Commissions and understanding your worth
Estate Agency can be a fickle business.
For example, a potential client might know that you sell property in your area for more than any competitor, they might know that you work with solicitors and brokers better than any of your competitors, maybe they even really like you!
And yet, when it comes time to talk about fee, they believe it’s perfectly okay to request you charge less than your stated fee for doing all this. Only to threaten you with “using someone else because they would do it for less” and labelling you as “unreasonable”.
We have ALL been there. If you haven’t had this conversation then you are simply not doing enough prospecting (a blog for another time) or you aren’t charging enough (in which case you really need to keep reading).
Let’s start with some honesty. When I started my career in real estate (to sound very Australian), I took whatever I could get. Coming off being a high performing agent’s PA for two years, I didn’t have many connections or a track record to call my own but knew I’d do a great job given what I’d learnt over that time. I was just excited to get any commission for my work, instead of just exposure to the world.
It’s only as your career grows that you learn to value yourself a little more as your experience and skill grow with it.
This means at a certain point in your career, as I did in mine, we all have to make tough decisions.
If client A wants to pay you 2%, it’s hard to take on client B at 1% or 1.5% and offer them the same level of service (usually leading to the same level of result).
Now reframe this standard fee to become your minimum fee.
Minimum not in cost, but in service. This fee represents the minimum you will do for them over the course of your professional relationship. Usually this is where you get some inquisitive looks. Outline everything you do that’s included in your fee.
It isn’t just for ‘selling or letting their house’.
Your fee is for agreeing the best campaign possible and setting an achievable asking price. It’s for your buyer database, it’s for understanding the profile of your potential buyers and using their language in local marketing, social media campaigns, daily communication and feedback. It’s for advice on decluttering, it’s for fantastic photos. Your minimum includes viewing confirmations, buyer qualification and follow up. It’s for professional negotiation - not just on price, but on terms, conditions, curtains, fridges, dates etc.
Your fee means having the tough conversations that may need to be had so you can agree a course correction.
And most importantly your fee means not resting until completion. This is the minimum you do and this is reflected in the minimum you charge.
And the best part, your client doesn’t even pay it until this point. Pretty hard to argue with that value.
Why is communicating what your fee entails so important? Because (especially if you’re using Homesearch and reading this blog) 9 times out of 10 your minimum will be much more than any of your competitors maximum, even they even bother to communicate any added value past ‘we’ll sell it’.
Go through this process. It’ll help you understand your own worth first and make sure your clients know what they’re really asking for when they ask for a ‘cheaper fee’.
But...if there ever comes a time where you think you need (or even want) to negotiate your fee, here’s a few questions you may want to answer for yourself first.
Is this new client motivated?
I mean really motivated. Just wanting to sell doesn’t cut it here. They’re all in or you’re all out.
Is the property going to help you meet more potential clients?
Will taking this property on help further (or establish) your authority as an agent. Is the property in a market you are trying to break in to? Are you going to attract enquiry from potential clients or merely people looking for a bargain/investment. Choose your lower-fee stock wisely.
How low is what they’re asking for, really?
Talk figures in real numbers, not in percentage terms. This makes it real for your client and makes it real for you. If your fee is only a few hundred pounds less, will you be losing much by taking it on? Conversely if its thousands less, is it worth it for the work involved?
Can you earn a fee helping them move on?
Chances are if your potential client is haggling over fee at this end, they’ll be every bit as much against paying you to help them buy their next place. But you still need to ask the question. You’re going to help them anyway, and offer advice, make it known that you charge for this as a professional service.
These are the questions I would usually ask myself, but you can probably think of a few more, depending on your own situation and depending on the client. At the risk of sounding like a broken record, there’s not really an established set of rules for being successful in the defending your fee. Learn to be upfront, engaged, flexible and resourceful; and then do what works best for you.