| March 10, 2005 |
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When a seller asks you to cut your commission, how do you give them what they want and keep your commission, too? Look at the seller's request in a new light, and you'll find you can make them happy without giving up a cent. Let's start with what you can't do:
What you can do is some prevention, before the commission issue comes up:
If the commission question comes up anyway, explain your position this way -- "When clients ask for a reduced commission, it's usually for one of two reasons. Either they aren't sure how they are going to get their money's worth, or they believe they have something to offer in its place that will make it worthwhile for me to agree. So what I can do is explain to you what I do for the commission and how the commission is shared with others." Naturally, the seller will be curious about what would make it worthwhile for you to cut your commission. You reply, "The only thing that would make it worthwhile is the one thing I can't ethically do, and that's ask you to price your home below market value. Here's why. All agents dream of quick, painless transactions, but that's not what the business really is about. If your home were priced low, we both know it would sell very quickly. You'd pay less commission but you may actually lose money on the sale of the house. My commission is based on taking risks -- the challenges of getting you the highest price and best terms possible for your home. Either way is a bit of a gamble, but my commission pays me for taking that risk. With a lower price for your home, you're taking the risk. In other words, if it were worthwhile for me to lower my commission, I wouldn't be worth much as an agent, would I?" If the discussion continues, lay out for the seller what they must do other than set a low price for the home. This may be the first time it dawns on the seller that they have a role in the home's successful closing, too. Say, "Let's turn this around for a moment. Imagine that the more difficult your home is to sell, the more I charge you in commission. I'm going to ask you some questions, and for every 'No' answer, we'll add a 1/2 percent more to my commission: Is your home market-ready to my standards? Is it updated with every feature buyers want today? Are you up-to-date on all repairs and major appliance replacements? Will you make it easy to show by stowing your Rottweiler at the vet's? Do you have any terms that will make the home harder to sell or to close, like you need to wait for school to be out before you move? Do you expect unlimited advertising the longer the house stays on the market? Will you agree to lower the price to whatever I suggest so buyers will swarm it making offers?" "You want me to work for the commission, and I want a house that will sell. As you can see, selling a home is a partnership where both of us have jobs to do. We need to trust each other to do those jobs, so that you will get to meet your goals." Remember, for a negotiation to be successful, both sides have to get some or most of what they want. Let the seller save face by telling them that you admire them for asking -- it shows they are thinking about the bottom line, and that's what they are paying you to do, too. |
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