask the consumer since I must pay my broker that leaves the money I have budgeted to market your home and the 1% I live on which one should I go with out?  If another agent has offered less commission ask the question which one do you think that agent is going with out?  Ummm Marketing?

If you can not convince a seller to list at a your normal commission rate you have a few options

1. Ask seller to pay for some of the expenses of marketing up front.  This will reduce your risk and make it easier to work for less.

2. Agree on a selling price like 100,000 and offer to reduce your commission equally to the percentage less then sales price you get for the home.  If you get 100,000 you get all of the commission.  If you get 90,000 then you got 10% less then asking and you would reduce your commission 10% (3% commission would be reduced to %2.7)

3.  Offer to reduce commission if you can get a referral fee if they are buying some where else. 

4. If they are buying in the area represent them as the buyer and credit them come money on the buyers transaction not on the listing!  Keeps the loyalty through both transactions.

5. Offer to reduce the commission by half of a percent for each legitimate referral you get during that transaction

6. Offer a flexible commission program depending on where the buyer comes from.  Charge less if you or the seller find a buyer with out the use of another agent.

Good luck and make it a WIN-WIN