I was recently on a listing appointment with a potential seller in my own neighborhood area of Hawk’s Landing.
The couple, who are in their later years, will move into Oakwood Village on the west side after they sell their approximately $1M home. They built the home in 2003. They plan to do this within the next 6 months. Let’s call them Richard and Barbara.
The appointment went great. I was 5 minutes early, had my CMA (comprehensive market analysis) in-hand, and even rushed to bake a dozen gooey chocolate chip cookies, to which Barbara squealed with excitement when I handed them over. Richard then led me around on a tour of their beautifully sprawling home which abuts the golf course.
Beautiful property, beautiful view. I commented that I have the same lovely sunset view from my back deck, which I do.
Finally, we sat down at the kitchen table. I presented my CMA of comparable sold homes in the area and asked Richard to tell me what he would like to receive for their home. He was confident they could get over $1M. I was in full agreement and offered some pricing strategies to get to his desired amount.
Finally, came the talk about my ‘Success Fee’, a.k.a Commission %…
(Some of us REALTORS® like to call this our ‘Success Fee’. We are only paid it when we actually successfully find them a ready and willing buyer who offers an acceptable price for their home.)
Barbara joined us at the kitchen table. I showed Richard a sample of the Wisconsin listing agreement and stated my compensation, which is the standard rate for the Madison area.
Richard said, “That’s a lot of money.”
This is where I gladly explain some of what I do as their real estate agent to get top dollar for their home. I explained why I don’t discount my commission. It was tempting to go into the whole anecdotal story about how if you go to the doctor and he tells you that you need heart surgery you don’t ask for a discount, or worse yet, for him to cut out some of his services for a lower price, but I didn’t go there.
After the meeting, I thanked them for a tour of their lovely home and said that I would be honored to help them with their needs.
Fast forward to this past week. I just wrapped up attending the Wisconsin REALTORS® Association’s Annual Convention at the Kalahari Resort in the Wisconsin Dells.
I’ve never been surrounded by so many REALTORS®. Not surprisingly, this same topic of the dreaded pushback conversation from potential clients about our Success Fee came up time and time again. I was rather shocked when many REALTORS® admitted to readily discounting their fee with clients to win the listing.
They did this by presenting a comprehensive list of all that they will do to sell a client’s home and then ask the client what they would like to cut off of the list in order to get the lower fee %.
Let me tell you why this is a terrible idea and a detrimental practice for real estate professionals.
While some argue that lowering commissions can attract more clients, it ultimately undermines the agent’s worth, professionalism, and the quality of service they can provide to clients.
Before I get into the list, let me just point out the obvious: when a real estate agent immediately agrees to drop their Success Fee (Commission %), is that really the kind of agent you want negotiating for YOU and what, for most people, is the largest investment of their lives, when they can’t even stand firm in their own justification of their skills for their services.
What if they instantly cave on your deal as well?
Read on to learn more about all that your REALTOR® must know and perform for YOU. This list only really scratches the surface mind you.
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Expertise and Knowledge
One of the primary reasons not to discount commission percentages as a real estate agent is the value of our expertise and knowledge. Successful real estate transactions require in-depth understanding of the local market, property values, negotiation tactics, and legal intricacies. By discounting commissions, agents signal a devaluation of their own expertise. It implies that our knowledge is expendable, which leads clients to question the quality of service they will receive.
For instance, when a client approaches me to buy or sell a property, they are not just paying for the time and effort I invest during the transaction but also for my years of experience and the insights I can provide. This experience translates into helping clients make informed decisions, negotiate effectively, and navigate complex contracts. A discounted commission deters potential clients who may perceive it as a lack of confidence in my abilities.
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Quality of Service
Discounting commission percentages leads to a decline in the quality of service provided by real estate agents. When an agent accepts a lower commission, they’re tempted to cut corners or rush through transactions to make up for the lost income. This can result in a less comprehensive service, potentially leading to poor outcomes for the clients.
Real estate transactions are not just financial transactions. They are life-changing events for many individuals and families. Clients rely on their agents to guide them through this process, ensuring that their interests are protected and their needs are met. By discounting commissions, agents may compromise the quality of service they can offer, leaving clients at a disadvantage.
