Why discount your fee and show your weaker negotiation skills?

Why discount your fee and show your weaker negotiation skills?

A lot is written about the level of fees that real estate agents charge and indeed during the heated and competitive market for listings late in 2003 we saw companies promoting lower fees as their competitive edge. Various segments of the market actively encourage our clients to ask for a fee discount and there are always those organizations set up to offer private sellers advice and various marketing options. I guess we would all like to pay as little as we could but at the end of the day it is not the fee that makes the biggest difference to how much money a vendor finishes up with after the sale. There are even companies that promote a lower fee if they sell the property in a shorter time-frame. I have a problem with that as those vendors may be encouraged to accept an early offer from the salespersons existing buyers before proper promotion and presentation of the property. And in the volatile market of recent months I wonder how often properties have been sold too quickly and so possibly run the risk of achieving a less than maximum sale price for the vendor?

As this is a position the average salesperson will often find themselves in, it makes sense to have a credible and honest strategy to cope with the challenge of avoiding discounting your fee.

Firstly we need to ask how much you value yourself and what you do? The true professional and highly skilled salesperson will always take the view that they are worth every cent of the fee, but I guess the salespeople who are happy to protect their own interests by selling to their existing favourite buyer before letting their colleagues or network know about the listing (Yes such people do still exist in our profession), know that a discount is probably justified. If you truly value your time and career and I would assume you know your value and know that selling a property today is not just about selling it. This business is less a transaction business and more a marketing business than many people realise.

The first justification for the fee is that you won’t just sell the property – you will market it in the correct markets with skill and then seek to identify the best buyers – the ones who will pay the most! And you will make sure the vendor understands the process, including the delay in showing of the property whilst we get the marketing and the property ready, and get their approval for the final choice of marketing material etc.

You will of course provide consultancy and advice on presenting the property to remove as many reasons as possible that a buyer might find for paying less.

You will not only position the marketing where you think the buyers are, but you will look to market the major benefits of the property with emotion and feel, taking care to structure your marketing to tug at the emotions of the buyers in the market.

There are unfortunately some salespeople who are just interested in the transaction and I guess they position themselves with the discounters that exist in any profession or trade.

How would you like to be ill and needing a transplant of some kind to stay alive. Imagine the service at the doctor or hospital who undercuts the experts? Would you go to the best hospital and pay say $50 000 or go to the clinic that offers the same service for $25 000? What confidence would you have in the success of the operation and your survival? And now let’s put the true test of your understanding of value and a great deal: Someone comes up to you in the pub and offers you something way below usual market value. Do you trust them? I bet you consider carefully and reject the deal.

Perhaps you own a lovely vehicle? Where would you get it serviced? At a garage that charges the full rate or at Flash Harry’s for half that rate?
Why would you do that? I suggest it has something to do with quality, skill and reputation?

I guess the average vendor gets the average salesperson and that is the problem. If only the salesperson believed in what they did and its value, and the vendor understood the cost of working with a weaker negotiator, it might be less of a problem.

Firstly we need to acknowledge that the vendor simply wants to save money. This is a fairly reasonable approach and needs to be acknowledged.

I understand your concerns and sometimes I find other vendors ask the same question. It is not my policy to do so as I believe that if you have a weaker negotiator working for you; it can cost you a lot more at sale time than you will ever save in any amendment to the fee. You see if I am not firm with the fee now you may want to consider how firm I will be with the buyers at sale time. If I am firm with you now imagine how tough I will be with the buyers when it comes to negotiate on your behalf? Saving a couple of thousand now can cost you a lot more later.

I guess in the last moments of the sale you will want to be confident that I am a strong negotiator. Now, if I give some of my fee away here would you be confident in leaving me to negotiate your money?

And best of all, have success stories that clearly demonstrate the success of campaigns you have conducted. Humanize those vendors, who possibly had the same concerns as these new vendors, and demonstrate the success of the result. The best counter to a request for a fee discount is to show how you have achieved results beyond expectations and that the amount of discount sought, is small in comparison.

It is also fair to acknowledge that in some cases of large amounts of repeat business from the same client, or on a major project, a fee variance may well be acceptable, but to run your business like any other discounter may simply position you and your business at a level where it is always expected and then we run the risk of being seen to cut the corners, that will encourage.

With property values being what they are, our vendors deserve better, and with the responsibility, time and risks involved we deserve the full fee.