Agents work incredibly hard to make it in the ever-changing world of real estate. We keep up to date on the latest market trends. We buy ourselves expensive courses and seminars to learn from top industry experts, and we even sacrifice our children’s weekend sporting events and barbecues with the family to show houses.
It seems like there is always something left on our growing to-do lists. And maybe this is just the way that real estate is supposed to be. However, I really believe that most people have no idea how many hours we work, or what kind of stress goes into working on deals that are worth hundreds of thousands of dollars or more!
The industry is currently undergoing some changes, and I think some of the new systems in place may make agents even more valuable. However, I think everyone has put up with clients who don’t really get what an agent does. I mean, I’m sure we’ve all felt like our work wasn’t appreciated from time to time. And on the other hand, sometimes clients are beaming with appreciation for our help and expertise.
The bottom line is that we are constantly on the clock, trying to make deals go through, guiding clients through key decisions, and helping our clients to get exactly what they are looking for in their real estate sale or purchase.
That’s why I absolutely never haggle on commission–it just isn’t worth it!
Clients are value focused, but also budget-minded.
Some clients will want or even demand that in order to get their listing you must reduce your commission.
My answer is always a firm, “no.”
Backed by these three reasons…
Reason 1: It’s Not Worth Your Time
Have you ever really needed to be somewhere at a certain time, but you were trying to do about five or six things at once before you left? It’s nerve wracking, and your quality of work really takes a nosedive.
This is the exact same feeling that I get when I know that I’m not going to be making as much money on a sale as I normally would. In the past, I have taken co-listings with other agents where I didn’t’ get the best end of the deal. I didn’t complain, but in the back of my mind, it was really hard to focus and put all of my energy into it.
I tell clients when they try to haggle on commission that I just can’t work as hard as I need to with only a 1% commission. It isn’t worth my time, and I want to feel enthusiastic about each and every property that I list. If my heart’s not in it, my head isn’t either and I just can’t perform as well as I need to.
There are also other things to consider like marketing time, being torn between other listings, and making the most of my time management skills.
When I don’t feel confident in my compensation, I can’t provide what the client really needs.
And you can’t either. Your time is valuable and I know as well as anybody that lowering your commission is a kick in the gut.
Your clients can’t expect you to work as hard when you aren’t being compensated.
Imagine that you went to their place of work and requested their services for a huge discount–they wouldn’t be happy!
Remind them of that simple fact when they haggle you, and usually, they will come to their senses.
Reason 2: Your Expertise is Worth It
When a client asks you to lower your commission, they aren’t asking you because they can’t afford to pay you.
What they are really saying (in the nicest way possible) is we don’t think you are worth it.
In essence, if you agree with them or drop your commission at all, you are reinforcing that you aren’t in fact, worth it.
This type of thinking goes against everything a good agent should stand for.
Can you imagine if someone told you that because you worked with multiple clients you weren’t worth as much, even though you are putting in your very best effort on each listing? It would be ludicrous to have a client ask to be your only listing for the next three months. Yet, time and time again clients think this way.
Whenever a client begins to go down this road of reducing your commission, you need to defend yourself with the facts.
Keep your composure and don’t appear flustered. Just calmly and eloquently explain the difference between you and your competitors, and also provide clear cut reasons for why you are worth the full commission.
Let them know that you’re putting in the same amount of work for each client and that this is what all of your other satisfied customers have paid you in the past.
If you are selling in the luxury market, simply explain to them that luxury branding requires you to command a better use of your skillsets, along with having a higher level of client satisfaction. In order to provide this benchmark of service, you will need to spend more time and effort and that comes at a price.
Being the best means being compensated like it.
Don’t lower your commission, it will be very hard to raise it in the future.
Reason 3: Set A Luxury Precedent
Word Travels Fast
Lowering your commission could hurt your reputation. Once you agree to go lower, that news will travel fast. In luxury, giving up a percent of your commission can cost you tens or even hundreds of thousands of dollars.
Getting one sale isn’t worth risking your reputation.
Play the long game.
One sale for a quick buck isn’t as important as creating a luxury brand perception. Clients care about perception when they choose a real estate agent.
They don’t want to go to a used-car salesman to help them buy a home–they are looking for a luxury real estate agent.
You can provide your clients with all of the rational, statistics, and information that they need in order to help them feel better about working with you.
In your listing presentation you can clearly lay out all of the perks that your services provide, and you can even demonstrate how you do things differently than other agents.
Instead of worrying about what they will think, don’t be afraid to walk away if the client truly doesn’t want to pay you what you are worth.
I’ve had clients make all sorts of ridiculous requests.
Once, a woman asked me to buy her a new computer to prove to her that I was loyal. Needless to say, I saw myself out and walked away from what would have been a very bad working relationship.
Not everyone will understand the value that you provide. Some people will want to list themselves, or seek out the cheapest agent. That’s their prerogative, and if that really is the case, you should let them.
Don’t haggle over your value. In luxury, you can’t waste your time with people who aren’t going to treat you fairly.
Focus on the clients who truly appreciate all of your extra efforts, and who compensate you fairly.
Never give up your commission for the sake of getting the deal.
Typically, clients who haggle on commission don’t understand your worth, and will create the biggest headaches in your business.
They will make all kinds of excuses for why something isn’t right, or why your opinion isn’t valid. Don’t play ball with people of this caliber. It will end up costing you, both financially and emotionally.
If you’ve ever had a client who was unhappy, imagine a client who isn’t capable of being pleased–those are the types of clients who ask to haggle on your end of the deal.
Only in rare circumstances is it okay to make exceptions. Sometimes, other agents are involved, or there’s a lot of money at stake that requires very little effort on your part. In these instances, it is alright to accept a lesser commission or to receive less for the sale.
However, this is the exception and should not become a habit. When you are able to remove the doubts from clients mind’s and explain to them why you are worth every penny, the majority of the time they will take your side.
Only on very rare occasions have I had to walk away from a client who haggled on commission.
One of the best ways to counteract any negative response is to quickly meet their suggestion of lowering your commission with all of the reasons why you charge what you do.
It’s not uncommon to have to state your reasons behind why your work is valuable. In fact, sometimes, clients will default to trying to haggle with you just because they want to see how you react.
Just remember to keep calm and be polite when they bring this up. 9 out of 10 times if you keep level-headed and remember to bring up your selling points, everything will work out in your favor.