When I finished my active sales career at the end of the 90s, the trend from a 7% fee to the 6% fee was well entrenched. Most areas were moving rapidly to a lower fee structure, while I was still taking plenty of listings and sales at a higher fee structure, plus a processing fee of $495.00. I already had belief in my value and could defend it to the open marketplace.

Due to the robust sales in that time, the consumers' perception of the ease of selling property, and the rise in sales prices; the lowering of our fee structure had accelerated. Given the reduced level of risk we, as agents, assumed in a marketplace where everything sold quickly and easily (even garnering multiple offers), one could understand the downward pressure on fees. The challenge was that once a fee structure or commission structure trends a certain direction, it won't go back to a higher level. When the risk increased for the listing agent and a smaller percentage of homes on average sell due to market competition increase, inventory, and selection options for the buyers, it would be nearly impossible to increase the fees or commission charged to better reflect the risk of marketing exposure of the newer, more challenging marketplace.

The natural trend is for agents to lower their fees in competitive marketplaces where listings are tough to acquire. When the competition is fierce, rather than raising knowledge, skill, attitude, or activities to compensate for the increased competition, we lower fees to attract and secure more prospects. A Champion Agent applies the opposite approach; they work to increase their activities to increase their leads and lead sources. They focus on raising their skills and knowledge to create more recognizable differences between themselves and the competition. This allows the Champion Agent to convert prospects to clients in higher volume despite their higher commission rate. Finally, they control and improve their attitude, so they increase the number of prospects and increase conversion.

In robust markets, too many agents figure that their work will be less strenuous; that they will exert less effort to achieve a sale of the property. They feel that the property will sell in a week or a few days, so they equate the timeframe and money spent on marketing to be quicker and cheap, so they feel a reduction is in order. I have never heard of a doctor lowering their surgery cost because the operation took less time than they expected. The charge is based on the procedure. In some cases, they take less time, and sometimes they take more time to complete the surgery. They don't rebate the easier ones because they know they will have a really tough one in the next few weeks.

If we get in the habit of discounting or rebating fees because one sale is easier or quicker than another, we will lose in the long run. There is no way of telling how hard or easy a transaction was to complete until you have the transaction fully closed and are looking back, even if the sale happened early and appeared to be easy. There are always transactions during the course of the year that you end up not making a profit on because of the difficulty and stress associated with them.

I know what it's like to try to defend my value and fee structure. I know what it feels like to be face-to-face with a tough seller and to be asked to cut my commission rate. I have had it asked of me hundreds of times; they say that another agent will do it for less money. I have also had both the buyer and the seller, during negotiation, expect me to cut my fee or participate in them buying and selling the home through a fee reduction. A Champion Agent experiences often those same situations. They are just better prepared to handle them and maintain their fees, value, and integrity.

Myth #1 – Champion Agents who never cut their commission don't get asked to as much as people who do.

It isn't that they get asked to reduce their fee less frequently; it's that a Champion Agent just doesn't do it. They choose not to play that game. They have the personal integrity, sales skills, and mental strength to be able to defend their value and not give away their hard-earned and well-deserved fees and profit.

The real truth is that a high volume Champion Agent will get asked to reduce their fee more frequently than other agents. That's due to them putting themselves in more selling situations, which raises the likelihood of the subject coming up more frequently in the course of business.

Myth #2 – A little adjustment in my fee won't hurt.

The minute you consider the option of a fee adjustment, you have opened Pandora's Box. You have started down the slippery slope. Most agents are willing to adjust a little, but they shouldn't. They will be unable to stop once they start.

I also believe your fees affect your self-esteem and self-confidence. There is a direct link between your fee structure and your self-esteem and self-confidence. To be successful in sales both of those need to be protected and at a high level. By cutting your fees, you are sabotaging yourself. When you accept less, you start to feel that you aren't worth as much; that your value is diminished. I know few people who feel like Champions walking away when they adjusted their fee downward. In fact, most of them feel poorly. Some will even beat themselves up over being weak. This whole negative mindset will affect your future performance. It will create a negative image and negative expectation when faced with the tough situation again. The belief you have in yourself will be changed and lowered.

Some people also can feel guilty because they are giving preferential treatment to one person over another. You can feel like you are taking advantage of the client who is willing to pay you a full fee. When you start wheeling and dealing with commission we can turn ourselves into the equivalent of a car salesperson.

Consumers have always rated car salespeople at the lowest levels on the respect chain. The reason is two-fold. First is the high pressure, hot box techniques that are often used in selling cars. The second is because they know others are buying the same car for less than they are purchasing it for. This is especially true for women. Women, on average, buy the same cars for more than men. The same car will sell for multiple different prices for multiple different people even in the same day. Is that what you want your reputation to be as an Agent?

A Champion Agent also doesn't adopt the two deal discount philosophy. Each transaction takes its own individual effort, work, knowledge, and expertise. Your surgeon doesn't offer you a discount on the second operation. I had surgery in college for a cyst removal on my tail bone. The doctor didn't get it all the first time, so a year later, I had to do it all over again. My parents paid for it all over again even though the surgery wasn't completely successful the first time. This volume discount philosophy only occurs when we don't clearly express our value in each individual transaction.

A few years ago, my father sold the family home that I grew up in and bought a condo in downtown Portland. He knew which building he wanted to live in. I flew up to look at all the condo choices he had in that building. In a few hours, we settled on the right one for him. My father, his real estate agent, and I discussed how the offer needed to be constructed and presented. Once that was agreed to, I watched in horror. This agent, who was a good agent, slipped into listing presentation mode right there in the condo. He proceeded to talk about listing my father's home. He concluded his ten minute discussion by stating that he would charge 1% less if Dad would buy and sell through him. He gave away 1% of his fee or 33% of his gross fee and probably over 70% in profit within ten minutes, and he wasn't even doing a real listing presentation! He didn't have the paperwork, didn't have the value of the home figured out, hadn't evaluated the marketplace, didn't know the services that my father wanted. He just gave away his hard-earned dollars without my father even asking.

The truth is my father would have never asked for a reduction in fee. I had done a few transactions in my sales career with my father on investment property and development land. I never offered a reduced fee, and he never asked. I never offered because I was worth every penny of the fees I charged. This agent, who is prominent in the Portland market, just gave away about $4,000 in commission at the drop of a hat. I would estimate he gives away more than $75,000 to $100,000 a year in net profit because of his rebate philosophy. He has probably given away in excess of $1,000,000 in commission in his fifteen years career . . . Ridiculous!

The only good news is I get lots of mileage out of telling how even seemingly successful agents are not Champion Agents. A Champion Agent would never operate that way! The list of available prospects and customers is unlimited if you are willing to work for free or at a substantial discount. It doesn't take any particular skill to attract people as prospects if you discount.

Published: December 9, 2011

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Dirk Zeller is a sought out speaker, celebrated author and CEO of Real Estate Champions. His company trains more than 350,000 Agents worldwide each year through live events, online training, self-study programs, and newsletters. The Real Estate community has embraced and praised his six best-selling books; Your First Year in Real Estate, Success as a Real Estate Agent for Dummies®, The Champion Real Estate Agent, The Champion Real Estate Team, Telephone Sales for Dummies®, Successful Time Management for Dummies®, and over 300 articles in print. To learn more regarding this article, please visit www.realestatechampions.com.