I’ve talked about agents caving in when clients suggest that the agent cut their fees so that the deal can go forward.
However, I continue to get asked by agents how to best address this issue.
Let’s start with your listing agreement. I can’t speak to all listing agreements, but I do believe that most have specific terms for the role of the broker/agent regarding payment of the real estate fee.
The language indicating the terms under which the seller is willing to pay you is:
“If you or anyone else finds a buyer who is ready, willing and able to by the listed property…”
“The listed property is sold.”
The language indicating the terms under which the buyer is willing to pay you is:
“You agree to show buyers properties that meet their needs, wants and price range and as a result they will pay you a fee based on the price agreed to between the buyer and the seller.”
In neither agreement does it state that if the buyer and seller cannot agree on the final sale price of the property the agent will contribute via a decrease in their original real estate fee.
If you’ve done the job that you were hired to do why would you agree to discount your fee?
The response to a seller should be:
Seller: “You agreed to pay me based on the price you accepted for your home. How long your home has been on the market, the number of showings and the number of offers. Now, let’s take a look at the quality of this buyer. The real question is, “Are you prepared to lose this buyer.”
Make sure that you take your listing agreement with the paragraph of what you agree to do for them and the conditions under which you will get paid, the marketing proposal for the listing, a list of the activity to the property and if there have been previous offers review the process and refresh why the deal didn’t consummate. Also, calculate the seller’s carrying costs over the period of the listing and note the possible additional time before another buyer shows up. At the end of the day your understanding would be that they are willing to pay more for carrying costs than consummate the deal and move on with their net equity.
The response to a buyer should be:
Buyer: “You agreed to pay me based on my finding a property that met your needs, wants and price range. We looked at “X” properties and you decided that this home was your home of choice. The sales to list price ratio for properties in this price range shows that buyers are paying “X” percent of the listing price. In addition, if you add “X” amount to your mortgage payment, over the next 15/30
years, that calculates to an additional “X” dollars added to your monthly mortgage payment. So let me make sure that I understand that you are willing to lose this home for “X” dollars to your mortgage payment.
The monthly number is so miniscule considering that they probably won’t live in the house for 15/30 years, but will benefit from the growth of their net equity, if they pay within market value.
Instead of being defensive, be the professional who knows how to intelligently and proactively respond to your seller’s and buyer’s question.
The above is a sampling of the “Why 6%!” workshop that I provide my clients! If you’d like to learn more about the workshop or are interested in coaching, please contact me at: firstname.lastname@example.org
Suzanne, welcomes your comments and opinions.
Whether a real estate agent or seller/buyer Suzanne will be happy to answer any of your real estate questions or concerns. Contact her at: email@example.com or leave a question below in the comments.
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