A new Texas agent is stewing over whether or not losing business to discounters is worth remaining loyal to a big-name broker who believes the brand name alone is enough to make sellers want to pay full commission.

Good evening! I'm a Realtor in NW Houston, and I joined a reputable broker with a great training program. They have coached and trained new agents not to "discount." Starting agents do not pay a high desk fee, but the commission split is high.

I have missed out on 1-$200,000, 2-$400,000 and 1-$600,000 listing, that have been referred by friends in the past 3 months. I lost two to "discount" agents offering five percent. One went FSBO. The $600,000, wanted to offer a flat rate that left 1.5 percent to the listing broker (which was declined).

The responses I receive, after the listing presentation meeting, is that they would love to work with me, and know that I would do a great job, but... It always comes down to the money they will save.

I know that I have a fabulous presentation of the service, representation, and marketing they would receive with me and my broker yet, I keep missing out.

I still believe in my broker's work ethics and agent support/training, yet I need to generate money for my family. I have young children and ideally, would like to be a listing agent not a buyers' agent, though I know this will take time. Being a Realtor is my calling, not to mention a long-term dream of mine, and I do not want to fail.

There have been a number of agents, that have left my broker to join another broker with better commission splits, and I am tempted, since this will give me more flexibility to counter these "discount" agents. I am basically in limbo. Should I stay and invest in farming and additional marketing, or move to another broker, and start investing money then.

What is your opinion?

-Torn in Texas

Realty Times responds:

Before we answer your question, what tools are your broker giving you to counter the discounts? Surely, they know you are coming up against these kinds of objections. What are they telling you to say to compete?

Torn in Texas says,

I've been stewing over this decision for weeks now, and am more disillusioned each day.

My broker has a career development manager, and when I have approached her with questions with possible scenarios (since these are referrals, my friends give me a brief outline of the needs or expectations), she basically gives me the "rah, rah, you can do it," "stick to your guns," and "we don't discount" talk. The office manager also rebuffs any discounting, even if the client will be selling and buying. So, basically, if you do discount, it comes out of your pocket, period. With the $600,000 listing that wanted a flat rate, I was told that we already farm that neighborhood, had two agents living there, and that we couldn't possibly discount.

Most of the new agents tend to do a lot of Open Houses, and focus on buyers. I strongly believe that with my sphere of influence, social/community standing, and aggressive marketing plan that I can become a Listing Agent. It's starting to be clear to me, that new agents are Buyers Agents for a long time with this broker. When they do get a listing, they claim that they are not discounting, and that the client never asked for one. Either they are lying, or my sphere of influence are shoppers, since they have all told me they are interviewing three agents.

My broker does have Took Kit and brochures with their company information, and services that we are trained to focus on in our presentation. They have implemented weekly listing training meetings, but still stick to the "if you discount once, you will always be known as a "discount" agent" and tell us to really push the broker's name.

I do incorporate the Company's Listing Presentation, information, and how I believe in their marketing strategies. I also focus to the personal attention they will receive from me, and the time and money I plan to promote their home.

-Torn in Texas

Realty Times responds:

Obviously, those responses aren't cutting it. What about a script that you can follow? You have to be able to negotiate, which means that you should also be able to offer something more. What is it that you can offer, that's more attractive to the seller than a discount?

Torn in Texas says,

"During my listing presentation, besides covering what my broker does in marketing, I offer newspaper/real estate magazines ads, professional photography for MLS, DVDs for Buyers of their home and high-quality color fliers, weekly or bi-weekly updates on what I have done for them "behind the scenes," offer to help stage their home, continuous availability, open houses, Realtor open houses, Just Listed postcards to supporting neighborhoods, send announcements to all area brokers, while continuing to market their property at top dollar, regardless of how long it may be on the market.

I emphasize that the commission that is being paid, is working for them.

Realty Times responds:

In most cases, when a seller wants to discount the commission, it can mean that they're looking for a quick sale and don't believe you will do enough to warrant a full commission. Tell the seller that if they want a quick sale, why not start higher and let you do the negotiating? Be willing to gamble on yourself. If the house has to be reduced before it finally sells, you will cut your commission then, but if it sells before then at the price and negotiation point that you predict, you get the full pop. Few sellers will be able to resist a gamble like this because they can't lose. You have some risk, too, but at least you'll have the listing, if you can get the seller to agree to a reasonable price, and if the home is in condition to sell quickly.

Sometimes sellers have a problem with the property, and they don't want to deal with the reality that their home isn't market-ready or competitive, so they'd prefer to take it out of your hide than theirs. Look around carefully, and determine what you think the house needs to compete, and get the price the seller wants. How far apart are you? Staging, updates, and if so, can be very expensive.

Explain to the seller that discounting a commission doesn't impact their bottom line as much as getting the home in proper condition to compete. Explain that part of your marketing plan, is working with the seller to obtain the highest price possible, and the sellers who listen to you net the most money and get the best terms.

Try turning the commission-cut request around. Instead of defending your commission, put the seller on the defense. Ask the seller to engage in an experiment with you. Ask them to defend the price on their home, while you play the buyer wanting a reduction. Show them comparables and make arguments why you, as a buyer should pay less. They will certainly respond emotionally, so write down their responses. Tell them part of your marketing plan and your advice to them on how to prepare, and stage their home is to make sure that those reduction requests never come up and they won't have to defend their price. And if you can successfully defend their price, show them in dollars and cents, how they will net enough to more than cover your commission.

Another approach is to say something like this: "Let's lay our cards on the table. You want a discount, and I want to make full commission. My broker won't allow me to negotiate anyone else's commission but my own, so here's the amount we have to work with." Show the seller how the commission is usually distributed, and be sure to include the six percent to the franchise, if applicable. Show them the figure that's left for your end. Then start subtracting your costs to represent them. When you get to the end, ask them if they still want a discount, and if so, what can they offer you to make it worth your while? Tell them, the answer is the one thing they don't want to hear -- slash the price of the home for a quick sale so you can cut your exposure and risk. Tell them, ethically, that's not how you want to represent them, and you prefer not to take the listing if that's what they want. You are building a business, and you rely on referrals. You want to be known as the agent who gets the most money, and best terms possible for sellers.

A reduced commission is easy for sellers to understand. Not so easy to understand is comparables. If there is a way to show the list to sales price, go one step further and show that your broker's homes listed for more and sold for more than homes where the sellers paid a reduced commission. If the numbers don't work out in your broker's favor, there's your answer. If it does, there's your biggest selling point to the seller.

Lastly, remind the seller that part of full service is letting them out of the contract if they aren't happy with your services.

While Realty Times can't tell you what to do -- stay with your broker or go to another -- we hope that these suggestions will help you decide what's best for you.