Let
me start off by saying I am a big advocate for agents getting
higher commissions! For the past year I have been traveling the
country sharing several techniques and concepts on how to do just
that - and many of my students have more
than doubled their incomes from some of the ideas I will
share with you.
In
today's climate, it's more difficult than ever to not only get
listings, but to get listings at a full commission.
It's more important than ever that an agent learn the skills and
techniques in order to stay profitable in this wonderful world
of real estate.
Let
me outline some of the important reasons why you should focus
on improving your skill at asking for, and receiving,
higher commissions:
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Owners
expect more for less |
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It's harder in today's market to maintain our profitability,
while still offering supreme service to our sellers. A
seller has to understand they get what they pay for. When
an agent lowers their commission, they have 2 choices.
To either take it from their profit margin, or, to maintain
the same profit margin we have been use to in the past,
the agent would have to cut back on the overhead of their
business. And our overhead is the marketing tools we use
for the seller to get their home sold for the highest
possible price. Either scenario, someone loses.
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It
hurts our industry |
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The
more we cut our commission as an industry, the more we are
lowering the perceived value of our services to the consumer.
To raise the perceived value of what we offer a seller,
we need to raise our standards. I believe when we lower
our commission, we are lowing our standards. And if the
only way you can get a listing is by cutting a deal with
the seller, it’s somewhat anti-climatic, because you know
that you sold yourself short.
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Here
is an interesting fact:
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91%
of all real estate sales are done using a real estate agent.
If we didn’t provide a muchneeded service, there weren’t
be so many buyers buying houses through us. Let’s raise
our standards, not lower them.
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You
deserve to get paid well |
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Most
of us got into real estate because we wanted to make a lot
of money so we can accomplish other things in our lives.
We saw real estate as a tool to help us achieve our next
level. You worked hard to get to the place you are now and
because you are licensed by your State, you know more about
real estate than any seller. You are the professional. You
deserve to get paid, and paid well. Besides, you owe it
to your family for all the long hard hours you work.
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Make
more money without working harder |
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Here’s
something to keep in mind: For every listing you get at
1% higher than what you’ve been getting, and the average
sales price is $200,000, that is an extra $2,000 per listing.
If you only got 10 listings in one year, you just gave yourself
a $20,000 raise without working harder or longer hours!
That alone should be enough of an incentive to improve your
skill on the listing appointment. |
Before
I share some specific concepts on how to get higher commissions,
there is something that needs to be addressed, and that’s your
attitude. If you don't have the right attitude,
regardless of the dialogue or techniques you use, you simply
will not be effective. People will pick up more on how
you say it versus what you say. I've seen some agents
whose biggest competition is themselves. They have this kind
of attitude when they go on a listing appointment: based on
everything I know about myself, I wouldn't even list with me.
So,
here are the two attitudes that you must have in order
to get higher commissions:
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1.) |
You
have to believe you're worth what you charge.
Now, even if you're new agent, you can psych yourself
up to feel good about what you bring to the table for
a seller because you have one thing the average agent
doesn't have -- enthusiasm. The fact that you're new,
you bring a sort of freshness to the business, plus you
have the time to devote doing the best possible job you
can for the seller. If you're an experienced agent, obviously
you have years of doing real estate, day-in and day-out.
Keep this in mind: no matter what the seller's background
is, the State that you're licensed in says you know more
about real estate than the homeowner does. Otherwise you
wouldn't have that license.
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2.) |
You
have to believe that the seller will not save money selling
on their own even with you charging a full commission.
According to a NAR Study you can get from www.Realtor.org,
homeowners selling on their own, on the average, sell
for 17% less than if they hired an agent. According to
a USA Today study, homeowners sell for 21.49% less than
agent-assisted sales. Therefore, if you charged DOUBLE
your normal fee, a homeowner will still net much more
than if they sold on their own. Bottom line – FSBOs lose
money so, it makes absolutely no sense for them to sell
the house on their own. |
If
you don't believe these two things, you'll always be faced with
sellers asking you cut your commission and selling yourself
short.
Most
agents make the mistake of thinking the “commission conversation”
happens at the end. Actually, the commission conversation
starts the moment you walk in the door. The better you
are in delivering the listing conversation, the easier it is to
ask and get higher commissions.
When
you meet with a seller who is thinking of selling on their own,
what do you think you need to sell them on? Most agents say “myself”
or “my company”, but actually you need to focus on having the
homeowner buy into “the real estate industry”. If a homeowner
is thinking of selling their home on their own to save the commission,
they obviously have not seen the value of working with a real
estate agent – any real estate agent. In other words, they have
not “bought into” the concept called “real estate agent”. So you
first have to establish that working with a real estate agent
is essential.
| Here’s
an analogy I share in my seminars. If you were sued, you would
call an attorney; if you were sick, you would call a doctor;
if you won a lot of money, you would call a financial professional.
In all of these areas that are important to a seller, you
would call a professional, so why would you do anything different
when it comes to one of your most important assets: your home? |
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In addition, when you talk about MLS, Public Open Houses,
Broker Open Houses, etc. the slant in your conversation should
be “these are the successful tools agents use”. If you focus
on selling the industry, and the seller buys into
it, they will list with you because you are the one delivering
the message. Plus, when you take this approach, your conversation
comes across less self-serving. The seller will feel you care
more about serving them versus trying to sell them on giving
you their listing. |
Another item I find agents improve on after attending my seminars
or listening to my other learning systems is how to explain the
importance of marketing. Most agents refer to “marketing” as “advertising”.
