"How Can I Compete with a Minimum Service Real Estate Company?"

Education & Training with Sell with Soul

As many of you know, I'm hosting a free teleseminar this Wednesday on the topic of negotiating commissions. You can register for it here.question

As agents are registering for the show, they're asking me lots of questions about their individual situations, which I don't mind at all! Keep ‘em coming!

I got a good one the other day from Melissa. Melissa finds herself competing against companies who provide minimal service for a minimal fee. Nothing wrong with that, mind you, it's a business model that has its place. But it can make it hard on those who offer full service for a higher fee, especially when the seller says those magic words "I need every penny out of my house to break even!" How do you persuade a seller that your services cost more because they're worth more?

I could probably write a book, or at least a chapter of a book on this topic (oh, yeah, I've done that!), but for our purposes today, let me share a little script I came up with in the shower this morning.

When the seller says something along the lines of: "I'm sure you're worth your fee, but I simply can't afford you," how can you respond?

Well, I don't believe you should argue with him. Arguing makes you look insecure and somewhat desperate. And it doesn't work. So don't do that. Neither should you put down your competition - that will only subtly criticize the seller's judgment; after all, he chose to consider going to minimum service route. But what if you say something like this:

"I hear ya and I understand. You have a tough decision to make. On one hand, you can pay this other company a much lower fee upfront and hopefully retain more of your equity. On the other hand, you can hire a full-service agent, whether it's me or someone else, and due to the increased exposure and marketing expertise, you might end up with even more of your equity. Either way, there's no guarantee that your house will sell for what you need it to. I'm sure you'll make the right decision. Do you have any questions for me that might help you in making that decision?"

The fact that you're sitting there in the seller's home means that he hasn't ruled out paying a full-service company. In fact, he probably wants full-service; he's just not convinced of its value. But if you first show him that you care about his situation and you trust his judgment, he'll probably give you the opportunity to persuade him. Just wait til he's ready...

Arguing will get you nowhere - try this instead!
The Power of Reverse Psychology



p.s. The Savvy Prospector is on Special this week! It's usually $249, but in honor of Real Estate Week, you can buy it for $199! Check it out here.

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Show All Comments
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Mike - Me, neither! I think it's going to be great. Glad you're joining us.

Christine - Yeah - that's what I thought - you can sort of spell out what's what without being critical of the other guy!

Kathleen - Yes, indeed!

Lana - I agree 100%. And that sense of self-worth comes from KNOWING that you know what you're doing!

Chuck - as long as the role-playing comes from the heart...

Yvonne - I'm so glad I could help!

Candice - I just don't like the idea of unbundling. I'm there to sell the house, not provide one service or another. If this particular property needs a certain set of services to sell, them's the services I want to provide!

Kelly - maybe, but that's no reason not to show up. I'm sure many a FSBO has hired an agent after being positive they wouldn't...

Maureen - you're right! I know it work on me!

Apr 22, 2009 12:01 AM #42
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

I've offered both services for years.  Flat fee MLS listings and full service.  Experienced sellers and even other Realtors list with my flat fee MLS service.  There typically isn't any convincing them to commit to full service.  On the other hand, some marginally experienced sellers find out they aren't comfortable with the mls listing after a month or 2 and decide to upgrade to the full service.  I explain that the big difference between the 2 services is with full service you get (1) my pricing and marketing strategies implemented (2) my negotiating and creative deal making skills, and (3) my assistance to make the SURE that the buyer ends up closing on the deal.

Apr 22, 2009 01:17 AM #44
Diane Plant
Forest Hill Real Estate Inc, Brokerage - Toronto, ON
Broker, TorontoHomeSearch: Forest Hill Real Estate

Loved your response and theory that if you are sitting in their home they are looking for a reason to use full service. I used to work for a discount Brokerage, but it turmed out that people who had higher priced homes wanted the sign on their lawn of a prestige Brokerage. I also found that people used the discount service to sell inexpensive homes but bought with someone else who they had a relationship with.

P.S. that discount Brokerage is ow out of business.

Apr 22, 2009 01:43 AM #45
Robert Rauf
HomeBridge Financial Services (NJ) - Toms River, NJ

Wow... Another Feature!  Congrats Jennifer...

Came back to check on the comments and Had to scroll WAY down...

Apr 22, 2009 01:58 AM #46
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Yeah, well... shucks... actually I was surprised at the utter lack of interest in the topic until that gold star showed up!

Apr 22, 2009 02:03 AM #47
Gary Meek
NewVision Realty Group - Roseville, CA
(916) 995-9385

Nicely put.  We rarely adjust our commissions at our company, as we are full service and offer many technology items others do not offer.  All listings are manged on transaction point, each listing gets virtual tours, showcase listings on Realtor.com, and is posted to our company site, teh individual site and gets its very own site.  Marketing the property correctly is what sells the home for the most money.  We believe in our service.

