I’ve worked with thousands of agents over the last twenty years and thought I’d share some excellent questions from some of them about working with Sellers. As with many things in life, there aren’t really hundreds of problems for any given activity. Most agents share the same few challenges, so you’re bound to learn a lot from considering both question and answer.
Q: I had an analytical (High C) seller quiz me about how I derived my stats, particularly the one stating my homes sold for 1.87% more than the market average as per the list to sale ratio. Could it be argued that I just list lower than the average?
A: We've all had homesellers challenge us with this one. Here's what I say: "Mr. Smith, it is unlikely that I could convince over 400 homesellers to list their home for 1.87% less just to make my stats look better?" In most cases, that's all the explanation a homeseller will need because it is based on simple logic. However, you might also have some further statistics ready to back your claim up. Then go on to do the math with your prospect to show them how much extra money they could realize from their own homesale by listing with you.
Q: Rather than charging a % commission, I am considering trying a flat rate commission. This would be a new USP (Unique Selling Proposition) that would be very aggressive. I would charge just a flat rate commission based on the sale price of the home - $3,000 for a $100K to $150K home; $4,000 for a $150 to $200K home, etc.
A: Discounting commissions including flat fees are a terrific USP because they grab attention, generate interest and calls. With that said, it was never one I pursued for two primary reasons:
1) Anyone can do this, especially agents with little or no skill, and I NEVER wanted to be perceived to be like all the other REALTORS where the only factor or consideration was price. I also believe strongly in the thought that you get what you pay for, and that price is only an issue in the absence of value
2) Any opportunity to earn a fair profit is dramatically diminished with this approach. I’ll bet you do one hell of a great job for your clients and believe you are entitled to the profit you make. I would rather do less transactions at a fair commission rate than cut my fees and have to do more volume. My goal was always to compel my clients to have a strong desire to pay me my full commission of 7% plus a $495 transaction fee. Although I wasn’t 100% successful with this strategy (and no one is), I positioned to my clients that I did not and could not cut my fees like all the other agents in town because I did far more to promote and protect my clients than my competitors did.
Q: At one point on the webinar today, you used an analogy about someone getting on a plane and talked about the amount of fuel. What I got from it seemed very powerful and would apply to my presentations to sellers, but I did not get the wording.
A: Here’s the analogy you’re referring to which I have used successfully with sellers: "Imagine you are about to leave on a transatlantic flight which requires 3,000 tons of fuel to reach your destination. Would you get on the plane if it only had 1,500 tons of fuel? If we were to cut our fee, we'd obviously have to cut back on the marketing we do. Cutting back on our marketing is like flying on half a tank of fuel. You see, we don't know which piece is going to get your home sold, but what we do know is that the more pieces we have, the greater the likelihood that we find the right buyer who is willing to pay you top market for your home. Does that make sense? Maybe it will help if we look at it this way; if we cut our fee 1% and, as a result, don't offer all the great lead generators and marketing we talked about, demand will go down or certainly won't be as high if we go all out, right? So, you save say 1% on the commission but perhaps you lose 3 or 4 % on the sales price because you don't have as many buyers knowing about your home. Is that what you really want me to do?"
Q: Do you allow the seller to see their price through rose-colored glasses and then later hit them with a price reduction? Or do you give them the bad news up front during the presentation?
A: The million dollar question is: “Are they giving you the price or are you giving it to them?” I would presume that you're giving them the disturbing news and they are understandably turned off by it. Put yourself in their shoes. They're expecting $15k-$20k more and you're telling them (the truth) that that's not where the market is. What works for us is showing them the market and, after reviewing some comparables, asking them where they think the price should be? It's far more powerful when they tell you versus you telling them.
We hold many free, half day seminars across the country if you want to learn more about my system and you can search the current schedule here.
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