Why real estate agents shouldn't reduce their commission sounds like a no-brainer.
But if you've been a real estate agent for any length of time, you have been asked to reduce your commission.
The question I always ask myself is this, "Why do people think it's okay to ask their real estate agent to reduce their commission?"
Do they not understand that this is our job, how we pay our bills and how we provide for our families?
Why should a real estate agent donate money to help you buy or sell your house?
Ask Your Doctor to Reduce Their Fees
What other profession do they ask for a reduction in fees or are we just that special of a group?
Can you imagine going to the doctor for a check up and asking for a reduced price? After all, the doctor only spent 15 minutes with you and didn't find anything wrong. Why do I need to pay the entire $450? How about knocking off $200...and you can forgot about that co-pay. Why should I pay that?
That scenario would never happen, yet real estate agents must defend their fees at every turn.
Just like any other professional, you are paying not just for the service provided, but for the knowledge and experience of the provider.
Real estate agents are required to complete a certain number of continuing education courses to maintain their license. In addition to that, many agents take seminars and attend conferences to improve their skills. Good real estate agents are consistently looking to improve their business and deliver five-star service to their clients.
What's the Problem?
In my opinion the reason people feel it is okay to ask an agent to reduce their commission is two-fold.
First, the consumers need to be educated as to what real estate agents actually do. All they see us doing is showing beautiful homes, wearing nice clothes and getting "high" commissions for what looks to be very little work.
What they don't see is what goes on behind the scenes.
Showing houses is about the easiest part of being a real estate agent.
Getting the property to settlement is a completely different story.
What Happens Behind the Scenes
We are behind the scenes making sure that everything gets done in a timely manner.
- Negotiating home inspection repairs
- Making sure the appraiser gets to the house and providing the necessary comparables
- Talking to the lender to ensure they have received all the required documentation
- Working with the settlement company to resolve any title issues
There are a lot of moving parts and numerous people involved in the transaction. The job of the real estate agent is to coordinate all of the parties so settlement happens on time.
Being a Real Estate Agent is Easy
The second issue is that good real estate agents make the job look easy.
Good agents will never let you see what is happening behind the scenes. It could be a difficult agent, an appraiser that used the wrong comps or an unresponsive lender. The real estate agents shields any chaos from the client.
As a result, the client thinks that what we do is easy. I can't tell you how many agents become agents because they just bought a house and thought they could do the job.
Upfront Costs Real Estate Agents Hope to Get Back
Agents spend a great deal of money upfront, with the hope of making money in the future.
For example, when we get a listing we may pay for:
- Professional photographer
- Marketing pieces
- Sign installation
These things have to be done just to present it to the market and there is no way around it. This doesn't include any items that we pay for that the seller reimburses us for or the time we spend meeting contractors at the property.
How the Commission is Divided
The commission we receive may look big to the untrained eye, but the agent knows that from that commission:
- The broker gets a share
- Set aside money for income taxes
- Pay for health care
- Save for retirement
- Pay business expenses
This is just the bare minimum. By the time you deduct these items from the commission, it's not as much as you think. What's left is used to pay bills, donate to charities and other things.
To add insult to injury, when you do reduce your commission, those clients are usually the most unreasonable. As a result, throughout the entire transaction you're kicking yourself because you are working at a reduced rate.
Time Has Value
Real estate agents work too hard to ensure our clients have an excellent real estate experience. We negotiate offers that fall through due to appraisal issues, home inspection issues and title issues. All in the hopes of making it to settlement so we can see a commission. All of this takes time and time has value.
In a hot market where you face multiple offer situations on a regular basis, it's not uncommon to write four or five offers for one client. That takes a great deal of time.
As with every profession there are those agents who don't do the work or put in the effort. However, the majority of us go above and beyond to make sure our clients are represented well.
To ask a real estate professional to reduce their commission is like a slap in the face.
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In 2016, Inman News named Candy Miles-Crocker as one of the Top 25 Real Estate coaches in the United States.
Candy, “The Real-Life Realtor”, coaches, mentors and trains new and experienced real estate agents to transform their business by mastering her proven systems for success.
She is a firm believer in managing expectations.
Her goal is to elevate the perception of real estate agents among the general public through education so every client has an amazing real estate experience.
Candy’s unique training methods have shown agents what it takes to be successful!
Learn more about her training program at www.RLRETraining.com or send her an email at Candy@RLRETraining.com.
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