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Industry NewsResponding to clients’ commission objections
This is the first article in a two-part series based on REALTOR® comments gathered by Melanie McLane through her Facebook page.
Experienced REALTORS® know they’re worth every penny of the commission they charge.
“If you don’t think you’re worth the commission, you’ll never convince a buyer or seller you are,” said Melanie McLane, a REALTOR® and nationally recognized real estate educator.
McLane recently asked other REALTORS® on her Facebook page what are the most common objections they hear from clients. Not surprisingly, she said commissions nearly always top the list of common objections from both buyers and sellers.
With more than 30 years in the business, McLane said she’s found some replies that work when answering clients’ questions about commissions:
- While commissions are negotiable by law in Pennsylvania, brokers in each office set the policy regarding commissions. If a client wants to negotiate the company fee, suggest he talk to the broker. Ninety-nine percent of the time, he won’t.
- When a client compares your company commissions to other companies, make sure you have a comprehensive list of services you and the company provide. Show the client the list and ask which service they don’t need – and wait for an answer. A good response is, “I’m sure other companies know the value of their services. I believe our services are fairly priced for the value we provide. Let’s review them.”
- Ask the client, “Do you expect me to negotiate on your behalf?” Most will say yes, to which you respond: “If I cave in this easily in a commission discussion with you, how confident are you in my abilities to hold firm to what you want in a negotiation? Don’t you want a strong negotiator in your corner?”
- When clients say “that just seems like an awful lot of money,” you need to explain that as a self-employed independent contractor, you pay all of your own expenses, including commission splits, both between companies and between brokers and agents. Remind them that unless or until you sell something, you get no money.
- Clients may question why they should sign with a buyer agency and pay that REALTOR® when other agents will show their house for free. If you don’t have a buyer agency agreement, no one is representing your best interests. A good answer: “When you become my client, I owe you fiduciary duties which include loyalty, confidentiality and the requirement to make an effort to find you a property. Most of the time you don’t pay me directly; the fee comes from the transaction as a cooperative fee.”
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Kim Shindle is the Manager of Media Relations at the Pennsylvania Association of Realtors®. |
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Kim:
Thank you for this fine article. Many agents can not express all the servies thier company provides from memory; therefore, it is good to have the information written down to refer to. Clients will be more convinced to see the services written down and may compare your services to the services provided by another company.
Once again, thank you. Looking forward to part 2.
HarryMcCarty16@msn.com
I found I never get commission objections when I use a menu of services. The client select what services they would like and that is the commission they are charged. Example purposes only: The higher end clients and commercial clients require/demand more of your time and you may use extraordinary efforts and advertising to accommodate their listing, so you will have those services at a high commission for sake of example only 12 or 10% commission, take away some services and lower the percentage add as many columns of services you like make sure you include your typical services and your typical commission rate then continue the columns until you get to form filling (transaction licensee services) which could be a lower percentage of a flat fee. When the client gets to choose 99% of the time they choose your typical services without a commission objective.
One additional comment: most agents seem to cut their commission fee for the higher end properties and I don’t understand this. In any other business (including appraisals) when you perform more services and with higher end clients you will defiantly work harder and spend more on advertising you should get paid more! This is a business run it like one and be mindful of your bottom line!