Wednesday, March 11, 2015

How About a Pay Cut?


Because most of my marketing is to distressed sellers, it's not often that you will find me doing a “listing presentation” for a traditional listing. I recently found myself in that exact situation, however, when I was referred to a seller, Mindy, from a friend. I didn't know that she was interviewing other agents but I did what I normally do... I brought some comps and we reviewed them. Nothing fancy.

After we finished discussing the sales data and her listing, she told me that she was interviewing other agents and wondered if I was negotiable on my commission. This is the point where most agents have that Deer in Head Lights look. Oh no! I just got a pay cut!

For those of you who don't know, although there is a common amount of commission that many listing agents charge, typically 6% of the final sales price. The amount is not regulated and is instead determined by the listing Broker and the seller.

My agents occasionally call me and ask if they are allowed to do a discounted listing or reduce a commission for a long term client. The answer is absolutely! However, before you do so give yourself a minute to determine if that's your best move.

I have certainly reduced my commissions for clients. I have a previous seller/buyer now ready to sell/buy again. Am I going to reduce their listing side commission on a two sided transaction for repeat clients? Of course! Reduce my commission to save a seller from foreclosure when we are squeaking by on a payoff? Yes, to get the deal done I have done it. I'm not greedy but....

Back to Mindy. We left off after I gave her a very simple listing presentation, I had been told that I was competing with other Realtors for the listing and I am faced with taking a pay cut to get the job.

My response:

“Mindy, you are smart for asking because commissions are negotiable. However, how would you feel if the person who is supposed to be negotiating for you wasn't even able to negotiate effectively for themselves? No, I will not reduce my commissions. But, if you hire me you can rest assured that I will work just as hard for you and your bottom line as I do my own.”

Guess who got the listing... and a full commission.

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