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How To Get Higher Commissions In
Today’s Challenging Market

By Darryl Davis


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:

Through experienced insight and instruction learn ways in which you can improve your real estate commission.
Owners expect more for less

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.

It hurts our industry
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.

Here is an interesting fact:
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.

You deserve to get paid well
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.

Make more money without working harder
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:

( 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.

( 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?

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:

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.

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.
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?
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.

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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