What If a Seller Asks You to Cut Your Commission?

By
Education & Training with The Lones Group, Inc.

The Lones Group, Inc.

What If a Seller Asks You to Cut Your Commission?

The first thing you have to remember is that when someone asks you to cut your commission, they are being motivated by something. Maybe the seller is concerned about closing fees. Maybe a friend of theirs bragged about what they paid. Maybe they are just trying to figure out the differences between you and another agent (because you may be competing against other agents to secure this listing client).

With that in mind, it's not about having perfect answers right off the top of your head. It's about opening up the topic for discussion. Both you and your prospective client should be comfortable talking about your commission.

When I was an agent, I would frequently talk with sellers about commissions. My response was, "That is a really great concern. I would love to talk about it, and more importantly there are some things I want to show you. When we talk about my fees, we also have to talk about my services."

When you start this conversation, remember that people need proof. To gather your proof, take the time to go over your previous transactions and do the math. Show your numbers and what you have done for past clients to get them the best results possible. Prepare a summary of your statistics, including sale-to-list price ratios, number of listings successfully sold, and the average or median days on market.

Sometimes people just want to know what your fees include, so make a list of the services you offer and tasks you take care of during the selling process. Demonstrating your market savvy with examples from previous clients. Give them the track record of your success.

Most of the time, when a client asks you to cut your commission, they are worried about their bottom line. This is where you can show them the math and educate them on the process. Show them the results you achieved for other successful sellers. If you are an area or neighborhood expert, take the time to show them the local market.

Don't be afraid to have this discussion with your clients. It's not a personal attack if a someone asks about your commission. Some people treat this topic as a barrier or something to avoid, but you can turn it into an opportunity to showcase the difference you make.

So take the time to collect your proof, don't be afraid of the question, and lean into your presentation.

To schedule an appointment, call us at (360) 527-8904, email solutions@thelonesgroup.com.


How will you prepare your business for 2022? Start with market facts, not market fear! Commit to improving your understanding of trends in your area. And if you are able to come to Lynnwood this January 26th, start with the energy and knowledge you'll experience at our 2022 Real Estate Success Summit. I'll see you there!

The Real Estate Success Summit is a limited seating event and has sold out every year. Don't risk your seat by waiting until January to register. For more information or questions, start with our registration website at:

TheLonesGroup.com/RESS

For additional information, visit our Facebook event page for a FAQ or call us at 360-527-8904.

 

By Denise Lones CSP, M.I.R.M., CDEI - The founding partner of The Lones Group, Denise Lones, brings nearly three decades of experience in the real estate industry. With agent/broker coaching, expertise in branding, lead generation, strategic marketing, business analysis, new home project planning, product development, Denise is nationally recognized as the source for all things real estate. With a passion for improvement, Denise has helped thousands of real estate agents, brokers, and managers build their business to unprecedented levels of success, while helping them maintain balance and quality of life.

The Lones Group, Inc.

Comments (15)

Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker, eXp Realty - Kalispell, MT
Helping your Montana dreams take root

Having an honest discussion about what is concerning them is a great idea, rather than just saying "NO!"

Nov 24, 2021 05:32 AM
Denise Lones

Thank you Kat - Denise

Dec 08, 2021 01:23 PM
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Denise. I am not a discount broker, but let's discuss your concerns. Enjoy your day.

Nov 27, 2021 05:07 AM
Denise Lones

A solid opening, but don't forget to articulate your value and difference as your conversation moves forward. -  Denise

Dec 08, 2021 01:24 PM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Hi Denise - this is a great discussion.  Fees tied to services is very important.  If you cut just to compete you have sent a message that you are negotiable and that fees don't mean anything.  When someone tell me the cost is too high I go though what it covers and then what I could cut out.  Fees and commissions represent value.

Nov 27, 2021 06:49 AM
Denise Lones

Absolutely, and don't forget to mention the value you bring to the table over your competition too. - Denise

Dec 08, 2021 01:24 PM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Commissions are always a sensitive subject and I move a greater portion of it to the co-broke commissions and how an agent may convince a buyer to stay away from a house because they don't want a smaller commission.  No agent will admit to it but the thought is always on their minds

Nov 27, 2021 09:52 AM
Denise Lones

Absolutely. Great point for when negotiating the seller offered commission for buyers. This recently became a more visible issue in our state when SOC started being published publically. - Denise

Dec 08, 2021 01:26 PM
Paul S. Henderson, REALTOR®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

I was so glad that Carol Williams featured you this week on Second Chance Saturday. 👍👍👍

Nov 27, 2021 10:30 AM
Denise Lones

Thank you Paul. Me too! Carol is a longtime experienced agent - and just over the mountains from us too. - Denise

Dec 08, 2021 01:27 PM
Anna Banana Kruchten CRS, Phoenix Broker
HomeSmart Real Estate BR030809000 - Phoenix, AZ
602-380-4886

Hi Denise before the market dropped in 08 we had a services based fee schedule and clients appreciated that.  They almost wanted the whole enchilada and I sure would as well.  Haven't brought that back and really haven't needed to as our clients know us and/or are highly referred.  I did, early on, just say no, but then ran across the services based fee idea and loved it.

