The Worst Way To Explain Your Real Estate Commission To A Client

By
Education & Training with Demetree School of Real Estate

I recently saw a list of 184 things that Realtors do to earn their commission. Many items on the list were items like, “Send a confirmation email for listing appointment.” Seriously! Another one was “fax copy of purchase agreement to lender.” Is that worth a five-figure commission? Or is that worth $15 an hour?

A plumber does not justify his fee by saying he had to retrieve a wrench from the truck. A lawyer does not say his job is difficult because he had to place the file folder in the appropriate spot in the file cabinet. Yet, a real estate agent says he deserves a commission because he sent a confirmation email.

Service providers – like electricians, accountants, or real estate agents – get paid well not because of what they do, but because of what they know. That is very important – we get paid well not because of what we do, but because of what we know. As long as we as real estate agents are trying to justify our commission by what we do, we will lose. A buyer or seller can do just about everything a real estate agent can do. A buyer can order a home inspection or contact the lender. A seller can put an ad on the internet or unlock the door to show the house.

Doing the tasks is not difficult, nor is it worth a large commission. However, knowing where to put the ad is valuable. Or knowing how to handle this difficult buyer, that is valuable to the seller.

As long as real estate agents present themselves to the world as worker bees who do a lot of tasks, the world will think we are overpaid and treat us that way. But if we let our clients know that we bring expertise to the table, our commissions seem warranted.

In short, whether the client believes you are worth a commission is not about the number of miniscule tasks you do, it’s about the expertise you bring to the table. It’s about whether you are offering the client something (hopefully real estate knowledge) that he doesn’t have himself.

Comments (37)

Alan May
Jameson Sotheby's International Realty - Evanston, IL
A moving experience!

I think you're viewing this like a consumer, and that's a good thing.  You're right... no consumer would consider those silly bullet points as "work".

Dec 29, 2019 07:44 AM
Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets

Amen Alan May , Karen is seeing this like a consumer, not a REALTOR who is much like an Attorney and let me tell you,, attorneys do bill for emails, faxes and phone calls. Once we see ourslelves as the professional we are: on the same level as doctors and lawyers, we understand the value of our time, energy and skills.

Aug 10, 2020 03:52 PM
Adam Feinberg
Elegran - Manhattan, NY
NYC Condo, Co-op, and Townhouse specialist

All those bullet points would have validity if the article went in a different direction - i.e.  everything an agent does in a day (albeit not a particularly exciting article).  That said, justifying our commission is demostrating value- which you get, but the author of that article didn't. I just spoke with a seller that has had his apartment on the market for a year without an offer. He has already gone through 2 different agents- and yet neither set of agents never challenged the owners assumptions. I talked to the owner to understand his motivations and underlying assumptions- which neither did- and then challenged those assumptions with the data to back up my statements. It was a harsh awakening for the owner- but neccessary to ensure the owner achieves his goals. This is how we justify our commissions.

Dec 29, 2019 12:46 PM
Karen Climer

I agree that all of those bullets are valid things that agents do.  This might be a useful list for a rookie agent or someone who didn't know what the field entailed or some similiar audience.


But for the client?!  Clients hire us not so much because of what we do, but because of what we know.  Your example demonstrates that perfectly.


Thanks so much for reading and commenting.

Dec 29, 2019 12:57 PM
Ron Tissier
Chapman Hall Premier Realtors (404) 580-9069 - Atlanta, GA
Defining Homes. Defining Lifestyles.

Hi Karen!

If all Realtors/real estate agents would use this as a paradigm shift, they would likely never stumble all over themselves when attempting to justify a commission with silly lists.  "You're paying me for my knowledge and years of expertise." is the only explanation needed.

Cheers!

Dec 29, 2019 12:53 PM
Ron Climer
Keller Williams Realty Mountain Partners - Tryon, NC

I I think this article is right on.  I guess it would be a bad idea to tell the seller  that we earn part of our commission for putting up with his non sense. 

Dec 29, 2019 01:10 PM
AndreaBFerreira CRS - SRS - CLHMS
Keyes Co. - Davie, FL
Miami Dade, Broward and Palm Beach County in FL

How silly.... I would like to think that could be a new licensee/agent/realtor  publishing the list on his/her blog not expecting that many readers and was careless to read before, just like exercise .... would be silly uotherwise...

Dec 29, 2019 01:12 PM
Karen Climer

If it was published by a new agent, I would tolerate it.  This was published by Florida Realtors.  It was in the print edition of the magazine a few months ago, and online.

Dec 29, 2019 01:21 PM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Well said. It's hard to imagine that a realtor organization promotes using such a list to justify commissions. What were they thinking??