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Commitment and Motivation
Another critical aspect to consider is the agent’s commitment and motivation. Real estate transactions often involve a significant amount of time and effort, including property research, market analysis, client meetings, negotiations, and paperwork. A full commission ensures that agents are adequately compensated for their dedication and hard work.
When agents discount their commission, it can lead to a lack of motivation and enthusiasm. The financial incentive to go above and beyond for clients diminishes, potentially resulting in a less thorough and less dedicated approach to their work. Agents who earn a fair commission are more likely to be highly motivated, working tirelessly to achieve the best possible outcomes for their clients.
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Marketing and Resources
The real estate industry is highly competitive. Successful agents invest heavily in marketing and resources to attract clients and provide top-notch service. This includes expenses related to advertising, professional photography, staging, and legal support. A fair commission allows agents to cover these costs and maintain the quality of their marketing efforts.
When agents discount their commission, they may struggle to allocate sufficient resources to marketing and other essential aspects of their business. This can result in subpar marketing materials, limited exposure for listings, and inadequate support during the transaction process. Ultimately, this compromises the client’s experience and can lead to a less successful transaction.
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Legal and Ethical Considerations
Real estate transactions involve intricate legal and ethical considerations. Agents are responsible for ensuring that all aspects of the transaction comply with local laws and regulations while adhering to ethical standards. Cutting commissions too low can tempt agents to take shortcuts or neglect vital legal and ethical responsibilities.
Maintaining a fair commission is essential for agents to invest in ongoing education and training. That allows us to stay updated on the latest legal and ethical guidelines. This knowledge is crucial for protecting clients and avoiding potential legal disputes or ethical violations. Discounting commissions can undermine an agent’s ability to meet these obligations.
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Client Expectations
When an agent discounts their commission percentage, it can set unrealistic expectations for future clients. Word of mouth and client referrals are essential in the real estate industry, and clients talk to one another. If one client hears that an agent offered a steep discount to another client, they may expect the same treatment.
This can create a cycle of decreasing commissions. With more competition, agents are constantly pressured to lower their fees to attract clients. Over time, this devalues the profession. It makes it challenging for agents to sustain their businesses. It’s important to set a standard commission rate that reflects the value of the service provided and maintains professionalism within the industry.
Conclusion
Discounting commission percentages is a practice that real estate agents should avoid for several compelling reasons. It diminishes the value of an agent’s expertise. It compromises the quality of service provided to clients. And it can lead to a decline in commitment and motivation. Moreover, it limits the resources available for marketing and legal compliance and sets unrealistic client expectations.
As a real estate agent, maintaining a fair commission ensures that clients receive the highest level of service and professionalism. It allows agents to invest in their expertise, dedication, and resources. Ultimately this results in successful transactions and satisfied clients. In the competitive world of real estate, providing value should always be the priority. That begins with recognizing the worth of our profession and the importance of fair compensation.
That reminds me, I never got my Tupperware back from Barbara. I better follow up and see if they found a discounted REALTOR® yet.
For more information of real estate commissions, check out this informative article from U.S. News & World Report,
How Do Real Estate Commissions Work?
https://realestate.usnews.com/real-estate/articles/how-do-real-estate-commissions-work
If you would like to have a further discussion about the services we provide at Copa Playa Realty, please reach out.
The couple’s decision to move to Oakwood Village seems like a thoughtful next step for their later years. Their home, built in 2003, clearly holds sentimental value, especially with its stunning golf course view. The real estate agent’s attention to detail, from the CMA to the homemade cookies, shows a genuine effort to connect with Richard and Barbara. It’s impressive how the agent confidently explained the value of their services without compromising on quality. Do you think the couple will achieve their desired selling price with this approach?
This seems like a well-thought-out plan for Richard and Barbara’s move to Oakwood Village. It’s impressive how detailed and prepared the real estate agent was, from the CMA to the homemade cookies—nice touch! The comparison to a doctor’s services was an interesting way to justify the commission, though I wonder if that analogy resonates with everyone. Do you think clients are generally receptive to such explanations, or do they still push for discounts? The property sounds stunning, especially with the golf course view, but I’m curious—what makes this home stand out to justify the $1M+ price tag? Also, how do you balance being transparent about your services while still maintaining your value as an agent? I’d love to hear more about your approach to handling negotiations with clients who might be hesitant about the commission.
