This week’s message is focused on how to defend your commission. And this is a really important topic because it’s how to defend your livelihood. This is the way in which real estate agents, make money, make income. And increasingly in this world, we’re seeing that erode, we’re seeing commission rates come down. We’re seeing more and more agents trade away their commission rate, their livelihood, just to secure a listing.

And this is a sad state of affairs, but the reality is we don’t have a lot of control over that, where the market moves, how these things happen, where the trends start to unfold. What we do have control over is our strategy on defending our commission. On how we take a stand for what we’re worth, for our value and for the results we get for our clients. Specifically here, we’re talking about listing clients, sellers that are looking to list their property with us.

YouTube video

So couple of tactics and strategies that I embrace and my team embraces is to make sure that we defend our commission, that we’re not trading it away. And you know, we’ve consistently and routinely for my entire career, had most all of our listings, you know, many, seven figures and up, under contract, listing agreement for 7%. That is a market high in most places across the country.

Most markets, especially when you get into the luxury higher price points are now around six. Sometimes even lower, five, some discount brokers are doing it at four. And some companies are now doing it even less than that, three or even below a fixed fee in many markets. So it’s more imperative than ever if we don’t want to keep making less money and working harder. For the same results that we learn how to defend our worth, defend our commission. So here are a couple of tactics.

Focus your pitch on value, not price.

One is focused in your listing presentation and pitch at the end, when you discuss the commission rate and the terms of your listing agreement. Focus your pitch on value, not price. By that I mean, you want to make sure that you’ve touched on all of the points, very comprehensibly in your listing presentation as to why you charge what you do.

Meaning if you’re the highest price broker in the market like I am, and like we are, you better produce and provide a really high quality service and an exemplary superior result in terms of your sales track record, your marketing assets and implementation of the plan. You know, the white glove service that you provide to your clients in terms of expertise, advice, and counsel in this process, because that’s what would command a higher price than others.

Just like if you’re going to go to target to buy clothing. That’s going to be at a different price point and for a different consumer and mindset clientele than going to Saks Fifth Avenue. So we need to focus on the value and the competitive points of differentiation on what we provide versus what our competitors do.

If our competitors that we’re going up against these listing appointments are charging one or two percentage points lower, we better know what they’re not doing for their clients. So that we can get ahead of that objection. We can make sure that we’re touching on that in the listing presentation, the things that we do that our competitors aren’t doing. Professional photography, maybe professional videography, maybe using a Matterport 3D camera, using a drone, syndicating at a different, more exclusive websites, producing really high quality, both digital and print content, to market, create collateral out in the market to get more exposure for qualified lead showings and offers.

Focus on results and outcome versus cost and expense.

The second is really focusing on results and outcome versus cost or expense.

Meaning oftentimes when we see a price, we see a percentage, 7% of a million dollars or $500,000, is $70,00 or $35,000. So a lot of money, right? It’s big number, but it’s not a big number when taken in context, in relation to the service you’re providing, which is selling and disposing of an asset, arguably one of the largest assets of that client and of that homeowner. So if you look at it that way, and you look at the comparative results that you or your firm, if you’re new, we have to leverage something larger than us if we’re a new agent. So the average close to list price of your firm, let’s say you can quote, if you don’t have one yet, um, you want to make sure you’re focused on that.

You want to make sure that you’re able to articulate hopefully competitive differentiating fact of the difference or what we call the Delta between your or your company’s average close-to-list price versus the competitors. Here’s an example. We would often state in the vacation markets that we’re closing properties on average of about 97% of list price. So on a million dollar property, we’re closing on average of $970,000. Our competitors are at 93 to 94%. So the same property would sell on average, again for $930,000 to $940,000. That’s a difference of almost $30,000 or three percentage points on a million dollar hypothetical home. But we’re only charging 1% more than that competitor who charges six. So do the math, we’re charging $10,000 more, but we’re saving $30,000. So we’re charging a net Delta of, or we’re actually saving rather a net Delta of $20,000.

We’re putting in the pocket of our homeowner seller client on average. Now that was a wordy way of telling it, but you understand the point here, the takeaway is that focus on the outcome, focus on the results you get for the service and the marketing that you provide that your company provides, use statistics and numbers to help support your argument. And if you don’t have those, yet yourself personally, leverage something larger than yourself.

Your overarching brand, if it’s a national brand or international brand or affiliate, and your local brokerage as well. Because then you’re changing the frame of reference of the seller to the outcome, to the results you provide, not the cost of the services rendered. There’s a big difference there in mindset, right? Because now they’re seeing how they could actually save money by paying more and remember focus their attention too and use terms like this, it’s a performance-based fee.

We’re never paid at all until you accept an offer and close on terms and a price that you’re comfortable with. So we’re not paid that number that might be slightly higher than the next, until we deliver outstanding results for you.

Those are some tips. Those are some strategies that we’ve implemented in our real estate practice as a luxury broker and top luxury team to get success, to defend our commission, our value proposition and our livelihood, really our income at the end of the day. Because what we do as agents, most people don’t realize is actually challenging. It’s very labor intensive. We have a lot of different hats to wear and we provide a valuable service. So don’t let anybody kid you and tell you otherwise.

Hopefully you get some value from this. If you did, please let me know, leave me a comment, share this for somebody like it. And as always put some of these tactics into play. Start to get results in your business. I hope this helped you in some way to success, your happiness, your freedom. We’ll talk to you next week.

Pin It on Pinterest

Share This