Should agents cut commissions in a slower market?

I don't think that there is an agent out there who has not been approached about cutting their commission at one point or another.  As a general rule I would say that reducing your commission is not a good thing.  To me it implies that you don't value the service you provide, and if you don't it is unreasonable to expect clients will.  However, there are circumstances where I believe that cutting your commission may not be a bad practice (such as multiple transactions with the same client, large volumes of transactions over a period of time, etc.), so I do not believe there is an absolute answer.

Pete,

I have been approached about cutting my commission.  Usually after I spend some time explaining to my clients all that I do for them to help make their dreams come true, they agree to an increase in commission.  However, there are circumstances where I would agree to a cut.  That is my exception rather than a rule

If you start cutting commission, then you will start discounting what we actually do as agents.  People will often ask you to cut, but the best way to avoid this in the beginning is to show up to a listing/buying presentation armed to the teeth with information.  We have several tools available that help us make our case. We are here to perform a service, and should be paid for performing our job. If we cut the commissions, we belittle our worth.  Show your clients where you plan on spending money ie: advertising online, your website, television, newspaper ads, fliers etc. If you show them all the marketing materials you can, then they will understand that they are getting something for their money, not just a sign in their yard.  Hope this helps.

I spoke about this just today with one of our top agents in Chattanooga. She had a seller who asked her to cut the commission because he had dropped the price, and he actually said that other companies were dropping their commissions.

To my knowledge companies are not dropping commissions.

And she did not drop hers.

Richard

Pete, As an old professor taught you are in business to make a profit; if you drop your rate you will end up doing more to make less. Take a look at the auto industry and see the condition they are in. 

Thanks, Ray

Peter,

I have been asked countless times to cut my commission especially in the last year. I have a partner named Donna. We are a small office and most of our clients pick us because of this reason. First I tell them no I do not cut my commission and this is the reason why.....I go on to list every single advertisement that we are in, plans for any future ventures and of course the web. While many agents are cutting back on their advertisement we have actually increased ours and they get two agents for the price of 1 which means they are really getting a bargain compared to some other agents....definately more bang for their buck. I generally get the listing over the "discount" commission agents. This being said I too have cut commissions due to special circumstances. All the best to you....knock em out with that presentation and follow through and they'll gladly pay for your services!

If a market is leveling or slowing up, cutting commission should have nothing to do with the market.  The amount of marketing, and service level stays the same if not increases in a tougher market.  Seattle is still a strong market from all I have been hearing. Perhaps you should of said that in a market as good as ours I've been thinking of raising my commission.  In all seriousness there may be exceptions to the rule on cutting, but those who make it a habit, I wonder....as the saying goes, you get what you pay for.

Years ago when I had a carpet cleaning business, I took pride in the quality and level of service we performed.  My competitors would slash prices for volume work, they were actually selling themselves out.  I fought of people who shopped by price, and refused.  The level of our work, kept me in repeat business and referrals... I rather offer quality keep my reputation compared to working cheap and cutting corners to compensate for the loss of income.

No Way!

In slow markets, Realtors have to work even harder to sell houses!  You are not the "order takers" you were 2, 3, 4... years ago.  And like Brian Buffini says, "sure, hire someone who works for 4%. You'll get KMart service, whereas I provide Nordstrom service." (He says it much better than I do!)

(My husband is a Realtor, that is why I have an opinion on this!)

It's all in how you present yourself. Cutting your commissions also shows you value less what you have to offer. Honestly, I do believe a truly motivated buyer or seller is willing to pay more for added value. The question isn't, "should I cut my commission and buy how much?" But rather, "What do I offer that is more than worth my standard commissions?" I'm a mortgage banker/broker and no way do I cut commissions. My only test is in presenting, and fulfilling on, my services and how they're worth more than the other brokers who may be charging less. This is why a Mercedes is a Mercedes, and a Chevy is a Chevy. They both get you from A to B, but it's all in the experience and value.

Only inexperienced agents should do this.  You either are a professional or you are not.  Ask you attorney,  your doctor or your dentist to drop their fees.  They won't.  Professionals never have to, only those at a disadvantage.

Anytime Peter!  Best wishes!  Great post!

The time for the "discount" versus "traditional" commission has come and gone.  The new words I see from consumer posts all over the web are "reasonable" and "exorbitant".