There are two reasons for objections to your commission rate, and it isn’t the fact that other agents are doing it. The two reasons are: we haven’t established value for our service, and the seller or buyer has a fear that we haven’t addressed properly to remove it. These fears are real and must be conquered before you can secure a representation contract from a buyer or seller.
Fear of making the wrong decision
You must probe to understand the root of this fear. It could be a previous bad experience with a real estate agent. It could also be that they feel the need to talk with parents or friends. They may feel the need to seek more counsel before they give you their final answer. A commission reduction, even if they ask for it, will not alleviate this fear. They still won’t sign unless you deal with the “wrong decision” fear. Having an understanding of that fear and giving them reassurances that you will protect them to make sure their fear will never be realized handles it for most people.
Fear of making any decision
Some people are paralyzed by decisions. They brood, steam, and toss and turn all night about decisions. The perceived risk is significant. You have to lower the risk in their mind. An easy exit listing agreement where they can void the listing quickly will provide more relief than fee reduction, even if they asked for it. These people want to think about it. We need to find out what they need to think about. In order to secure them as clients, you have to isolate the fear and walk them through the situations and challenges that come to mind, overcoming each one.
Fear of change
A commission reduction really won’t help with these people, either. We often try to motivate them based on the monetary deal. We have to sell the benefits of change. Identify the worst case situation to prove to them that there is a limited down side. A personal assurance of the next steps and the protection and security you are offering will work well. You might even build a sense of urgency based on the marketplace, interest rates, or through the fear of loss. Convince them that the window of opportunity is open now and might not be as favorable a few months down the road.
Fear of being cheated
For some people, this one can take aim at your fees for service. We must build value for our service to show that, because of our skills and strategy, they will end up with a high sales price, more potential buyers through their home, a higher probability of a sale, better negotiations, and a smoother transaction with less risk. Because they are receiving all of those items, the value is enhanced, so the fees don’t need to be less.
We have to demonstrate clearly that, even though they are paying more, they are getting more value.
Fear of looking bad to others
Most people want social acceptance by others. Other friends and neighbors will talk about how they grinded on an agent to reduce their fee. It’s like a badge of honor in the community. There are some people who use it as the real litmus test to make decisions because the social recognition is so important. The way to combat this is, again, with value. I see that behavior exhibited in agents, as well. Agents who crave recognition and status often make poor business decisions just so they can receive a plaque or walk across the stage at the company awards banquet.
Fear of acting without sufficient knowledge or reflection
Too often, agents attack this problem with fee reductions, trying to create a decision now. The best defense for this fear is a good offense. Know how they typically make decisions of this magnitude. What is their decision process? Know the timing of when they want to buy or sell. Some of selling is being in front of the prospect at the right time. There is no substitute for correct timing of your presentation.
All of these fears are born out of a heightened feeling of risk. They are really not commission based concerns. We have not dealt effectively with the risk they feel toward working with you or any agent. Focus on assuming the risk yourself or removing it.
Then, give them strong reassurances that they are making the right decision, and they should make it now. Don’t concentrate on your cost of service; focus on reassurance and work to pinpoint the client’s fears and remove them.
Dirk Zeller is a sought out speaker, celebrated author and CEO of Real Estate Champions. His company trains more than 350,000 agents worldwide each year through live events, online training, self-study programs, and newsletters. The Real Estate community has embraced and praised his six best-selling books; Your First Year in Real Estate, Success as a Real Estate Agent for Dummies, The Champion Real Estate Agent, The Champion Real Estate Team, Telephone Sales for Dummies, Successful Time Management for Dummies, and over 300 articles in print. To learn more, please visit: http://www.realestatechampions.com.