This is an interesting read about the process of selling a million-dollar home and the dynamics between a real estate agent and their clients. The attention to detail, like baking cookies and the thorough CMA, shows a high level of professionalism. The comparison to a doctor’s fees is a clever way to justify the commission, though it might feel a bit stretched to some. Do you think clients would appreciate such analogies, or could they come off as pushy? It’s impressive how the agent balanced confidence with humility, making them seem approachable yet competent. I wonder, though, how often clients actually ask to cut services to lower the fee. Is that a common request in your experience? Overall, this seems like a well-handled appointment, but I’m curious—what would you do differently if you were in the agent’s shoes?
This is a well-detailed account of a real estate meeting, and it’s clear you’ve put a lot of effort into making Richard and Barbara feel comfortable. The personal touches, like the cookies, really stand out and show your dedication. I appreciate how you explained your pricing strategy and the value you bring without compromising on your commission. It’s refreshing to see such transparency in a business that can often feel transactional. I’m curious, though, how do you typically handle clients who are more focused on lowering costs rather than understanding the value of your services? Also, do you find that the personal gestures, like baking cookies, significantly impact your client relationships? I’d love to hear more about your approach to balancing professionalism with personal touches.
The story of Richard and Barbara moving to Oakwood Village is quite heartwarming. It’s impressive how they’ve decided to downsize after so many years in their beautiful home. The real estate agent’s attention to detail, like bringing cookies and preparing a thorough CMA, shows a level of care that’s rare these days. I wonder if Richard and Barbara felt the same level of trust and confidence in the agent’s abilities. The comparison to a doctor’s services was an interesting touch—do you think it effectively communicated the value of the agent’s work? It’s refreshing to see someone stand firm on their worth, but I’m curious, do you think clients are more likely to appreciate transparency or flexibility when it comes to commissions? Overall, it seems like a well-handled process, but I’d love to hear more about how Richard and Barbara felt about the entire experience. What do you think they valued most in this interaction?
It’s great to hear about Richard and Barbara’s plans to move into Oakwood Village. Their home sounds absolutely stunning, especially with that golf course view! I’m curious, though, how did they decide on the $1M price point? Was it based purely on the CMA, or did they have other factors in mind? The idea of baking cookies for clients is such a thoughtful touch—it really sets a personal tone. I wonder if that’s something you do often or if it was just for this special occasion? Also, the analogy about the doctor and heart surgery is interesting, but do you think it’s entirely fair to compare real estate services to medical procedures? Lastly, what’s your take on the trend of lowering commissions—do you think it compromises the quality of service, or is it just a necessary adjustment in today’s market? I’d love to hear your thoughts!
It’s great to hear about Richard and Barbara’s plans to move into Oakwood Village—it sounds like a big but exciting change for them. The way you prepared for the meeting, from the CMA to the cookies, shows how much you care about your clients. Their home sounds absolutely stunning, especially with that golf course view—I can see why they’re confident about the price. Your approach to explaining your commission and the value you bring is refreshing; it’s true, quality service shouldn’t be discounted. I’m curious, though, how do you handle clients who are more focused on cutting costs than understanding the value of your work? Also, do you think the current market conditions will help them achieve their desired price? I’d love to hear more about how you navigate those conversations!
The process of selling a home, especially one with such sentimental and financial value, requires a thoughtful and professional approach. It seems Richard and Barbara have found someone who not only understands the market but also values the personal touch, like those chocolate chip cookies! The CMA and the detailed tour of their home must have given them confidence that their property will be listed at the right price. The comparison to a doctor’s services was an interesting way to justify the commission, but do you think that analogy resonates with everyone? Also, was there any discussion about the current market trends or potential challenges in selling a home of this caliber? I’m curious to know if they’ve considered any upgrades or staging to enhance the appeal or if the natural beauty of the property is enough. What’s your take on offering a lower fee percentage by cutting services—does that truly benefit the seller in the long run? Would love to hear more about the strategies you’d use to ensure they get their desired amount!
