If your prospects want to negotiate a lower commission than what you’ve proposed, they may be reacting to circumstances unrelated to your value as an agent. Asking a few follow-up questions may shed more light on their motivations and reveal an alternative opportunity that benefits everyone. Start by considering the following scenarios.
Are they worried about cash on hand?
If you’re working with buyers looking for a rebate, find a way to tactfully inquire if they’re worried about budget, downpayments, or closing costs. You may be able to point them to resources about assistance programs or financing options that can serve a similar need.
Are they considering going with different or limited set of services?
Make sure your prospective clients understand the full suite of services you offer, and ask if they’ve shopped around for other agents or brokerage, which gives you an opportunity to point out if the comparison isn’t like-to-like.
Are they making assumptions based on someone else’s experience?
Maybe they’ve talked to a friend or neighbor who worked with a different brokerage model or negotiated a different commission amount. Inquiring about assumptions they may have will allow you to support your commission based on the particulars of their property, the local market, and your plan for marketing the property.
Do they think they already have a buyer lined up?
If sellers think there’s already enough interest in their home that an offer is practically in hand, they may question your value. Challenging the seriousness of that interest may not go over well, but you could reach a compromise in the listing agreement—for example, a lower commission amount if a named party they know purchases the property but a higher amount if you bring a different buyer.
Are they looking for a bargain?
Some consumers are just looking for the cheapest price. If your questions lead you to that conclusion, you may decide that it’s best for both parties if you refer them to another broker.
REBATES need to be BAN ! 9 states do not allow them! Many agents are involved in Mortgage fraud giving cash back! This practice needs to stop!!
I agree. RESPA violations are definitely something to be mindful about.
Why? As long as it is disclosed, why not? Why should someone else dictate what another agent wants to charge?
My understanding is that ALL commissions are taken in the name of the broker/brokerage, not the agent. I believe the agent needs to speak to their broker/supervising manager and ask what the brokerage policy is before giving/offering a commission concession.
I have found that these conversations usually dive into deeper topics for the seller. They’re true motivation is sometimes masked by a “need” to reduce commission. An agent should completely go through a sellers goals and motivations to find a fair business deal for all. And an agent Should never engage in a commission reduction conversation without previously consulting with his or her broker.
Christy – I cannot agree more. I have a policy that states my portion of the agreed commission on any and all transactions. If the agent wants to reduce their commission the amount that I am due stays the same. I have explained that they have the authority to negotiate their income but not mine.
You Are so greedy!!!
Why would you say that Alex?
Or you are such a weak agent you can’t work without discounting.
That was funny 🙂 Lighten up a little.
I realize this is a serious subject – we all respect the topic but – You Are So Greedy – that statement didn’t bring a chuckle? Relax. It’s okay to laugh.
If you and a Seller agree to a “named party” commission reduction, I’d recommend also putting a time limit on that portion of the agreement.
Hard to ban. Rebates to principal have been there for a long time. Very rarely I’d kick back 1% or 1.5%. Sometimes for a friend. Sometimes for a prospective buyer client who already found a house or a seller that already has a buyer but just needs a realtor to write up the docs. In other words more than half the job is already done. We’re not in the market to work for free but I do know of a couple of realtors and a broker whose business model is always 2% back to buyer and 1% for the brokerage.… Read more »
I run into this most on repeat clients. I wish Texas would ban commission rebates. I had one client who negotiated a reduction. Even though I told them in writing three times that they may not get the full amount of the rebate because their lender may limit it, they expected me to give them the difference after closing. They signed a document saying there was no payments outside of closing but expected me to give them money because their friend’s Realtor did. I offered to donate the difference to the charity of their choice, but they demanded the money.… Read more »
Nancy, What was that document they signed? I don’t believe the TAR Buyer Rep says that.
Stuart, there is a lender form my clients are required to sign at closing stating that no agreements have been made outside of the sales contract. They specifically mention the form includes anything after closing.
Rebates artificially inflate the actual selling cost and open the door to fraud. And demonstrate that you think you bring a reduced value to the transaction. Why would you cast doubt on that? If you’re taking less, be honest to all concerned: Reduce the commission percentage and the selling price by the same amount. If you can’t negotiate well enough to keep your own earnings, how well can you negotiate for your client.? Would you go to a less competent heart surgeon simply because he’s cheaper? Or a lawyer based solely on fees?