Dec 29, 2019 01:19 PM
Raymond Denton
Homesmart / Evergreen Realty - Mission Viejo, CA
Casta del Sol Realtor

Well said, Karen ... well said.

Dec 29, 2019 01:33 PM
Mercedes E. Santana
Santana Property Group - New York, NY
NYC Multifamily Properties

Well said Karen.  Florida Realtors mag needs a refresher course in how to value what we do. Thanks for posting.

Dec 29, 2019 03:47 PM
Anna Banana Kruchten CRS, CRB, Phoenix Broker
HomeSmart Real Estate BR030809000 - Phoenix, AZ
602-380-4886

Human Doings instead of Human Beings! And that goes for real estate! I totally agree - it's all about what we bring to the party with knowledge, experience and know how - not all those details an assistant can handle for us.

Great post Karen Climer  & Happy 2020!

Dec 29, 2019 04:20 PM
James (Jim) Lawson, DBA
DomainRealty.com LLC - Bonita Springs, FL
Broker Associate, RSPS, BPOR, HI & PE

Good point Karen. Agents who are skillful at quantifying and conveying their value to the client can nip this problem in the bud should the issue arise. Just need to deliver on what you say and do which can be a big challenge depending upon evolving circumstances.

Dec 29, 2019 08:51 PM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Somethings are better left unsaid in that way so that we can learn from it all

Dec 29, 2019 11:11 PM
Tom Bailey
Margaret Rudd & Associates Inc. - Oak Island, NC

Great post Karen! I always tell clients I get paid to be their "trusted real estate advisor ". I tell them I am in charge of the process, and they are in charge of ALL DECISIONS! I tell them that if they want to do something that gives me heartburn,I will tell them. If they want to do it anyway, I will do everything in my power to make it happen!

Dec 30, 2019 03:10 AM
Carla Freund
Keller Williams Preferred Realty - Raleigh, NC
Carolina Life RealEstate & Relocation 919-602-8489

I agree. Many agents don't know how to explain their value. I pay an assistant do do much of what is on that list and $15 - $20 an hour is not what they cost if you're a business owner. You pay a lot more over their hourly wage. Not only do we provide knowledge, we manage peoples emotions. I find each transaction has its own challenge and it may be different based on the people and the circumstance. 

Dec 30, 2019 05:10 AM
Carol Williams
Although I'm retired, I love sharing my knowledge and learning from other real estate industry professionals. - Wenatchee, WA
Retired Agent / Broker / Property Manager

Hi Karen,
So glad to see this get the well-deserved Gold Star!

Here's wishing you a wonderful new year!

Dec 30, 2019 06:49 AM
Laura T. Perry
Keller Williams Elite - Lancaster, PA
CRP, GMS, Award Winning Relocation Specialist

Most Sellers(and Buyers) would not understand that from “Contracts to Closing “ can be a real bumpy ride for new agents( let alone a consumer) 

Dec 30, 2019 08:06 AM
Stephen Turner
Burkentine Realty Group (Burkentien Builders) - York, PA
The BIG Guy of NEW HOME SALES

Very good point.  So often we try to justify the commissions with the silly details instead of proving our value.

Dec 30, 2019 09:20 AM
Gary & Melynda Wolter (CRS) 480-269-1164
ProSmart Realty - Mesa, AZ
Reliable, Premier Personal Service since 2001

This is one of the biggest issues in our industry. Training is key. Some brokers dont teach how to not have a commissionectmy.

Knowing what to say and how is essential to remain a respected professional 

-Gary

Dec 31, 2019 07:27 AM
Dr. Paula McDonald
Beam & Branch Realty - Granbury, TX
Granbury, TX 936-203-0279

My doctor, my attorney, my CPA, etc. do not provide me with a "task" list. I trust they are backed by training, a license, and with the ability to do their job.  We as professionally, licensed agents MUST act like and BE the professionals we should be.

Dec 31, 2019 07:33 PM
Jill Sackler
Charles Rutenberg Realty Inc. 516-575-7500 - Long Beach, NY
LI South Shore Real Estate - Broker Associate

This is a brilliant post and it's not just some fancy "spin." Knowledge and experience are key to a successful transaction.

Jan 01, 2020 02:57 PM
Karen Climer

Thanks so much for reading and commenting.  I really appreciate it.

Jan 02, 2020 06:55 AM
M.C. Dwyer
Melody Russell Team at eXp Realty of California, Inc. - Felton, CA
MC Dwyer-Santa Cruz Mountains Property Specialist

I'm late to this party Karen Climer 

but I really appreciate your intelligent take on task lists versus problem solving ability, people skills, and years of market knowledge and transaction experience.

Jan 27, 2020 04:47 PM
Karen Climer

Better late than never!  ;)


Thanks for reading and commenting.

Jan 28, 2020 08:09 AM