Tired of hearing... I don't want to pay that much? (Excellent Read)
By: Walter Sanford
Sometimes when the seller does not want to pay your full commission, they may be right - you're just not worth it. Don't worry, it's nothing that focus, education, compassion and implementation won't cure. However, if you are worth it, then cut this article out as your call to action!
When asked to cut one percent from a six percent commission, that you will probably co-op with a peer, you de-motivate the co-op and they negatively impact the marketing campaign. The really dangerous situation is that if you take a ½% cut from a 3% side, you are putting your commission on sale for 17% off. "Well," you say, "why am I any different? Everyone has sales" The profit margin in real estate can be brutal. Many agents have 60% or more in overhead, when you take into consideration your broker, income taxes, and overhead. This simple little reduction now translates into a 42% reduction of net profit, based on the fact that approximately 40 cents of every dollar goes to your bank account. This is a business practice that is guaranteed to keep you from innovation, success, and retirement. If you're worth it, this is how to say "no thanks" to a commissionectomy, in a warm fuzzy way.
1. “Mr. Johnson, please allow me to restate some of the extras and differences that my marketing plan and service delivers………”
2. “Mr. Johnson, let me show how I earn my full commission by positioning your home in the marketplace. The buyers will be found by lead generation, focused demographically and economically to make my solicitations interesting. This type of lead generation creates multiple buyers that may lead to multiple offers and thus less negotiation of price.”
3. “Mr. Johnson, I understand that is your bottom line, but I need my full fee to offer my services. Let us both ask the buyer to pay for it in a higher price. However, after marketing the home, we may have to reduce the price after 30 days. If the market will not realize our higher price, I would like your "okay" now for a price reduction that is more in keeping with the comparable sales.”
4. “Mr. Johnson, it's all about your net proceeds, right? Well, let me show you how working with me can increase your net proceeds. (1) Discovery of latent problems early in the listing by using one of my team members, my home inspector. We can sometimes discover and cure any deficiencies prior to the new buyer requesting "above and beyond" remedies. (2) Here at our board of Realtors® , homes sell for an average of 96% of list price. My average is 98% of list price. Because of my negotiating experience, I bring 2% more to the table. Apply that 2% to your $150,000 home and we have a $3000 increase in net. (3) (what do you do to increase your client's net proceeds?)”
5. "Mr. Johnson, what business are you in? How do you respond to requests for lower prices, fees, etc?"
6. "Yes Mr. Johnson, I understand that Brand X will do it for less; however, when you buy something, you look at all the features for comparison, right?" Then let's look at a comparison chart of:
A. Number of signs up (more signs equals more buyer calls).
B. Sold properties in last twelve months (proof of excellent marketing).
C. Number of agents in company (all your sales people!).
D. Systems and strategies (show them your checklists that guarantee consistency in service).
E. Education and experience (you want the best CPA for your audit, right?).
F. Marketing powers (let's check some internet sites!).
G. Years in the business.
H. Testimonial letters.
I. Proven lead generation systems.
J. Number of buyer contracts in force.
K. Resumes of all team members.
L. Technological proficiency.
M. Internet search engine superiority.
N. One hour return phone call guarantee.
O. (Where does the competition eat your dust?) I will mark the boxes for myself and the ones that I am sure of for my competition. You can mark the ones I leave blank on the competition. Based upon their listing presentation, you should be able to fill them in. Then we will decide.
7. Using the old speaker's standby of "What should we eliminate from the marketing plan" is negative and I have never used it.
8. "Mr. Johnson, I have offered discounts to volume clients. What other business can you offer our team?"
9. The 30-year-old stand by, "No, next question please."
10. "Mr. Johnson, is this a test to see how I will negotiate for the best price on your home?
If anything happens after reading this article, weakness in the face of a commissionectomy will not be one of them. You just might realize that their property listing does not work for you and the most profitable move may be a strategic retreat. When do you say "pass"? Figure your bottom line before you go. Understand that even a small reduction will severely affect your net, then overcome the objections using some of my favorites above. If the pain still exceeds the pleasure, pass it on.
Walter Sanford is a top producing real estate agent and speaker who travels the country delivering systems and strategies to top producers for higher productivity and client satisfaction.
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