Today’s Commission Challenge

HOT MARKET:

Let’s start with the scorching hot real estate market and how that is putting a downward pressure on commissions because houses are often selling in days. You should expect this objection in today’s market and be prepared to answer it during your listing presentation. If the house sells in days, you may not have to invest as much money and time into marketing, but you still must steward the transaction to closing. If the seller hires a limited-service broker at a reduced fee to sell their house, do you think that agent will be available when the sellers call at 8 pm on a Friday night because the inspection or appraisal didn’t go well? Getting the accepted offer is only the first step, a lot can go wrong between accepting an offer and closing. If you hire a limited-service agent, you can expect to do a lot of follow up yourself. You may pay less, but it will be a DIY transaction with a lot of stress. When it comes to the largest investment they own, sellers need to put it in the hands of someone they trust, who will be there for them at a moment’s notice to alleviate their stress. 

IBUYERS:

Sellers are often enticed by iBuyers because they want to avoid the stress and inconvenience of selling. They are willing to accept thousands less than market value to reduce their stress. The real issue is the service delivery the average agent is supplying. What does it say about the average agent if a seller is willing to take thousands less on the sale to avoid you? To earn a full-service commission, you must prove that you have the market knowledge and pricing strategies to get them top dollar, and you have the attention to detail to handle every issue that arises on the road to closing.

CLASS-ACTION LAWSUIT:

I believe the class-action lawsuit is a good thing. It will force agents to improve their communication skills around commissions. When explaining commissions to the seller, first let them know how much you charge for selling their house. Once you have agreement on that, ask them how much they would like to pay the buyer’s agent (explain the pros and cons of different commission options). When working with buyers, get your Buyer Representation Agreement signed up front, so the buyer understands how much you charge for your services. If they purchase a house where the seller offers less than your agreed-upon commission, the buyer can pay the difference on closing, or they can offer slightly more and negotiate that the seller pays the full commission.

TECHNOLOGY:

Some people think that with all the new technology we’ve adopted and the efficiencies we’ve created, we should be able to work for less. Although technology is profoundly changing the way we do business, it has created more work, not less. Whereas years ago, marketing consisted of putting a few pictures in the local newspaper, consumers now expect professional staging, drone videos, 3D virtual tours, social media advertising, syndication across hundreds of websites, etc. All of this costs money and takes extra time. Technology has certainly increased the consumer experience, but it has hasn’t made things easier for real estate agents.