One sure way to find a motivated seller is to look at the commission in MLS. If you looked in MLS and saw a five per cent commission to the selling agent, you would assume that seller is motivated. Would you show that listing? It has been my observation that, if they get shown, they get sold. Raise the commission. There is a recession going on.
Have you ever gone into a liquor store to buy a bottle of scotch? As the cashier is ringing up your purchase, he asks "Have you ever tried Brand X scotch?" "No" you reply. He starts to tell you this Brand X is the best scotch whiskey ever. It is so good, it is almost always on back order. The owner usually saves it for his close friends but through some miracle, we have a few bottles available. Not only that, they are on sale for less than you are paying for that Johnny Walker Scotch. "I think I will just stick with Johnny," you reply. "Well you might just grab a bottle of Brand X for selection. You will love it." So you do.
Why is that clerk pushing you, urging you, encouraging you, cajoling you, helping you to buy Brand X scotch. I know this may seem like a foreign concept. It is called financial incentive. That clerk was getting a commission if you bought Brand X. If this works in other industries, it will work in real estate. Raise the commission.
Imagine, if you will, it is a hot August afternoon in Orlando,Florida. Mr. Real Estate Agent just pulled into your subdivision. He stops the car at the entrance to your subdivision. There is a house to his left listed at a three hundred thousand dollars price and to his right there is a very similar house listed also for three hundred thousand dollars. He quickly glances at the two listings. He notices that the one to his left has a 3.75% commission to the selling office. He realizes that this is a $22,500 total commission. He realizes that will be split fifty fifty between the listing office and his office. He mentally computes his office share as being $11,250. Since he is on a fifty fifty split with his broker, he computes his commission as $5625. He looks at the other house for sale in the subdivision. He sees a $18,000 commission, split fifty fifty between his office and the listing office. That is $9,000 coming into his office. His share of that is $4500. As he is sitting there looking at those two listings, Ms. Buyer, sitting in the front seat of his car smoking a cigarette, burns a hole in his upholstery with that cigarette. Almost simultaneously, Junior, in the back seat, drips Popsicle down his neck. Which one of those two listing do you think he will show first and most enthusiastically? Is that fair? It is human nature. People do what you pay them to do. The liquor store probably sold more Brand X than Johnny Walker this week.
"Mister Seller, are you convinced yet or do you need to see more evidence that a higher commission will get us to the closing table faster with more money for you and me?"
If Mister seller says he is convinced, write up the listing at 7.5%. This is probably what will happen. If he says he needs more evidence. Here it is. " Mister Seller, when I did a CMA for your house, I looked up the Solds, the For Sales and the Expireds. You have seven expired in your neighborhood. You are one of them. That is why I am here. All of the expired have three per cent commissions and some even less than three per cent. None of the expired have 3.75% commission. Three and three quarter per cent commissions do not expire. They sell. How do I know that? I have been doing this for a while. Do you want to list with me a six per cent or seven and a half per cent?"
Ron Climer www.climerrealestateschool.com Orlando, Florida
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