COVER FEATURE:8 ways to justify your commission
BY JIM HATFIELD
I’M WORTH IT!
You know the moment. You’ve completed your listing presentation and the sellers are huddling. Then they turn to you and say, “Thanks, but we’d like to try to sell it ourselves.” Your heart sinks and your stomach churns. You’ve been FSBOed. What can you do? Real estate professionals and other experts we talked to say “A lot!” Here are eight tips for turning those FSBO blues into much-deserved green cash.
1. Show sellers the money. “Convert commission concerns into a discussion about equity,” says top sales trainer David Knox, CEO of David Knox Inc. of Minneapolis. “Sellers often say they’re concerned about your commission, but what they really want is the highest price for their home.”
Many sellers don’t realize that four out of five homes are sold by a real estate professional and that these homes consistently sell for more than FSBOs—27 percent on average, according to the 2002 National Association of REALTORS®Profile of Home Buyers and Sellers. But to show sellers the light, you need hard numbers to back you up. “I always present comps that prove they’ll make more money even with my commission,” says Karen Gorz, CRS®, a broker with RE/MAX Suburban Inc. in Glen Ellyn, Ill. “And, believe me, money talks.”
2. Make it clear that you don’t get paid unless you make the sale. “Emphasize that you’re taking all the risk,” recommends Greg Wang, a broker with Realty World Alliance in Milpitas, Calif. “Remind the seller that you won’t be paid a thing until the sale is completed.”
3. List all you do for your commission. Most sellers don’t realize everything that’s involved in putting a home on the market. They need to know how much you plan to do for them, including placing advertising, holding open houses, arranging tour luncheons, getting the word out about their listing through the MLS and your own network, and possibly even helping buyers obtain a mortgage. Remind sellers that you’ll also be helping to coordinate myriad tasks associated with the closing, including inspections and title insurance.
“I always tell sellers that I have experience and tools to ensure that their home will get many more showings than they could ever attract on their own,” says Russell Benson of Prudential Alliance Realty in Oklahoma City. “I make sure they understand that, with me, they won’t have to do a thing except sign the contract and cash their check.”
4. Demonstrate your knowledge of the market. Make sure you can explain current market conditions convincingly in terms the sellers understand. Be ready to prove what you know with supporting evidence, such as comps and local economic data. Also be ready to explain what you’ve done to stay abreast of real estate trends and issues. “Sellers will be impressed that you’ve worked hard to upgrade your knowledge through continuing education and that you’ve invested a lot to keep your technology tools current,” says Melvin D. Simpson, broker-owner of Team 1 DFW Properties in Dallas.
“Sellers won’t know how qualified you are unless you tell them,” adds Simpson, who holds several NAR designations, including the ABR®and CRB. “Don’t hide your light under a basket.”
5. Price the property right. “Ninety-five percent of any marketing plan is how you price the property,” says Walter Sanford, a broker, speaker, and author based in Kankakee, Ill. “And who better to price it than a real estate professional who views the competition every day?”
Indeed, the right price is critical to any successful sale, and most homeowners don’t have an accurate picture of what their home is worth. Be prepared to demonstrate to homeowners that a too-high price will drive buyers away. Emphasize too that your expert, objective opinion will help them identify which improvements will bring the highest return.
6. Stress your success. Prospective sellers are impressed by results, so don’t be shy about telling them how many sales you’ve completed. If you’re new in the business, you might mention how many sales you’ve had over a recent period. “Always have testimonials from satisfied customers as part of your listing presentation,” advises consultant Danielle Kennedy, a speaker, sales trainer, and author of How to List and Sell Real Estate and Seven Figure Selling. Put testimonials on your Web site, too. “There’s nothing more powerful than a third-party recommendation,” Kennedy says.
7. Highlight your ability to negotiate. “Sellers pay me to guide them through the land mines and pitfalls that can occur,” says Brian McDaniel a top-producing salesperson with Century 21 Intown in Atlanta. For inexperienced negotiators, one of the biggest pitfalls can be a communication breakdown during the offer process. Point out that thousands of dollars may depend on your ability to present an offer and effectively respond to a counteroffer.
8. Have an answer ready in case sellers ask you to lower your commission. Everyone loves a bargain—so don’t be caught off guard when sellers urge you to reduce your commission. Some real estate salespeople agree to a decrease, especially if the home sells within a stipulated time period. Others have a policy of no reduced commissions, period. It’s your choice, but be ready with a firm and friendly answer if the question comes up. In fact, Realty World Alliance’s Greg Wang says you can even turn this tough question into an advantage. “If you handle the question well,” Wang says, “the sellers will see that you have the strength to negotiate well on their behalf.”
One more thing: None of these tips will be enough if you don’t believe in yourself. Meet your sellers with a smile and a note of confidence in your voice that lets them know they’ve picked a winner. As Amy Stoehr, a real estate sales consultant with Star Power Systems Inc. of Boulder, Colo., puts it: “If you don’t believe you’re worth it, why should the seller?”
