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change my commission?

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Penny L. | 02 Jan 2015, 10:12 AM Agree 0
The biggest complaint I get from clients is my commission - I charge a regular 5% - and now I'm thinking of maybe lowering it? Has anyone ever changed their commission structure?
  • Rod Doris | 02 Jan 2015, 11:15 AM Agree 0
    Penny L; You will be out of this business sooner than you think! Early retirement and $12/hourly at Timmy's or McDonald's will be in the cards.
  • | 02 Jan 2015, 12:00 PM Agree 0
    If you can't hang on to your own commission how can you effectively negotiate the sale of their house.
  • JK | 02 Jan 2015, 12:51 PM Agree 0
    Greed, over confidence and conversely; fear can be the death of any business. I propose the previous comments were made out of the first and latter of the three. I think the whole industry could use a healthy shake down to a more reasonable level of commissions. When it is a slam dunk walk in the park, do we really need to be charging the same commission fees for a complex, and very involved deal requiring much more work? Earn your money people, and stop with this prevalent feeling of entitlement.
  • Marty | 02 Jan 2015, 01:15 PM Agree 0
    So JK, what you're saying is that if you sell a property quickly (because you marketed the home well, offered good or better than good commission to collaborating Agents, and did what you said you would do) you should lower your commission? I often ask my vendors if they think it's worth more to take longer to sell. Our business is not paid on an hourly rate. We are paid when we get the job done. Whether it takes a day, or 6 months, we are paid to do a service - not work on a "per-hour" basis. I think JK, you should get an 9-5 job....
  • Rachel | 02 Jan 2015, 01:15 PM Agree 0
    Its refreshing to see this side of the argument, I must agree. I work hard and I get paid well and sometimes my commission reflects the seller's desires and/or my own feeling of fairness. Personaly, when you have good working practices which generates a great established business, the financial success comes naturally, whether its 5%, 4%, 2%.
    Don't give yourself away, you have value - if and only if you are truly good at what you do and care about the consumer!
  • dw | 02 Jan 2015, 01:23 PM Agree 0
    Once you start the process it will be hard to stop. All good full time realtors make a living by doing all that is that is possible to make a deal for buyers and sellers. This takes time and money. That's hard to by cutting commission.
  • Ken | 02 Jan 2015, 01:25 PM Agree 0
    In the last 200 years Sellers ,on the most part, are happy to pay our fees, because they feel they get more than what they are paying for in quality and services..However, many Sellers today will ask for a discount in our fees because it can't hurt to ask..Also to see how you are going to protect their Selling price..Commissions are negotiable and the time to discuss them is after you finish a good presentation and the Sellers understand what is involved Selling a home and where the money goes...Be Strong and build reflexes and muscle to protect our fees for all of us..
  • Wayne Ryan | 02 Jan 2015, 02:05 PM Agree 0
    One of my business practices over the last 20 years has been to discuss commission directly after I have discussed market value and the marketing strategy. I give them precise numbers based on a realistic sale amount and then I show them exactly how much of that commission goes to the other agent. I then show them how much a discount broker will offer to another agent. Generally, that is enough said and I shut up!!
  • JK | 02 Jan 2015, 02:57 PM Agree 0
    Marty you are not focusing. If you are going to respond to my point and lash out, at lease try to stick to my point. I never once mentioned time frame. I spoke of complexity and level of involvement. Your statement is very defensive. Hmmm, I wonder why? Could it be that you hear a little voice inside saying "oh no, have I been exposed!" ?
    Just like in any industry/profession, there are bad apples, those who cut corners, and take the path of least resistance. I only suggest that those of questionable work ethic and weak morale fiber get paid accordingly. Sorry if this cuts to the core or into anybody's bottom line Marty. You suggest that because I have an opinion that does not align with yours I should get a 9 to 5 job... not very enlightened my dear Marty. My income is generously healthy, and I am willing to take a cut for longevity and in the name of fairness to the client.
    Happy New Year.
  • Tom | 02 Jan 2015, 06:35 PM Agree 0
    I always found it extremely disturbing that NONE of the pre-licensing courses EVER discussed how to price your product. The product you have to sell is your own services. We BROKER real estate, but we SELL our services.

    Generally, what I do is determine what it is that I am including in my marketing package and then set a price based upon that package. I also set a minimum that I will work for -- which is adjusted upwards based upon inflation every year. If they decide not to sell, I also expect to be compensated for time and expenses. The more they guarantee in compensation should their home not sell, the lower the fees that I will charge should the home sell. Rarely, do I take a listing that requires commission based on 100% contingency upon sale -- but for those, I do charge a higher "market rate" since those clients are usually the toughest to deal with or are unreasonable in expectations since they have no "skin in the game".

    I never discount my package amounts -- they are set in stone -- for me. Occasionally, I do remove a single service - like drafted floor plans - and adjust the package price charged accordingly.

    Of course, I ALWAYS include the market normal co-operative commission in the agreement and MLS listing. (After all, this IS the definition of the MLS "SYSTEM" -- cooperation.) Most sellers in my market know that that amount is only paid should their home sell, and it is a cost of attracting buyers AND their agents. Most are also educated that a low cooperative commission stigmatizes their property since now most buyer clients will direct their agent not to show these homes should they - even remotely - have to pay their own (buyer's) agent's fees directly (instead of out of the proceeds of the sale). Then again, I also come across a small number of clients that ONLY want to see these homes with low co-operative commissions because they feel there may be an opportunity to take advantage of an unsophisticated or unknowledgeable seller that has either been given bad advice by their agent or isn't listening to one at all.

    Pricing your services right is driven by market dynamics. You need to price it right so you can stay working full-time -- say 24 homes per year. Any less, and it's a part-time hobby - no matter what you charge on each transaction.

    I always have to laugh at the clowns that demand "market normal" high commissions and yet don't offer full, premium realty services but rely on slick sales scripts. They also try to claim that postcards, newspaper ads, open houses, flyers and personal promotion YouTube videos are somehow a marketing expense the home seller should pay for when clearly they are only meant to attract additional business to the agent. They are just overhead expenses plain and simple -- the same as monthly brokerage fees (that they failed to negotiate when they first started at their office), or license fees, insurance fees, or the dreaded board/association/(aka "union") fees.
  • NR | 04 Jan 2015, 07:31 PM Agree 0
    Considering all the support for NOT cutting commissions, how do you propose competing against a broker who is dominant in the area and is known to cut commissions - whatever it takes to secure the listing.
  • Mal | 05 Jan 2015, 02:43 PM Agree 0
    I would have to agree with NR. It really comes down to location and area of your business.
    Where I am, there are several big agents that cut commission to secure the listing. And they provide everything, staging, pictures in HDR, cd's, nice fancy brochures, you name it, they supply it.
    Buy reading all your post, maybe I should come sell where you are, if it's that easy to receive full commission all the time. lol
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