It has become popular practice for the ever-growing “do-it-yourself” crowd to assume that buying or selling a home falls into the same category as putting a faux finish on their guest bedroom’s walls. Even for the do-it-yourself purist, however, real estate is enough of a mystery to merit at least a look at realtors when it comes to buying or selling property. However, to this same group, the commission paid to a realtor is becoming less a generally-accepted rule than a point of negotiation. What do you do when a prospective client wants to negotiate your commission?
First, do not panic. There is enough evidence to support the fact that you are worth the commission you charge. In a June 9, 2007, article posted on washingtonpost.com, Kenneth Harney noted that for the first time in years, the average commission rate on closed home sales nationwide actually rose slightly last year. He attributed this to the recent downturn in the housing market, noting that “full-service” agents are becoming increasingly in-demand. With sales down, inventories up and prices suffering as a consequence, the skills and market-knowledge offered by such agents are increasing in value.
Second, be able to show a prospective client where your value lies. You are a full time real estate professional; it’s your business to have the most up-to-date and informed approach to the housing market. You offer expertise on local markets, inventory levels and pricing; and you have the negotiation skills necessary to close deals in the best interest of your clients. You have at your fingertips the tools to help your client (or prospect) get top dollar for their investment (see Part II of this article for examples). And, as an agent, you are assuming a great amount of risk on behalf of your client. Just as a client would not question the money collected by a doctor or attorney for his/her expertise and consultative services, why should a realtor be considered any differently?
Finally, it may benefit the prospect in front of you to know that in a market glutted with homes for sale, buyer’s agents are more likely to bring their clients to a listing offering a higher “co-op” commission. In other words, since most commissions are split between the listing agent and the buyer’s agent, it only makes sense that a buyer’s agent may be more inclined to show a listing with a three percent split as opposed to a listing with less “incentive.”
For more information on how to get full commissions for your services, see the article entitled “Three Ways to Multiply Your Value in the Marketplace,” by Craig Forte.