I want you to take the word “advertising” out of your
vocabulary. Every time you say “advertising”, here's
what the homeowner thinks “hey, I have advertising, and I'm getting
a lot of calls off of my advertising". I’d like you to replace
the word “advertising” with “marketing tools”. One of the visuals
in my Commission Audio Program explains to a seller that to get
the highest possible price you have to have as many buyers interested
in the home as possible. How you get the most buyers interested
in your home is through exposure, meaning that every buyer in
this price range needs to know the houses for sale, and how you
do that is through marketing tools. The more tools you use, the
more exposure a property gets, which means more buyers coming
through the front doors, which drives the price higher. This is
one of the main reasons why agents sell houses for 17-21% higher
than FSBOs.
By
the way, even if a seller could sell their home on their own,
that’s when the real work begins and a trained, licensed agent
is where they earn their fee. I don't have to tell you that 100%
of the contracts we write don’t all make it to closing. We need
to handle buyer remorse, engineer problems, financing challenges,
etc. If selling a house was as simple as putting an ad in the
paper and a yard sign, you wouldn’t have to be licensed by the
State to help other people do it. Selling a house is more
complicated than a homeowner realizes and we need to educate them
on the process.
You
can even ask a homeowner this: "if you were going to hire
an agent, regardless of what they charge, would you hire a part-time,
unlicensed agent?" The obvious answer is “No”. Well, what
a homeowner needs to understand is that when they are selling
on their own, that's exactly what they are -- a part-time, unlicensed
agent.
Let
me now share with you some general rules of thumb:
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Attract
sellers based on the value you offer, not what you charge.
One
of the main reasons why commission becomes an issue on a
listing appointment is because the homeowner is focused
on the wrong thing. The homeowner is usually shopping, not
for the best skilled and trained agent but for the cheapest.
Now I could be wrong, but for most homeowners, I believe
their house is one of their biggest assets that they own.
And because of this shouldn’t they find the best professional
versus the cheapest? One of the visuals I use in my audio
program "Give Yourself a Raise : How to Get More Listings
at a Higher Commission" goes like this: if you had
to have brain surgery, would you try and find the cheapest
surgeon or the best skilled?
One
of my Power Agents, Tom Seeley, shared a great analogy
on one of my Teleclasses. He would tell the homeowner
to go to the refrigerator and pull out their mayonnaise
or ketchup and if they have anything other than a brand
name, like Hellman's or Heinz, then he would cut his commission.
Of course, they always pull out a name brand. The point
is on something as insignificant as mayonnaise or ketchup
they buy a brand-name at a premium price, but with their
most important asset, their home, they want to go for
the cheapest.
So
we need to make sure the homeowner focuses on choosing
an agent based on their skill and ability, not how much
they charge. After all, it doesn't even matter what an
agent charges. What really matters to the seller is how
much they net. In any profession or industry, the price
a professional charges is directly related to the service
they provide. There’s a good chance that if an agent has
to lower their fee in order to get hired, they obviously
know something the homeowner doesn’t know, and that is
they are not worth anything more than that. If an agent
has to lower their commission to get hired, there’s a
great probably they don’t have the skill to get the job
done effectively. In other words, paying a premium price
for a skilled agent could net the seller more because
that agent can get the job done better than a discounted
agent.
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When
the issue between you and another broker is, let’s say 1%,
you only need to prove to the homeowner, why you're 1% better.
Sometimes we become overwhelmed because we think we have
to sell the homeowner on the whole full amount. If a homeowner
has made the decision to hire an agent, but they are leaning
toward another one because they are “cheaper”, you only
need to validate why you're that 1% better than them. Show
the seller, through statistics, by paying you more, they
will net more than with the other broker. |
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There
will always be somebody who's going to charge less than you.
Therefore, don't compete based on price, but based
on the value you offer. Say this to a seller: If an agent
is so willing to give there commission away in order to get
your listing, how quickly will they be to give away your money
in order to make a sale happen? |
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Never
address commission until you have established the value you
offer.
One
of the mistakes agents make is addressing how much they charge
when a homeowner asks them on the telephone. You should never
address commission until you have sat down with the seller,
built rapport and trust, and they fully understand the value
you offer. I
just saw the movie Superman 2 with my family the other night.
While I was watching the movie, I was enjoying some scrumptious
chocolate covered Raisinets. At one point, as I emptied
some of the raisins out-of-the-box, one got away from me
and started to bounce out of my hand onto my chest. Well
let me tell you, I started doing a juggling act with this
one stupid little Raisinet as if it were a nugget of gold.
Why? Because I figured, based on movie theater prices, I
probably paid about $.25 to this one raisin. So in other
words, the perceived value of this one raisin caused me
to treat it as a precious item. If you can create a high
perceived value with a seller before you tell them the fee
you charge, the easier it will be for you to get a higher
commission. |
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There
is no law that says you have to negotiate in 1% increments.
If you have to adjust your fee because the seller
is the type that feels they need to win something, then consider
adjusting your fee just a ¼ of a percent. Even ½
percent would be better than a full 1%. If the seller has
“bought” into you, this should be sufficient to fulfill their
ego that they got something. |
I hope you've learned a few things in this short article
to help YOU to get higher commissions. There is much more you
can do to get those commissions... and I want to help. For more
information on how YOU can get stop cutting your commissions
to get listings, click
here.
Once
again, YOU deserve it and YOUR FAMILY deserves it – so DON'T
CUT THOSE COMMISSIONS!
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