Nov 27, 2021 10:40 AM
Denise Lones

I'm glad you've found a solution that works with your pricing and commission conversation. Thanks for sharing Anna - Denise

Dec 08, 2021 01:27 PM
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Denise- I love what you have to say. And I agree, have an open discussion with your sellers and come packed with information. I also love Anna Banana Kruchten CRS, CRB, Phoenix Broker's comment. 

Nov 28, 2021 10:46 AM
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

That's a smart way to deflect back to what services are provided.  I love to do this as I have a list in their presentation guide that lists everything  - otherwise I'd forget! 

Nov 28, 2021 12:08 PM
Denise Lones

That's right, focus on value and services, reinforce that you are worth it. - Denise

Dec 08, 2021 01:29 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Great discussion on how to appropriately handle the topic of commission. Better to be prepared just in case. 

Nov 28, 2021 04:48 PM
Denise Lones

A lot of sellers have the idea that in this market it is less work for the agent because the house will quickly sell, so this does come up a lot. Agents of course know the truth, a fast moving market is a lot of work! - Denise

Dec 08, 2021 01:30 PM
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Flower Mound, TX
Selling Homes Changing Lives

Denise Lones - I have sat through so many classes on this topic of discussion but I have to say, you said it best and very different from what I'm used to because it's not parrot talk. I am very grateful you shared this information and that your blog post was featured. I'm looking forward to what else you have to share. Thank you. 

Nov 29, 2021 05:24 PM
Denise Lones

Patricia - Great to meet you here on AR and glad you found this useful. Appreciate the follow. - Denise

Dec 08, 2021 01:31 PM
Mike Frazier
Carousel Realty of Dyer County - Dyersburg, TN
Northwest Tennessee Realtor

Denise what a great topic for agents today in the era of discount brokers.

Nov 30, 2021 07:37 AM
Denise Lones

Not just discount brokers, but iBuyers and other businesses encroaching on traditional agent turf too. Thanks for the comment Mike! - Denise

Dec 08, 2021 01:32 PM
Alan May
Jameson Sotheby's International Realty - Evanston, IL
A moving experience!

Asking the question, and having a conversation about commission is a fair topic, and shouldn't be considered taboo.  Many agents have a knee-jerk reaction and have "no" automatically spring-loaded, rather than being prepared to discuss the value and services they offer for the fees they charge.

There are business models out there for every consumer.  Some people are looking for Filene's basement and T.J. Maxx, and others want to work with Nordstrom's and Sackowitz.  You get to choose who you want to be, just be clear who you are and what you offer and make sure you are consistent and your clientel understand.

Nov 30, 2021 08:22 AM
Denise Lones

Alan, thanks for sharing the thoughtful comment. You're right, it shouldn't be a taboo discussion that the agent and client dance around. Rather than attack on commission, I look at it as an opportunity to share my value as an agent. - Denise

Dec 08, 2021 01:34 PM
Fred Griffin Florida Real Estate
Fred Griffin Real Estate - Tallahassee, FL
Licensed Florida Real Estate Broker

     My commissions and fees are negotiable.  What are you (client, Buyer, Seller, or investor) proposing?

Nov 30, 2021 09:30 AM
Denise Lones

Rather than open with negotiability, I'd start with just the second part and then move to justify your commission based on services and track record. - Denise

Dec 08, 2021 01:35 PM
Scott Godzyk
Godzyk Real Estate Services - Manchester, NH
One of the Manchester NH's area Leading Agents

I love to start off by letting them know the most important thing is what they get for what they pay. That you usually get what you pay for when it comes to discounts. I show them my worth, my value and what i provide. In the conversation i als lke to garner wht they want, what they need and expect. As well what they want to pay. Why they want a discount... 3/4 of the time i am leaving with a signed contract. 

Nov 30, 2021 12:14 PM
Denise Lones

Excellent. Perfect! - Denise

Dec 08, 2021 01:36 PM
Bob Crane
Woodland Management Service / Woodland Real Estate, EXP - Stevens Point, WI
Forestland Experts! 715-204-9671

With a smile on my face... 

Well Mr Seller, I suppose that I could do that, however I doubt that you would respect me in the morning. 

There are all kinds of agents out there, some are desperate and know that they are not really worth their fees, others are experts and know that they will earn their share and more by bringing you a higher price for your property. 

I am of that later group.  

A large part of my job is setting the stage for a successful negotiation that will yield you an amazing price with winning terms.

IfI were to start our relationship by selling myself out, can you imagine trusting me to not sell you out when the important negotiations begin?

 

Nov 30, 2021 12:29 PM
Denise Lones

Bob - Only thing missing from here is stating your difference and value. - Denise

Dec 08, 2021 01:37 PM