It's Not the Time to Cut Commissions!

This morning as I poured my first cup of coffee I opened my morning newspaper here in the Nashville area, THE TENNESSEAN, and read the headline “It pays to haggle with agent over real estate commission.”  What a way to start the day!  I immediately took that section of the paper and hid it from my wife who reacts quite angrily at these articles.  I think she believes in “modern journalistic castrations!”

I have spent the past few weeks and months reading nothing but negative news from the liberal media in this country about the state of the real estate industry.  This particular article, highlighting survey results conducted by Consumer Reports, touched a very sensitive nerve with me.

I find myself constantly defending my profession with those who really do not understand what we, as professional REALTORS®, do for a living.  Many in the public, including the uninformed media, compare us to professions that have traditionally and consistently made them out to be “scum of the earth” in what they do for a living.  I do not want to name these particular jobs, as I know I will offend many.  But, I think most of us know these folks about whom we are speaking.  

I am very proud to be a professional REALTOR®.  I have spent the past several years working in an industry that serves the needs of those who either are selling a home or purchasing a new one.  In addition, I have added to my expertise by earning professional designations to my resume as well as obtaining my real estate broker’s license.  When I read an article stating I need to be willing to reduce my compensation then I become defensive.

Educating the consumer. Most consumers do not realize why we charge what we charge.  They don’t understand we operate small independent businesses that have expenses.  As business owners we incur marketing expenses, insurances costs such as health, errors and omissions, liability, automotive, disability, etc; fuel and automotive upkeep, office expenses, brokerage expenses – and the list goes on.  I equate our business models similar to that of attorneys and doctors.  It costs a lot to do what we do.

I am worth what I charge!  I always tell my clients what I charge you will be different that what it costs you.  I work with a successful written marketing plan on all of my listings and use some of the most cutting edge tools for my clients such as podcasts, You Tube videos, virtual tours, professionally printed brochures, etc.  I spend a considerable amount of time and effort in marketing a listing and ensuring it receives maximum exposures.  Most of the public does not realize the time we spend in front of a computer, on the telephone, at open houses, in meetings, in the car, etc.

When reviewing our brokerage fees with clients I always tell them that the breakdown is as follows:  I must pay a certain amount to the selling side (usually what the market is commanding); I have to pay my brokerage firm a certain amount; I have to pay Uncle Sam his share of taxes; I have to pay for all of the marketing expenses in marketing their home; and finally I need to put food on the table for my family.  When the question of cutting my fees comes up I usually respond with “which one of these components do you want to take away?  I would hate top take away money to market your home. Do you want me to get in trouble with the feds for not paying taxes?  Don’t you like to feed your family?”    I also ask them if they asked their doctor to reduce his fees when they are about ready to get their annual physical.  Heads go side to side with an affirming “no.”  I have never had a client ask for a reduction once I go through this exercise. Again, it comes down to educating the consumer.

The modern real estate practice has become more and more demanding and the costs have risen dramatically over the years.  To effectively service our clients we must be able to use the latest tools and resources that will allow us to sell a property at the highest price in the shortest amount of time.  It costs money.  If, in turn, we can help a seller realize the highest amount of money in their pocket with our expertise and the tools we use then the saying “what I charge you is different than what it costs you” remains true.

I will continue to charge what I charge and defend it every time.