Every day I get a a request on how to handle commission negotiations. Here is the thread between one of my coaching clients and their seller/buyer. I first offer some advice on how to handle a the offer next time and then tell my coaching client the reasons why he can not offer what the client is asking for. Many of you would cave in because this person is a volume client, maybe we will have to cave in. However, we are not going to cave until the client understands why we are his/her best choice. Everyone needs to spend more time protecting their commissions.

Question:

Here is an Email exchange between myself and a client. I’m not sure where to go next. Could you help me, coach?

From my client:

We haven’t finalized our decision. Since we will be buying in your market and we would like to use the same selling/buying agent, we want to get a lower REALTOR® price on the package. Can you propose any options?

My response to my client:

It’s good to hear from you! Here is what I can do for you: on the listing of your home, I will charge a commission of 6%, and on the purchase side, I will give you a 1% of the sale price credit at closing of your new home. I hope that this will work for you. I would love to represent you and help you make your move.

Let me know if I can answer any other questions. The time to list is now; the spring market has started. I have sold 18 properties so far this year, most of them within the last 6 weeks.

Talk to you soon!

From my client:

We also want a discount on the sold home. How about 0.75% on the sold home and 1% on the bought home? Checking the competition, there basically is 1 maybe 2 homes similar in style/price, so I think priced right, it should sell easily. Also a discount on the sale helps minimize the impact of taking a loss on the house. Additionally, we are both familiar with the internet and are very focused on what we want, so it should be easy for us to find a home (and less work for you).

Answer:

Next time, it is 6% on the sale with 1% on the sale being credited toward their down payment on the purchase, if they buy through you. You will actually give them a check at close of their new purchase for 1% of their sale. If you get both ends of the sale or the purchase, you will give them 1.5% and if you get both ends of both ends you will give 2% of the sales price of their listing.

Here’s my suggested response to your client:

I know you will be able to find someone that will give you more of their earnings than I will give you, but here are a few of things that you’ll also be bargaining for:

1. Carrying costs. I beat the days on market for the average real estate agent on the sale by ________ days.

2. List-to-sell ratio. In our area, the list-to-sell ratio for the Board of REALTORS® is 96%. Mine is 98% because of the marketing that I do. You will give up the 2%.

3. Average litigation rate for a seller or buyer. The current going rate is one for every 87 transactions. This is a National Association of REALTORS® statistic. Mine is one in every 433 transactions. Litigation is where clients really feel the pain of having a poor agent.

4. You will not be introduced to my secret, wholesale property list. This has saved my clients over 20% on a purchase.

5. You will not get the guaranteed customer service and return call guarantees. You have not experienced pain until you have unanswered anxiety.

There are many other differences as to why I do not cut my fees more; however, if you look at my overhead as compared to other commission cutters, you will find that I have a staff, which is necessary to provide the kind of service that you deserve.