Yesterday, we started talking about the dreaded phrase, “We need to think about it.” This will be an ongoing series this week so be sure not to miss a single day. We’re going to tackle the objection head on today. Let’s get started!
Now that the objection that is preventing them from moving forward has finally been laid on the table, it is your job to provide them with information to overcome that objection. Please be aware that some objections just cannot be overcome. You would not be doing your best unless you gave yourself every opportunity to solve the client’s challenge immediately.
Let’s review some of the objections that you might encounter.
The Commission Objection: The commission objection takes one of two forms. They either are comparing you to the competition’s cost (another agent, close friend, family member, or going FSBO) or secondarily, they just do not believe that your commission is fair for the job you will do for them. Commission objections have been handled in the past by continuing to show them more value and why you are actually “worth” your commission.
At this point, I believe that the listing presentation you have presented has already done just that. Therefore, the commission objection needs to be turned into a “not enough net” objection. Convincing a seller that it is not the commission amount but the net proceeds amount is an easy and logical process.
Prior to going into that process, I believe that some of the standard commission objection overcoming quips might be in order. If you can deal with the commission objection easily and quickly with someone who is not truly committed to the commission objection, then by all means let us use some of the “quickies” first. Below are some of those responses:
* “No, next question, please.” Obviously, this works with only the most skittish sellers.
* “Someone who questions commission sometimes does not understand where the dollars go. Let me show you the commission pie chart.” At this point, you can pull out a pie chart detailing how the left side of the “pie” goes to fund your cooperative agent education program, and the right side of the “pie” can be divided in pieces among the bricks, clicks, and systems your broker provides to the marketing dollars customized to the individual property, the IRS, and your profit. When they see the profit pie piece is so small in relation to the whole, you might get the fair commission that you need to accomplish the seller’s goals.
* “I understand completely that the other broker has offered to do it for less. I would like to discuss two items that are necessary for you to make an informed decision. First, can we talk about all the areas of the listing presentation and the services that I offer that differ from the other broker? Secondarily, can we discuss if the other broker offers a lower commission, where does that represent itself in the service they offer?” I would then bring out their advertising examples and compare them to mine. I would also show the number of transactions that the individual broker or office completes on properties that are similar to the sellers’ property. These figures should be readily available on your MLS.
When the client sees that the lesser price makes a difference in the service or results that they can expect, the objection will be fairly easy to overcome. Since you know who your competition is from my question list, be prepared to bring your competition’s work product.
* “May I ask you what response does your company give when someone asks for a fee adjustment?” This takes the professional objection overcoming tool one step further. If you are dealing with a true professional, who probably does not negotiate their fees, then you might want to elevate your service to the same professional level and compare your fee-reducing opportunities with theirs. Most professionals have set fees.
* “If the other agent was so fast in dropping his or her commission from a standard rate of return, then can you imagine how fast that agent might drop your selling price in an effort to make a faster sale, to cut their overhead, and to make a profit?” You put the fear of doubt in their mind by accepting a lower commission bid. Lower prices decrease selling time, therefore decrease the overhead of a real estate agent. The client must know that for a discount brokerage to make money, their overhead must be reduced.
* “I understand you are going to a discount brokerage firm to save money. However, before you do that, please allow me to explain their business plan.” This is the famous discount broker pitch that is so prevalent in hot markets. Obviously in stagnant or down markets, the threat from discount brokers goes away since the discount broker makes his or her money in volume and shorter selling periods.
Once the seller understands that a discount broker can have a successful business by the seller performing activities and the selling period being lessened, then they can draw their own conclusions as to why it might not be in their best interest for their net proceeds. Furthermore, discount brokers compared to full rate brokers usually cannot compete in MLS stats regarding closed transactions. Also, discount brokers do not center their marketing on the client’s needs as you would do in asking more questions; they instead center their activities on the asset.
* “I understand that going to ‘for sale by owner’ can save you money if all of your goals are met in a reasonable amount of time with no potential for mistakes. However, the problems incurred are numerous.
- Buyers are trying to save the same commission as you are.
- A “for sale by owner” might find it difficult to overcome objections from the prospective buyers because of lack of experience and emotional closeness to the property.
- A “for sale by owner” does not have access to as many buyers as a business created for the sole purpose of generating buyers.
- A “for sale by owner” cannot allow the same accessibility as a company devoted to communication, showings, feedback, and follow-up.
- A “for sale by owner” does not have other listings to show that will make their home competitive in a favorable light.
- A “for sale by owner” is not able to write tight contracts because of a lack of experience.
- A “for sale by owner” does not make the correct foreclosures allowing for future lawsuits.
- A “for sale by owner” does not have the experience to anticipate and to eliminate potential problems.”
The “for sale by owner” objection comes up because of the commission that they want to save. When you take commission back to net profit, you can show money is saved in fewer mistakes and overcoming the inabilities of a “for sale by owner.”
One of the things that you have to remember is that what the client is actually asking for is more money in their pocket or a higher net. My best commission objection overcoming technique is to take the request for commission reduction and assume that it is a request for a net increase.
Tomorrow, we’ll cover how to handle the “hidden” commission objection. Come back for rest of this important series!
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