Have you ever had a client ask you to discount your commission? If not, you haven’t been selling real estate for very long.
When it does happen, don’t be insulted. We all want the best deal we can get. Does anyone like paying commissions?
Sometimes homesellers ask listing agents to give up some of the commission that they already agreed to pay. My answer to that is always “no.” I instead focus on getting buyers to up their offer. If that doesn’t work, the sellers will have to reject the offer. I won’t close the gap with my paycheck.
It’s common for clients to reach into our pockets and expect a donation when they cannot make ends meet. Clients sometimes request these commission-ectomies while sitting at the closing table with their arms folded across their chests and a message in their eyes that says: “I refuse to close.”
They always close.
But this is the ‘going rate’
Commissions are negotiable, and some homesellers will see what they can get. They always “know” for sure what the “going rate” is. It’s funny — I don’t have any such data and am not supposed to ask other brokers how much they charge.
If clients will spill these sacred commission beans, I use the “going rate” to my advantage and sometimes charge them more than I was planning to — but less than what they think I normally charge.
Personally, I see that as a win for me and for them. I don’t charge everyone the same because I don’t have to.
Levels I won’t sink to
There are some things I would never say when asked to discount my commission.
For one, I would not show the seller a pie chart explaining my expenses and commission splits, just as I would not expect my plumber to do so when I gasp at his bill. Our clients do not care what happens to the money they pay us. They aren’t concerned about splits with brokers, transaction fees or national franchise fees.
It is all hocus-pocus, mumbo-jumbo to them. They just want to save a buck or two, and they want value and service for their dollar.
At least my clients know upfront what they’re getting into, and they won’t see me demanding more money because the job took longer than expected or because I have “never seen a situation like theirs before.”
Another script I’d avoid: Telling clients that being talked into a lower commission means my negotiating skills are not strong enough to ensure a great deal for them.
When I sell real estate, I am representing others. They are negotiating for more money for their home. I am making suggestions, giving advice and helping them put it into words, and using my experience to come up with a strategy to fit the situation. They are signing the contract to sell and agreeing to a price.
When my clients attempt to negotiate a lower commission, I demonstrate my listening and negotiating skills as I enter into a two-way conversation instead of shutting them down with a canned response. I take the opportunity to educate them about what I actually do.
For some, securing the lowest commission is more important than anything else. Those people are not my ideal clients.
‘I do not get paid until the sale closes’
There is one thing I like to tell people who balk at my enormous fee, and that is: I do not get paid until the sale closes. That means I can do my job as promised but end up penniless because circumstances that I have no control over went awry.
Often it takes several months to get paid. Sometimes the work is done, but the closing is two or three months away. My clients are paying for my experience and for the risk I take on.
Most people would have trouble waking up unemployed every day and being responsible for a household’s income. They probably wouldn’t like having bills to pay now while facing closing delays.
The buy side
Sellers aren’t alone. Buyers will also ask for discounts or commission rebates. My answer to that is easy: “No.”
Buyers add a new level of risk: The time-consuming process of working with buyers requires more skill and experience than representing sellers, and it usually doesn’t pay as well.
Homes have not gotten easier to buy, just easier to find. Once buyers figure that out, they don’t mind having to pay an agent.
One common tactic is telling buyers that the seller is paying the commission while suggesting that our services to buyers are free. That’s a stretch. The buyer is technically the only one bringing money to a real estate transaction. Is anything ever free?
In the end, I can charge whatever I want to charge, and people will either agree to pay it or they won’t.
What do you say when a client asks you to discount your commission?
Teresa Boardman is a Realtor and broker/owner of Boardman Realty in St. Paul. She is also the founder of StPaulRealEstateBlog.com.
