RE Pros - Stop Discounting!

Below is an article my partner Ron Marks wrote for our quarterly newsletter. If you are in the real estate profession I know you've dealt with the challenge of clients wanting you to discount your fee for service.

Before you ever do that again read what Ron has to say on that topic...

As Tom Hopkins and I travel around the country speaking to real estate sales professionals the biggest challenge we hear is clients asking agents to discount the listing fee when they authorize the exclusive right to sell of their home. Being asked to provide full service at a reduced rate creates stress at many levels for today’s agent.

With the proliferation of so many discount real estate agencies, this challenge is compounded because the expectation of lower real estate fees becomes the norm.

If you are a full service agent and are committed to earning what your time is worth, then we have some good news and some good ideas for you. By law, the commission paid by a seller of a home to an agent is negotiable and cannot be fixed by any one government entity. Even though there are traditional fee structures, you can decide what your services are worth and if you provide the appropriate value, the market will pay you.

As Tom Hopkins teaches, there are three ways to handle any objection you face. You can bypass it, brag about it or respond to it. Bypassing an objection means that you “shelve it” and do not address the concern right away. This approach is only effective if the discounted listing fee objection comes up right away before you have really had a chance to give your full listing presentation.

Of course if you have given the full presentation and then the objection come up at the end, bypassing it will only aggravate the seller. At that point you will need to respond, however if the concept of discounted listing fee comes up in the beginning, then it is best for you to acknowledge the objection and then shelve it for later.

For example, when a future client asks what is your fee or if you will discount it your fee in the opening moments of your presentation, you can respond with:

“I understand you are concerned with the costs of selling your home. At this point, we have not fully discussed all of the objectives you have in marketing your home and therefore it would be difficult to quote a number. Ultimately you want the highest selling price in the shortest period of time don’t you? Let me make a note of your concern and then I will show you how we can help you achieve those two objectives.”

In this strategy you have acknowledged the sellers concern, but you have not been tied to a specific number. The fact is that until you can describe all of the services you can provide for them, it is unfair for you to concede or reveal any listing fee information.

The next strategy is designed to build more value in your listing presentation and brag about the objection of discounted listing fees. In order for this strategy to work you need to be prepared to walk away from discounted business. When you are new to the real estate profession this is difficult to do, yet the true professional is willing to stand their ground and make sure they are compensated according to the value they bring to the marketplace.

As you transition into your listing presentation, try the statement below. It will establish the foundation for your position on discounted listing fees and make it more difficult for the client to ask for the concession. Now, before I give you this phraseology, please realize that the risk of bragging about a specific objection is that you are bringing something up that the customer may not have thought of themselves. Having said that, the best times to use this strategy is when you anticipate the objection or you get to a point in your career where you hear it all of the time.

“Before we discuss how our firm can help you market your home, I wanted to let you know that I have learned something over the years. When people look to sell their home, they really look for three things: FIRST, they want the most exposure to ensure the highest selling price possible in the shortest time frame. SECOND, they want the best service from their agent throughout the transaction and FINALLY, they want the lowest selling costs.

I have yet to find a company that can provide all three of these things at the same time. They can not give you the most exposure, the best service all for the lowest selling cost. I am curious, which of these three are you most willing to give up? The best exposure, the best service or the lowest cost?”

By using this strategy, you establish right up front that the seller will basically “get what they pay for,” without using this old cliché. In most cases the client will respond logically and let you know they realize they can not get the most for the least and then it will be more difficult for them to bring up the objection later. Again, in a situation where you have a tough seller that says “they don’t care, they don’t want to pay the listing commission,” you may need to walk away from that seller.

This response can also work well if you hear the objection at the end of your presentation, although real estate agents around the country are telling us that the most effective way to “head-off” this challenge is to handle it up front.

The reality is that even if you end up taking a discounted fee, you need to establish your position of value so you have a better place to negotiate. This technique will work if you USE IT! Please let us know how this works for you so that we may share the idea with other real estate agents across the country.

Email me at ronm@resultsseminars.com

Nice Job Ron!

TK