Apr 22, 2009 03:09 AM #48
DeAndrea "Dee Dee" Jones
Home Buyers Marketing II, Inc. - Manassas Park, VA
The NorthernVARealEstateLady & DMVRealEstateChick

You get what you pay for in real estate as with any other business.

Apr 22, 2009 03:19 AM #49
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

I agree.  Clients get what they pay for.  In this market it takes more than just putting it on the MLS to move it. 

Apr 22, 2009 04:32 AM #51
Adriana Steel
WC & AN Miller Realtors (A Long & Foster Co) - Chevy Chase, DC

Hi Jennifer, I don't even compete with minimum service providers. I think you get what you pay for. Check out my latest post about a client advertising on Craigslist.

Thanks, Adri

Apr 22, 2009 07:48 AM #52
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

Woops missed the seminar!

Apr 22, 2009 11:17 AM #53
Anja Kerstens
Coldwell Banker Residential Brokerage - Morgan Hill, CA
GRI, CDPE, CHS, ASP, Selling Silicon Valley Real


Thank you for hosting this teleseminar.  I found it helpful.

Apr 22, 2009 12:18 PM #54
Sara Goss
HatmakerGroup.com GMAC Real Estate - League City, TX
Realtor - Houston Bay Area, Texas

Great topic . . . sorry I missed your teleseminar. I offer full service, and provide excellent marketing for my clients. Would the seller work for a reduced salary, just because someone else would?

Apr 22, 2009 02:28 PM #55
William James Walton Sr.
WEICHERT, REALTORS® - Briotti Group - Waterbury, CT
Greater Waterbury Real Estate

Thanks Jenn! Between you and all of the commenters (especially Erica - absolutely loved her suggestions), I have another set of tools to add to my bag of tricks when dealing with sellers reluctant to pay my percentage commission.

Apr 22, 2009 03:02 PM #56
Robert T. Boyer
FHA Loan, VA Loan, Jumbo Loan,FHA Loans,VA Loans,Jumbo Loans - La Jolla, CA
San Diego Real Estate & Mortgage Loans, Ph.D. | VA Home Loan

Thank you.  In our market (good times and bad) that is certainly an issue we have to deal with.  I will try to use your approach next time I face this issue.  I also appreciated all the responses.

Apr 22, 2009 05:40 PM #57
Sheri Spain
Next Home Team - Raleigh, NC
Wake Co. NC REALTOR Apex to Raleigh to Wake Forest

Be careful throwing around the "you get what you pay for."  Several of our top agents in my market offer their services for a "reduced/below what most of us consider norm price."  Call it whatever you wish but know your competition before stereotyping them based on their commission rate.  One of the least expensive agents in our market has over 15 years experience as one of the top agents and his marketing plan includes more than almost any agent in our market.

When I am training new agents I hear this comment in each and every class and have to correct them.  I explain that they need to learn the business models of these others brokers and to check themselves at the door... Is a new or even not very experienced agent worth 6% when a 15-20 year vet with 1500+ sales under their belt offering full marketing and the experience and knowledge of the market at 4%???  Just food for thought?

Apr 22, 2009 11:01 PM #58
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Bless you Sheri!!!! I agree 1000% but it's a very unpopular opinion! I was a discount broker for a few years and provided full service - and I was amazed at how hostile the other agents were toward me. I'm curious how your new agents respond to being told they aren't worth as much as experienced ones? I say that all the time and get slammed every time!

The teleseminar on commission negotiation was FABULOUS!!!! Thanks to everyone who showed up and gave us such wonderful feedback.

Apr 22, 2009 11:06 PM #59
Kelsey Barklow
Hurd Realty - Johnson City, TN

Hey Jennifer, great answer to a tough question. You just have to hope your potential seller client has all the facts to make the right decision for him.

Apr 24, 2009 04:56 AM #61
Yolanda Hoversten
Berkshire Hathaway HomeServices Elite Properties - O'Fallon, IL
Broker - O Fallon, IL Real Estate

Hi, Jennifer!  I like your phrase, you don't get what you don't pay for.  In this case, full time service.  It's difficult not to argue sometimes since I know the kind of service they get from some discounters in my area.  But this tack is worth trying for sure.  Thanks! 

Apr 24, 2009 10:18 AM #62

Great post Jennifer! I agree 100%. Especially the "you don't get what you don't pay for".


Jun 04, 2009 08:47 AM #63
Winter Baserva
Seasons Realty Group of PalmerHouse Properties - Atlanta, GA
Realtor -Homes For Sale, Atlanta, GA

When you can effectively paint the value of your services, the dollars will follow! Its an easy concept, but not one that everyone sticks to!

Jul 02, 2009 03:23 AM #64
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