Real Estate

‘I Am Not A Tour Guide’: How To Nail Tough Commission Conversations

Panelists Smita Singh, Cindi Hagley, and Kraig Klaus discussed client requests to negotiate or cut their pay at Inman Connect Las Vegas on Wednesday

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Real estate commissions are a hot topic these days and agents are likely to be increasingly faced with clients asking them to justify how they get paid.

Panelists offered some tips for handling such conversations at Inman Connect Las Vegas Wednesday in a session called, “An Agent’s Guide for Navigating Tough Conversations and Maintaining Your Commission.”

Lack of value is a concern when costs are on the table, according to panelist Smita Singh of the Seth Brothers Team at eXp Realty in Houston.

“I am not a tour guide,” she said. “I’m an expert at what I do. And if that’s who you want, you’re gonna get it. And we’ll take our full commission.”

Cindi Hagley, broker-owner of The Hagley Group in the San Francisco Bay Area, quipped, “I am happy to negotiate my commission. If you want to pay me more, who am I to stand in your way.” Attendees laughed.

On a more serious note, Hagley pointed out that in her market there are a lot of brokerages that offer very low rates.

“There’s one company that will settle for a $1,000 transaction, which is just absolutely nuts,” she said. “But you know, you get what you pay for. So you can negotiate my commission upfront. But on the backside, you’re going to get that pain, because when you negotiate my commission, you are cutting the money that I am investing in marketing your home.”

Kraig Klaus of Keller Williams’ Klaus Team in the Phoenix area said that when he is asked to cut his commission he just says “no” and moves on.

“Our market has quadrupled inventory since April, so what’s more important, what you pay or what you net?” he said. “And I always say if an agent is willing to cut their own paycheck and can’t negotiate their own commission, how can they negotiate the top value for you?”

The panel moderator, Kendall Bonner, broker-owner of RE/MAX Capital Realty, did some role playing with the panelists.

Bonner: “Cindi, thank you so much for coming out to the house today. I really appreciate you sharing with us our home value. But really, I’m not sure if I want to pay 6 percent or 7 percent for my listing, will you negotiate with me?”

Hagley: “I will absolutely negotiate. But my question is, why would you not want to invest that amount and it’s really not paying because you’re investing in me. I am listing your home, marketing your home, staging your home and then advertising your home on the internet, on TV, through door knocking, through newsletters — anything that I need to do. So every percentage point or even half a percentage point that you try to negotiate, that you’re more than welcome to negotiate, but that’s coming off the marketing on the backside that I’m doing for your home. So my question is, is the commission more important to you? Or is the number that you net at the end of the transaction more important to you?

Bonner: “Absolutely the net.”

Hagley: “Okay, so sign the contract.” Attendees laughed and some clapped.

Bonner then role-played with Klaus.

Bonner: “Thanks so much for coming out tonight. I’m looking at these numbers. I need to net $100,000 and I think the way that I could get there is through your commission. Will you cut your commission?”

Klaus: “No. I want to get you there through marketing and sales price and experience and understanding how to present the home and how to get the most for it. If we’re cutting our commission, we’re cutting our marketing budget. We spend a lot of money on marketing. We have the resources, the systems in place. We’ve been doing this for over 20 years. We’ve sold over 4,000 homes. We’ve been through every market. The average agent [has] five and a half years [of experience]. In our market, we haven’t had a balanced market in eight years. So most agents have only seen a seller’s market. So when things get different and tough and homes aren’t selling, that’s when the experts stand up. That’s when we become more valuable. And that’s where we’re going to earn everything we get. If we don’t at the end, we’ll have that conversation. I’m happy to have that conversation if I didn’t do what I said I was going to do.”

The audience applauded.

Email Andrea V. Brambila.

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