What do you do when your client wants a fee discount?
We’ve all been there.
You’ve known this client for years, their need matches your service, the instruction appointment has gone about as well as it ever has and these people know you’re the right agent for the job.
Then it happens…
“We spoke to Billy** from FlatFee123 Estates just to be sure and he’s willing to sell our place for £900, can you match that?” Usually delivered with a trepidatory smile.
“Flat fees bring flat results” despite being a good sound byte, is not the response to give.
Working in estate agency requires you to constantly juggle multiple demands simultaneously. In fact, an agents’ superpower is the ability to pivot from one problem, issue or demand to another and deliver a considered solution instantly.
You constantly have to meet your current clients’ needs, wherever they are in the moving cycle. Of course, you have to do all of this while continuing to prospect for new business to keep your business flowing, but that’s not what this article is about.
One of the trickiest aspects of meeting your clients needs has to do with your fee. Based on the conversations we’ve had with Homesearch users over the past two weeks, it would appear that the Spring of 2019 is all about people asking for discounts.
“If our sale price is going to be down, so should your fee” is a sentence we had repeated to us last week.
“You all do the same thing” is another.
Sure, there are occasionally clients who accept you are the expert you show you are (key learning - show don’t say) and accept the fee that comes with you. But in many cases, you will be asked by your potential (or existing) client for a discount.
When that happens, here’s a few suggestions on what to do next...
Don’t panic, you got this.
You might feel like you’re on the spot as this is one of the questions that creates a feeling of dread among agents. But that’s only because you’re associating it with something negative.
Instead, look at it as a possible step closer to getting a deal made, and be confident that you’ll handle it correctly.
You’re the professional, remember.
Find out why
Asking “why” in a polite way serves two purposes.
Number one, rarely will your clients expect it. A compassionate “may I ask why you’d like a lower service fee?” (key learning - frame it as relating to the level of service provided - a good landmine for your cheaper competitors) can often cause them to withdraw their request and move forward at full fee.
Number two, more importantly, it can uncover a whole number of reasons or scenarios that should factor into the equation, whether it’s a limited available budget on what they want to move on to, a deep-truth that their price is too high, or certain aspects of your service that they don't see the value in (you not doing your job well enough before or at the appointment).
Whatever the case, it will give you some clues as to the next steps to take.
Confirm that your fee is the only obstacle
When you’re asked for a discount, it’s a great opportunity to confirm that there aren’t any other obstacles to moving forward and to get a firm commitment.
This way, you can agree that once you come to an agreement on the fee, any other major concerns have already been addressed and you can move forward with the deal.
Discuss real numbers and reaffirm the work
Half a % sounds like a lot of money when you throw it around in order to win business off a better agent.
There’s not an agent in the history of the business that hasn’t dropped their fee to win an instruction, the differences between the battlers and the greats, is the greats’ took what they needed to learn from those opportunities and made their process (and their service) full fee.
What sounds better to a client? 0.5% cheaper, or £1150 off. If you’re selling a home for the current UK average house price then that’s the difference.
Now’s the time to go over your process again.
Show your client how you negotiate, give them an insight into the work that makes up your process and explicitly let them know that if you were to ever accept a lower fee, it would directly affect the quality and quantity of the marketing you would be able to employ for that property.
Remember your job is to educate, help them understand why great results come with fair fees.
Ask for something in return
It’d be stupid of us to say never drop your fees.
There’s a great rule to follow in estate agency. The perfect listing is made up of three things
- Priced well
- Motivated seller
- Fair fee
In a soft market - take any listing that hits two out of three. You’ll thrive.
There will be times in the next 12-18 months where you’ll need the easy win. A bit of stock that is priced to run out the door, coupled with truly motivated sellers.
Take the win, but make sure you get paid in other ways.
If you are going to bend on the price, then you should get something in return. The client is asking for you to change the terms, so it’s perfectly acceptable for you to do the same.
Whether it’s signing a longer contract to get the reduced price, agreeing testimonials throughout the process (imagine the power in a live seller update of your service throughout the sale) or agreeing they will directly introduce you to three people thinking of moving in the next six months.
Whatever it may be, if you’re going to give up money, you shouldn’t do it for nothing.
That said, you and your company are in business to make money, and there comes a point where even a deal no longer makes sense.
If it’s not at a bare minimum two out of the three above, walk away.
Don’t be afraid to say no and be willing to walk away from the client. There is so much power in this. You will feel better about yourself and the way you conduct business, you will show these potential clients that you are not quick to drop your pants, and you would fight just as hard for their price too.
In many cases, if indeed the conversation is only hanging on your fees, the client will balk and you will have a full fee instruction on your hands.
And of course, sometimes they will walk away, and that’s ok too.
So if they do…
Refer a competitor and book in the next meeting
If you know this client isn’t for you unless it’s with your full fee, don’t be afraid to steer them towards a competitor that falls more in line with their price range.
Passing them Billy’s** contact details and letting them know he’d be more than happy to work with them on fees, and almost anything else, is a way of showing them you care more about their move than they knew.
The key here is to book a follow up appointment for 8-10 weeks time. If Billy** doesn’t sell it then you want to have the re-instruction appointment in the diary so you can take over without any hassle and repair the damage done.
Bringing it all together…
Short and sweet from us this week. There’s needless discounting going on out there from estate agents who are either too scared or too untrained to have these courageous (and simple) conversations.
For some, learning the process above could define the future.
Protect your fee, protect your clients, protect your business.
**Apologies to any hard working agents named Billy who may be reading this