When I started selling real estate, I was just 23 years old. I wasn’t an SOB (son of a broker), I had no family in the area and most of my friends were still slugging it out in university.
Pretty much all of my hard-fought listing appointments were therefore with either expireds or FSBOs who usually wanted a deal on commission.
As a result, I constantly found myself up against discount brokers. They’d usually list for just 3% and offer 2% (or lower) to the S/B with the ultimate goal of double-ending the deal for themselves.
It’s a sad truth that most people are innately motivated by money. There’s just no denying that, so I explained that some agents wouldn’t be as enthusiastic about showing a home that only paid 2% when the usual S/B commission was 2.5% or higher.
I further explained that when selling a home, you want to generate a frenzy of activity but this lack of enthusiasm would result in less exposure, less demand and ultimately a lower sale price after the home sits on the market for an extended period of time.
Nothing I said would change their mind though. Instead of stepping back and looking at the big picture, they stood their ground with their heart firmly set on paying a low commission. Instead of getting frustrated, I set out to PROVE my theory to them!
After a bit of digging, I found various properties that had been previously owned by discount brokers and in nearly every case, when they put their OWN homes on the market, they themselves offered the standard 2.5% commission to the S/B. Oftentimes more!
While at the listing presentation, I’d lay out the evidence to prospective sellers and after it had a chance to sink in, I’d ask them why in the world would a discount broker offer 2.5% on their own home but just 2% for their clients?
They’d look at each other, then back down at the listings and after a moment of silence, they’d realize that a decent sized S/B commission was actually in their best interest. After that, I never lost out to a “commission cutter” ever again!
It was clear that when selling their own homes, discount brokers offered a high S/B commission because they wanted to attract as many agents as possible and they knew that 2% simply wouldn’t cut it (pardon the pun).
Furthermore, sellers could see for themselves that discount brokers didn’t really care about steering agents away when they listed other people’s homes because it meant they’d be more likely to double end the deal and keep the full 3% for themselves.
Instead of cheesy lines like “If I can’t even negotiate my own commission, how can you expect me to successfully negotiate the sale of your home?”, present concrete proof that’ll help prospects arrive at their own conclusions.
