Can You Explain Your Commission?

By
Services for Real Estate Pros with www.PrinterBees.com BRE# 01392374
https://activerain.com/droplet/5kZc

The internet has multiplied competition in real estate. Instead of competing against Realtors® from your immediate area, you’re competing with folks from all over the state and even country offering to help buyers and sellers.

As a result, there’s been downward pressure on commissions. A lot of agents are offering extremely low commissions – of course, for cut-rate service. But that can be hard to see when you’re a seller fearful of costs.

As a professional full-service Realtor®, what can you do to help sellers understand your value – and your commission?

Here are some tips.

Explain the Commission Split

Some sellers think that if they do an FSBO or low-cost selling service, they’re saving 6% commission. Of course, they aren’t – they are only saving some of the 3% that would go to a listing agent.

They still need to pay 3% to a buyer’s agent when the deal closes.

Many times, once the seller understands that they aren’t saving nearly as much as they thought, the dramatic loss of service doesn’t seem as acceptable.

You can help them understand that you provide far more value than your 3% portion of the commission.

Offer Premium Real Estate Marketing

A low-cost agent isn’t going to offer much more than an MLS listing and the transfer of that listing to online marketing portals.

When you can lay out a comprehensive, premium marketing plan, you’ll really stand out. The seller will immediately realize that you’re providing a great value.

Here are some elements of a premium plan:

  • Print Marketing. By using a series of postcards to generate interest in the property, you’ll be able to target specific types of potential buyers in a place with little competition – the mailbox. We recommend a series that includes “coming soon”, “just listed”, “open house”, and “just sold” to maximize exposure.
  • Social Media Marketing. Go beyond the MLS and portals for your clients by letting them know how you’ll promote their listing on social media. Mention professional photos, Facebook strategy, and more.
  • Connecting With Other Realtors®. You can find a buyer even more quickly when you connect with other agents. Tell the seller how you’ll network to help them find a buyer fast.

When you explain all the value you bring to their home listing, they’ll understand that you’re well worth your commission.

Talk About the Work of a FSBO or Using a Low-Cost Agent

When a homeowner chooses a cut-rate agent, they naturally end up doing more of the work themselves. However, they aren’t trained for, or familiar with, real estate, so it takes them much longer and they are much more likely to make mistakes.

Many times a seller doesn’t realize how much goes into selling a home. Ask these types of questions:

  • Are you a well-trained negotiator? How do you think you will fare with a buyer’s agent who is?
  • How do you plan to promote your home and reach those most likely to buy?
  • Do you intend to send your own postcards or do your own open houses?
  • Are you prepared to handles dozens of calls and questions from people who don’t even end up seeing your home?
  • Do you have the time and energy to arrange for dozens of home showings?

These types of questions can help open a seller’s eyes to exactly what’s involved, and it will help them understand why you’re worth your commission!

 

How do you explain your commission in today’s market? Share in the comments!

 

This post originally shared on PrinterBees' Real Estate Marketing Magazine.

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Topic:
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Rainmaker
1,698,206
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker and Attorney Licensed in DC, MD, VA,

great questions to discuss with a seller - particularly the FSBO sellers who don't know what they don't know!

Oct 08, 2019 05:30 AM #1
Rainmaker
3,636,314
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good morning Nadine. This is terrific and seldom discussed. When I was actively listing I was a 7% person. My bottom line was always what do you care what I make if I can put more money in your pocket. 

Oct 08, 2019 06:37 AM #2
Rainmaker
3,204,315
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Nadine with Printer Bee (A excellent company that I use).  I explain the benefits of use me and take them through the 100 of thinks what they can expect from me.

 

Oct 08, 2019 08:37 AM #3
Ambassador
4,013,752
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

HI Nadine:

FSBOs rarely know the true costs of going it alone, and many sellers who are talking with listing agents don't get the value that we bring. We certainly need to be able to articulate this value so the commission is no longer an issue.

Jeff

Oct 09, 2019 08:29 PM #4
Anonymous
Jerry Dragoon,Broker, GRI

And when a seller asks if you would cut your commission, simply smile like a puppy that just made a mess and say noooo.Sellers are looking for a strong agent and not a weakling that will succumb to pushing a lower offer. So by saying no to cutting commission they may be testing you to see how strong you are.

