Don’t take 6% as a given anymore. Remind consumers that the amount your agent (whether they’re representing the buyer or the seller) will make is up for negotiation, and then sell them on your value proposition and why you deserve what you are asking for. More on that below. That said, having a more flexible commission (and tools to help you deliver the same great customer experience with less effort and people power) could be a valuable tactic for getting more leads in this exceptionally competitive market.
Agents work hard. It’s so much more than snapping a few listing photos, putting them online, and watching the offers (and money) roll in. If only it were that easy!
Being a broker is hard work, too. You’re managing an entire sales and support team and often a brick-and-mortar location, maintaining your license and (if applicable) franchise agreements, working on recruitment and retention, deciding what agent benefits to provide and how to pay for them, and so much more. And most importantly of all, this work gets results: according to NAR’s 2023 Profile of Home Buyers and Sellers, for sale by owner properties typically sell for less than the selling price of other homes (a median of $310,000 in 2022) versus the median of agent-assisted homes ($405,000).
A big part of your agents’ work going forward will be explaining why you command a certain commission and why you deserve it. It is in your clients’ best interest (remember, your fiduciary duty) to know what they’re paying you for and to give them a chance to ask questions.
So, what is your value proposition? Why do your agents deserve their commissions? What value do you add? Here are a few ideas to get the conversation started.
The undeniable fact is that, since selling real estate is your bread and butter, you know more about it and have amassed considerable expertise about how it works in terms of the rules, best practices, and market. This means you’re in a position to fetch the highest price for those who list with you.
This goes back to being a fiduciary. Just as a listing agent’s role is to maximize profit for the seller, the buyer’s agent’s responsibility is to make sure they get the fairest price for what they’re buying. This means honed negotiation skills and the ability to advise their clients when they aren’t getting a good deal, and why.
The data speaks for itself: agent-assisted sales result in higher prices for sellers than FSBOs. This is a big selling point for sellers, and helping them means helping yourself, too. Where it gets tricky in this new landscape is ensuring that they know the buyer’s side commission is also negotiable and to work that into the conversation.
Agents don’t work with rotary phones and post-its anymore (and even if they did, they’d need to pass on the cost of using those tools to their clients). Agents use pretty sophisticated tools to market their listings, nurture their clients, and ultimately help properties sell faster and for a fair price. These tools cost money, and consumers might not realize the resources your agents are investing in to ensure their success. So, tell them!
This is all, of course, on top of the role of being a trustworthy, confidential guide and advocate for the biggest purchases the average people make in their lifetimes!
This is just the beginning of what will likely prove to be a very long and evolving conversation across the entire industry. So, start now. Talk early and often with your sales team and their clients about these issues and stay abreast of more developments as they happen.
If commissions become more competitive, so will recruitment and retention, and margins will continue to shrink. The tools you offer and your team’s ability to maximize their efforts through technology will become even more crucial than they already are.
Constellation1 provides an entire suite of solutions to help your team serve your customers better, with smart automation, powerful integration, and cloud-enabled functionality to reduce errors and supercharge productivity. Plus, we can help you keep track of your hard-earned commission and ensure your team gets paid quickly and accurately with the most flexible and customizable real estate commissions solution on the market.
Ready to learn more?
Disclaimer: The Constellation1 team are not lawyers or accountants. This blog post does not constitute legal or financial advice. Always consult a professional familiar with your specific situation.