Real Estate Broker Commission - You Can Successfully Negotiate

It goes without saying that most homeowners, regardless of market conditions, would like to make as much as they can when they sell their property. You do, I do, everyone does. Of course, when the market conditions are down it's even more important to squeeze out every last penny you can.

Like any other financial situation, though, it's not necessarily how much you make but how much you keep and the 'keeping' starts with negotiating the real estate broker commission.

Most property owners know that the real estate broker commission is negotiable but the vast majority are not successful in doing so. If you have searched Google and read what's out there, I'm not surprised. Most advice is geared toward just asking for a lower commission. Sure, that can work in a handful of cases but is that the real estate broker you want negotiating your sale?

I mean, if the real estate broker immediately reduces their commission what makes you think they can negotiate the highest price for you?

Remember, a realtor knows (or should know) how to negotiate. After all, it's what they do in their profession. The most successful real estate brokers have spent thousands of dollars in education and training through out their careers and you can rest assured knowing they are completely expecting the request to 'lower my commission'.

When this happens the realtor does a quick mental review of which objection handling technique they'll use to easily counter your request. In this example we'll look at the technique 'We Do the Most Marketing'.

When the commission subject is brought up the realtor will respond with something like this.

"I understand you want to save money. Believe me; I'm married with four kids. However, as you know, my company ABC Realty does more marketing than any of our competitors. We have the highest amount of sales in this city and we continue to set the curve for getting the highest price year after year. Between the MLS, open houses, print advertisement, cable TV, broker tours, brochures and my massive network of home buyers, no one can offer you the exposure that I can. Are you looking to walk away with the highest price and with the most money or are you looking to hire an agent who will charge less and get you less?"

Whew! How to you reply to that when it's delivered with such confidence and perfection?

Well, it's not really that hard when you understand the truth behind the 'We Do the Most Marketing' objection handling technique.

First, we have to understand how many of the 'proven and successful' marketing strategies are actually proven and successful. For the sake of argument, we'll use the real estate broker's own organization, the National Association of Realtors (NAR), for our statistics.

According to the NAR, 75% of all homes are sold through the MLS, the Internet and a yard sign. (Do not get this statistic confused with how many people 'start' their home search on the Internet which is just under 90%.). Interestingly, if you take open houses, homes magazines, virtual tours, real estate hotlines (800 numbers), cable TV, broker open houses, postcards (flyers) to neighbors and combine the total, you'd find that it accounts for less than seven percent of all homes sold.

Less than seven percent!

Uh-oh. Did we just discover a little crack in the real estate armor? What's so proven and successful with seven percent? Maybe if we dig a little further we come up with some more cracks.

What if we found out that the average real estate broker spends less than $1000 for yard signs, access to the MLS and the Internet – per year? What if we found out the remaining marketing strategies (seven percent effective) are actually lead generation systems for the agent to build new relationships? Has it just clicked that you're actually paying to build your realtors business, not sell your home?

Pay to build your realtors business? Let's see if we can validate this thought.

Statistically, just over 10% of homes are sold by the listing agent. In other words, the listing agent who represents you also represents the buyer who wants to buy your home. This means nearly 90% of homes are actually sold by another realtor.

Is it starting to come together? Let's review.

Out of all the proven and successful marketing strategies it turns out that a) only three are effective, b) the cost to implement these strategies is pennies compared to the commission charged, and c) it's nearly 10 to 1 that your realtor will not procure the buyer.

Now when the real estate agent asks the question, "Are you looking to walk away with the highest price and with the most money or are you looking to hire an agent who will charge less and get you less" you can be ready with three solid reasons why you should pay a lower real estate broker commission.

The key is to lower the level of perceived value. The realtor lists several reasons why they are worth their commission. Simply devalue those reasons and there is no basis to pay a higher commission. How you phrase the response depends on your personality and comfort level.

Be prepared, though. This is only one technique a realtor may use. The good news is for every reason a realtor gives to justify a higher commission, there are at least three reasons against it.

With a little research and help, negotiating the real estate broker commission is easy.