Defend Yourself! There's No Need to Cut Commission!

Earning a fair commission for a job well done is every real estate professional's right. You have the mortgage to pay and kids to feed, just like everyone else. If you accept to reduce your commission and not earn a profit from your transactions, you will not be able to provide the level of service that your clients deserve. It's not only you and your business that will suffer, but your clients will suffer as well.

Many of your clients do not understand how the commission is split up, until you educate them on the subject. They need to be informed that the commission is divided several ways and that your net profit will not be as big as they believe it to be. They also aren't aware of all the marketing fees that you accumulate to sell the home.

Prove to them that you are worth your commission and more! Educate them about all of the steps that you have to do to successfully close on the sale. Make a list with every step, detailing your responsibilities or download a great document entitled, The Critical Role of the Realtor in the Real Estate Transaction by the Orlando Regional Realtor Association. They list about 200 typical actions, research steps, procedures, processes and review stages that a full service real estate brokerage provides for their customers. Personalize the list to fit within your job responsibilities and include it in your next listing packet. I bet it will open your potential seller's eyes on how big of a job it really is to sell a home. All of the job responsibilities may be too much for the seller to handle by themselves if they are thinking about listing by owner. You may have just turned a potential FSBO around with that list!

The most effective way to prove you are worth your full commission is to educate your client how you add value to the transaction. Throw some statistics at them. According to the 2006 NAR Profile of Homebuyers and Sellers, the median sales price from a FSBO was $187,200. Compare that to the median sales price of $247,000 from an agent-assisted sale. That is a big difference! The profit from the agent-assisted sale more than makes up for the commission that the seller would have to pay to the Broker.

Why do agent-assisted transactions return a higher sales price than a FSBO? According to NAR, real estate professionals price the home competitively; they negotiate better than the home seller; they utilize marketing techniques to its full potential and they assist the sellers through each step of the process.

If a seller asks for a commission reduction, you need to have a reply ready to defend yourself! A few good things to have ready are as follows: (Summarized from REALTOR Magazine Online. "Prove You're Worth the Commission"

1. A comparison of your sales volume and days on the market with the MLS average and with other real estate professionals whom your prospect may be considering.
2. Statistics that show your average list-to-sale ratio compared with the average from your local board of REALTORS.
3. Your marketing plan to sell the home which includes direct mail pieces, e-mail marketing, search engine and internet marketing, database research, etc. Reiterate that the steps will improve the chances of a quick sale.
4. The list of all of the services that you provide (home staging, free home warranty, etc) and the list of the actions and steps that you created as introduced above.
5. An offer to provide a free home warranty with the listing. The home warranty will not only attract buyers, but it will also protect the sellers from any last-minute repair negotiations that can postpone closings. Click here for more information on how home warranties can protect you.

Remember, you are worth your commission! Justify yourself and educate your client on all of the ways that you add value to the transaction.