Oct 09, 2019 08:39 PM #5
Rainmaker
753,214
Shanna Day Team Leader AZ & UT - Call 480-415-7616
Keller Williams Realty EV (AZ) & Keller Williams SLC (UT) - Mesa, AZ
Top .0033% of 40,000+ Realtors in our MLS

There are quite a few scripts to use for this scenario.  I like a couple... Ben Kinney's (where he takes out dollar bills and explains he has to give so many to the buyers agent, so many to the broker, so many to marketing costs, to the IRS and then what small portion is left over, I feed my family with.   

I also like where you turn it on them and their own profession... Will you cut your invoice in half when patients come in for root canal? or Chiropractic adjustment, tax return prepared etc.

Oct 09, 2019 09:13 PM #6
Rainmaker
3,209,384
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Interestingly I have only had to explain my commission five times in 25+ years and ironically it was about four days ago when it was the fifth time:)Endre

Oct 09, 2019 10:51 PM #7
Ambassador
912,292
Lynn B. Friedman
Atlanta Homes ODAT Realty Call/Text 404-939-2727 Buckhead - Midtown - Westside -- and more ... - Atlanta, GA
Concierge Service for Our Atlanta Sellers & Buyers

Nadine Larder 
Let's not forget the safety factor -- 
Do they want to open their doors to people not knowing who they are? 
STRANGER DANGER!!!!!
All the best - Lynn

Oct 10, 2019 12:33 AM #8
Rainmaker
57,827
Cathy Starkweather
La Rosa Realty, LLC. - Celebration, FL

Terrific post, I've faced this question recently in the Central Florida market. It's a sellers market with a lot of new, uneducated agents willing to do anything for the listing. I explain the commission structure/split in the listing appointment along with the other costs to sell a home. It's important for sellers to understand the logistics of selling costs - both commission and additional costs such as title work; title insurance; doc stamps; recording fees; HOA estoppel fees, etc. "If" a seller asks for lower commission as other agents are willing to cut commission, I ask... What's included in their services? Did you ask about their experience, knowledge and expertise? Are they a full time Realtor (this is a BIG one)? And other strategic questions depending on the direction of the conversation... Bottomline, you get what you pay for. 

Oct 10, 2019 06:25 AM #10
Rainer
9,034
Kevin Cloutier
Cre8ive Realty - North Fort Myers, FL
Kevin Cloutier - A HouseSOLD Name

The commission offered between the seller and listing brokerage is always a moving target.  I can actively take either side of the argument and defend that position.

You could say, the buyer brings the money to the table and we are being paid money for our services, so who is really PAYING the commission?

Or SOLD comps include a commission being paid in the final numbers used by an appraiser.  So the commission is like, please appraise my house but don't give any value to the roof.  Like it wasn't part of the house!

I don't care how smart you make a computer, you will never replace a human being and if you decide you don't want to work with me and the value I bring, it may be worse, I may sit across the table from you!

 

Cheers

Oct 10, 2019 11:32 AM #11
Rainmaker
1,110,851
Barbara Michaluk
Weichert Realtors | Silver Spring, MD Phone Direct 240-506-2434 - Silver Spring, MD
Top Producing / Full Service REALTOR in Marylan

I usually show a pie chart to the seller when negotiating the commission to show how the 6% is divided 4 ways. I also share all the things I do to market their homes to potential buyers and agents.

Oct 10, 2019 11:56 AM #12
Rainmaker
522,024
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

This can be a tricky question if a seller presses the matter.  6% of a $200,000 listing is much different than 6% of a $500K listing, especially if the house sells quickly.  We constantly have to prove our worth to the seller and the specific points you make are useful no matter what the price of the home

Oct 12, 2019 03:28 PM #13
Rainmaker
378,686
M.C. Dwyer
Century 21 Showcase REALTORs - Felton, CA
Santa Cruz Mountains Property Specialist

I enjoyed reading your points, especially how they think they'll fare against a professional negotiator representing the buyer, and if they're prepared to answer dozens of calls from people who aren't serious buyers, and to show the home dozens of times...

Oct 13, 2019 09:47 AM #14
Rainmaker
470,034
Diana Dahlberg
1 Month Realty - Pleasant Prairie, WI
Real Estate in Kenosha, WI since 1994 262-308-3563

Alot of well thought out responses.  Loved reading every one of them.

Oct 13, 2019 10:38 AM #15
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Rainmaker
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Nadine Larder

Real Estate Marketing Expert/PrinterBees Founder
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