The Art of Commission Negotiation – a Recap

Jul
2011
02

posted by on Consulting & Compensation

microphone

On Wednesday afternoon, I hosted a teleseminar panel discussion on the Art of Commission Negotiation. And yowsa! It was fantastic! If you missed the show, you missed a great one. If you ask me reeeeeeal nice, I might be persuaded to send you a recording of it.

Anyway, we had five guest speakers, including me, sharing our strategies for that sometimes-awkward commission negotiation conversation with a potential seller. We all had very different approaches, (but none of us advised the “whine your way to a commission” strategy where you basically tell your seller how little you end up with at the end of the day, as if he cares!)

For those who missed it, our five speakers and an overview of their philosophies were:  

Jackie Leavenworth, The Real Estate Whisperer: Comfortable scripts & dialogues, including “No, but thanks for asking. What other questions can I answer for you?” and “No, but thanks for asking. I used to negotiate my commission, but I found it didn’t work for me,” and “No, but thanks for asking, I run my business with integrity and decided that it’s not right to charge someone less because they’re a better negotiator than someone else,” and “No, but thanks for asking. This is actually your first test of my negotiating skills!” Jackie also refers to her commission as a “success fee” and takes the time to explain what that means.

Scott Nordby, Broker Owner of Innovative Real Estate Group: Asking the seller for his thoughts on what is important to him in a real estate agent. If the topic of commission comes up, Scott asks him what he feels is a fair price to pay a professional real estate agent. Most of the time, the seller responds with the figure Scott is looking for, but if he doesn’t, Scott doesn’t back down and is willing to lose the listing.

Loretta Hughes, Broker Owner of Exit Realty Fusion: Raising the total commission payable so that the buyer agent co-op is far above what most other agents are offering, thus encouraging showings. She explains to the seller that by netting a higher price (due to the increased activity), the higher commission they’re paying is offset – that is – the seller ends up with a higher net proceeds. She does not participate in the higher commission – she gives all of it (over and above her own normal listing fee) to the buyer agent.

Tupper Briggs, RE/MAX Top Producer: Tupper uses his prowess in the Evergreen market to demonstrate his value. He shows the seller, using hard figures from the MLS which are updated monthly, how his team sells homes far faster and for more money than the “average” Evergreen real estate agent. Thus, even if his fee is higher than his competition, the seller nets more in the end.

Jennifer Allan, Author of Sell with Soul (me): Being upfront about commission – getting it out of the way as soon as possible so as not to create an adversarial situation with a seller. When sellers ask what I charge, I either tell them or direct them to my website where it’s clearly spelled out. I also offer an option in fee structure – the seller can pay my full percentage at closing or pay me an upfront marketing fee + a reduced percentage at closing, thus sharing the risk.

Thanks to all who attended and a HUGE THANK YOU to the speakers!

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