Why Lowering Your Real Estate Commission Can Be Bad for Clients

client contractIn real estate, there are no guarantees, and as a full-time real estate agent, commissions are how you earn a living. For most agents it is their only source of income. One of the challenges facing many agents is maintaining 100 percent real estate commissions. There are always going to be potential clients who want to negotiate a lower price. But are they really getting a better deal?

A commission is not only how you get paid, it is also what drives and motivates you. With a lower commission, you lose that incentive and may spend more time on other properties where you earn a higher commission. Also, advertising, marketing and all of the resources required to properly sell a home costs money. With a lower commission, there is less money to spend on those resources. This could result in a seller’s home remaining on the market longer than average, negating any potential savings from a lower commission.

However, when sellers ask for a lower commission, it is best to handle it as any other type of sales objection. To overcome the objection, it is important to understand why they need a lower commission in order for you to offer an alternative solution. To do this, take out a sheet of paper and calculate the estimated proceeds from the sale for them. In many cases, the result is actually higher than they thought.

In lieu of a lower commission, perhaps you can suggest alternative solutions such as affordable improvements the seller can make that will improve the home value. Staging a property can also result in a higher selling price.

Keep in mind that most sellers today start their research online. There is plenty of misinformation on the Internet so it is easy for sellers to become misinformed. Therefore, it is essential to help them understand the real estate sales process, your marketing plan, experience negotiating the best offer on their behalf, showing properties to prospective buyers and all of the other valuable resources Realtors® provide.

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