by Bernice Ross
Inman News Features
With attacks being waged on all sides to lower our commissions, being able to defend your commission is an essential skill in the real estate industry. Are you up to the challenge?
During a recent training session in overcoming objections, I asked the agents to break into small groups and to come up with the most difficult objections they had encountered for sellers, buyers, and during negotiations. The toughest objection for most agents in the room was “You make too much in commission.”
I then asked the 50 agents in the room to give me their best strategies for responding to this objection. Here’s a summary of what they said:
Strategy 1: Explain how the commission is broken into four different parts and that you don’t get the entire amount. Instead, the commission goes partially to your broker and to the other agent and their broker.
Strategy 2: Show the seller all the services you provide so they can see the value of paying a full commission.
Strategy 3: Tell the seller that the buyers’ agents show the properties with the highest commissions first.
While each of these strategies can work, the problems are listed below:
Challenges with Strategy 1:
Telling the seller you only get approximately one-fourth of the commission puts you in a defensive position. The moment you have to justify how much you’re being paid means you’re negotiating from weakness rather than strength. For example, I role-played using this response and the agent playing the seller responded by saying, “Your broker is worth millions — tell him to take less.” Now you’re in the position of having to defend yourself and your broker.
A better response is to focus on the seller’s real question —”What’s in it for me?” What the seller really wants to know is how they can get the most money possible for their property. Thus, instead of “telling” the seller what happens with the commission, turn the tables to your advantage by asking the following question:
“Is it correct to say that your real concern is how to get the highest price possible for your property?” The obvious answer is “Yes.”
“To achieve highest price possible, you will need to do three things:
• “You will need to obtain maximum exposure to the buyers in the marketplace by positioning your property competitively in terms of price.
• “Since more than 90 percent of all properties sell through a broker, you will need to do everything possible to make your property attractive to be shown by the other agents, and
• “You will need an agent who can negotiate the highest possible price for your property, so let’s look at how you can obtain the highest price possible for your property.”
At that point, move to your 90-Day Marketing Plan as a means to reach the most buyers possible and then to how many properties are selling each month. The strategy here is to shift the discussion from your commission to the real issue — how the seller can obtain the highest price possible for their property.
Challenges with Strategy 2:
The primary challenge with this strategy is that you’re still in defense mode. Again, rather than “defending by telling,” it’s much stronger to use a question.
“Mr. and Mrs. Seller, our company is a full service company. Here’s a list of the services we provide at different commission rates. Which of these options best suits your needs?”
The beauty of this approach is most sellers generally do want full service. Now, rather than defending your commission, you’re simply asking them to make their own choice. Given the choice between full service (advertising, 360 tour, open houses) and less than full service (limited ads, no 360 tour, limited or no open houses), most people will choose the full service route.
Challenges with Strategy 3:
While this is a good response, the shrewd seller will say, “We’ll pay the selling agent 3 percent — you take 2 percent.”
To overcome this response, say: “To obtain the highest price possible for your property, you need someone who is a powerful negotiator—isn’t that correct?” (The obvious answer is “Yes.”)” So if you hire an agent who can’t even negotiate a full commission on their own behalf, how effective do you think they will be in negotiating the maximum price for your property?”
Notice in each example above, the shift is from “telling” to asking a question. The moment you shift to “tell” mode, you’ve lost the battle. Question, question, question, always with the idea of staying focused on the seller’s real concern—”What’s in it for me?”
— Bernice Ross is an owner of Realestatecoach.com
and can be reached at [email protected].