Bernice Ross

Only a small percentage of agents understand how to effectively persuade sellers to list at a full commission. Instead, agents are often so desperate to get the listing that they cave in the moment the seller asks them to reduce their fee. It’s time to stop and here’s how to do it.

In 2005 I wrote a book called Waging War on Real Estate’s Discounters. In many ways little has changed since then. Agents are still struggling to articulate their value and full-service brokerages are still being attacked by discounters as well as multi-billion-dollar companies like Opendoor, Redfin and others who want a piece of the commission pie.

As an individual agent you have one advantage these companies lack: the ability to build personal relationships based upon personal connection as opposed to an algorithm or a slick ad campaign.

Who’s Willing to Pay?

The fee you earn is based upon the business model your company uses. Based upon my research on this topic for over two decades, it’s generally true that about 15 percent of all sellers will select their agent based upon the commission amount. If they could persuade you to represent them for free, they would do so. If you are a full-service agent, these people are not your clients. Don’t waste your time.

About 5 percent want the best agent in their area and are willing to pay for it. The other 80 percent are willing to pay a full commission, provided you can demonstrate why they should do so.

Backing this up are findings from surveys by the National Association of Realtors that say 77 percent of all sellers only contacted one agent in the process of listing their home. In other words, as a seller’s agent, 77 percent of the time your only competition is you, so you have a 77 percent chance on winning both the listing and the commission battle by being the first agent to meet with the seller face-to-face.

Where Agents Lose the Battle

Here are three obvious places you are not only losing the commission battle, but the battle to win the listing in the first place: failing to stay in touch with past clients, failing to follow up with buyer leads and failing to convert incoming seller inquiries.

According to the 2021 NAR Profile of Home Buyers and Sellers, 89 percent of all sellers would hire their agents again, but only 26 percent actually did because the agents failed to stay in touch with them. So, reach out to your past clients and get caught up.

Next, schedule a face-to-face meeting as soon as you speak with any buyer lead. In addition to building a personal relationship with them, the purpose of the meeting is to have them order a credit report to make sure it is accurate and to correct any errors, discuss the mortgage qualification process and determine if they qualify for down payment assistance.

The most important reason, however, is to discover if have a house to sell. If they need a contingent sale, you can make that problem disappear using companies such HomeLight, Homeward, Knock, Opendoor, Orchard and Ribbon. These companies either purchase the seller’s existing home, purchase their next home and then sell it to them once they sell their current home, or provide a mortgage solution that allows them to pay all cash. Most are eager to work with agents and some even allow you to earn a full commission.

Show Your Value

A widespread problem agents face today is how to handle the seller lead who calls you and asks, “How much do you charge in commission?” If you tell them a percentage or number they don’t like, they cut you off and hang up, often because you have failed to demonstrate your value. To make sure you don’t fall into this trap, position yourself as a “premium” agent. Create a checklist to demonstrate how the services you provide create the maximum exposure that results in the highest possible net price for a seller.

If you’re a strong agent who consistently sells your listings over asking price, you can also use that to your advantage. Calculate the average percentage of the purchase price that your closed listings sold at during the last six months. Then, compare it to the average list-to-sell-price from your MLS. The difference should more than covers any discount another agent or low-fee brokerage may offer.

So, here’s the bottom line. When it comes to earning a full commission, help the seller understand that what matters most is how much they will net when the transaction closes, not the percentage or dollar amount they pay in commission. Position yourself as a “premium” agent, back it up with a personalized “premium marketing plan” and show prospects just how good your results are.

Bernice Ross is a nationally syndicated columnist, author, trainer and speaker on real estate topics. She can be reached at bernice@realestatecoach.com.