The process of selling a home, especially one as valuable as Richard and Barbara’s, seems both exciting and meticulous. It’s impressive how detailed and prepared the real estate agent was, from the CMA to the homemade cookies—such a thoughtful touch! The comparison to a doctor’s services was an interesting way to justify the commission, though I wonder if it resonated with them. Do you think Richard and Barbara felt fully convinced by that analogy, or did they have any reservations? The focus on getting top dollar for their home is understandable, but I’m curious—what would happen if the market conditions changed unexpectedly? Would the strategies adapt accordingly? Overall, it seems like a well-handled meeting, but I’d love to hear more about how they felt about the entire process. Did they leave feeling confident and supported, or were there any lingering doubts?
This sounds like a smooth and well-prepared real estate appointment, but I’m curious—what makes Richard and Barbara so confident about getting over $1M for their home? The property does seem stunning, especially with the golf course view, but the market can be unpredictable. Also, why did you choose to bake cookies instead of another gesture? It’s a nice touch, but I’d love to know the thought process behind it. The comparison to heart surgery was interesting—do clients often try to negotiate your commission? It feels like there’s more to unpack here, especially with the strategy of presenting a list and asking what to cut. Wouldn’t that risk underselling the value of your services? What’s your take on balancing client satisfaction with maintaining your worth as an agent?
The process of selling a home can be quite intricate, especially when it involves a property as valuable as Richard and Barbara’s. It’s impressive how detailed and prepared the real estate agent was, from the CMA to the homemade cookies. The comparison to a doctor’s services is an interesting analogy, though it might not resonate with everyone. I wonder if Richard and Barbara had any specific concerns or questions about the commission structure. Do you think they felt fully informed and comfortable with the agent’s approach? It’s also intriguing how the agent emphasized not discounting their services—do you believe this is a common practice in the industry? Overall, it seems like a well-handled meeting, but I’m curious if there’s more to the story. What do you think could have been done differently to make the process even smoother?
It’s fascinating to see how Richard and Barbara are approaching the sale of their home with such clarity and confidence. Their preparation and the real estate agent’s professionalism seem to be a perfect match. The agent’s approach to not discounting the commission is intriguing and makes a lot of sense when compared to professional services like healthcare. The cookies were such a thoughtful touch—it really sets the tone for a positive relationship. The home sounds stunning, especially with that golf course view—it’s no wonder they’re aiming for over $1M. I’m curious, though, why they decided to move to Oakwood Village after so many years in their current home? It’s a big decision, and I’d love to know what’s driving it. Wouldn’t it be harder to part with such a beautiful property after all this time? What do you think?
The process of selling a home often feels like a rollercoaster, especially when emotions are tied to a property that’s been home for decades. It’s interesting how Richard and Barbara seem so composed and confident about their decisions, yet I wonder if there’s a hint of nostalgia they’re grappling with. The way you handled the meeting—bringing cookies, a CMA, and a clear strategy—was both professional and personal, which I’m sure made them feel at ease. Your approach to not discounting the commission is bold but valid; after all, expertise and results come at a price. I’m curious, though, how do you balance sticking to your value while still being open to client concerns or objections? Do you think there’s ever a scenario where a slight adjustment could work in your favor, or does it always risk undermining the perception of your worth? Either way, it’s clear you’ve built trust with them—something that’s invaluable in real estate.
This is such an interesting read! It’s clear that Richard and Barbara are making a big life change, and it’s great to see how thoughtful and prepared their real estate agent is. The personal touch of bringing cookies is such a nice gesture—it really sets the tone for a trusting relationship. I appreciate the agent’s transparency about their commission and the comparison to a doctor’s services; it’s a strong point. However, I wonder if there’s ever a scenario where flexibility in pricing could benefit both parties? The property sounds stunning, especially with the golf course and sunset views—it’s no wonder they’re confident about the price. Do you think the current market conditions will work in their favor to achieve that $1M+ goal? I’d love to hear more about how the agent plans to market such a unique home!
The process of selling a home, especially one as valuable as Richard and Barbara’s, seems both meticulous and personal. It’s impressive how the agent went the extra mile with the cookies and the detailed CMA, which likely made the couple feel valued. The comparison to a doctor’s services was an interesting touch—it really highlights the importance of expertise in real estate. I wonder, though, if there’s ever a scenario where adjusting the commission could benefit both parties without compromising the quality of service. The sunset view sounds stunning—do you think that played a significant role in the home’s valuation? Overall, it seems like a well-handled meeting, but I’m curious, how do you ensure transparency with clients when discussing pricing strategies? Would love to hear more about your approach!