Use Your Expertise to Justify the Commission
In part one of a three-part series, learn how to explain to prospects and clients that your specific real estate knowledge is worth the money they’ll pay for your services. Everyone wants to feel appreciated, and you’re no different. You want your clients to see the value you bring to the transaction, but many real estate professionals are timid about tooting their horn to prospects and clients. You don’t want to come off as self-important, but you do want to educate customers about what you do—and most importantly, why you’re worth a commission check. Particularly in this digital age, where face-to-face communication is becoming scarcer, you might hear some of these aggravating comments:
- “You made what off the sale of that home? It must be nice to ride around all day and make money.”
- “I can save a lot of money if I don’t use an agent. That’s 6 percent more cash in my pocket. How hard can it be?”
- “You can show me some homes, but I’m not going to sign an exclusive agreement with you. I’ll work with whoever brings me the best deal.”
- “I’ll consider using you to sell my home if you’ll cut me a break on the commission.”
You know all the reasons you’re valuable, but this list is a resource you can provide customers. It’s part one of a three-part series designed to help you bust common misconceptions about your profession, drawn from our book, 31 Reasons Your Real Estate Agent Is Worth Their Commission. We’ve grouped our points into three value-building categories, beginning with knowledge.
Glean talking points about your experience in the field, which will come in handy if clients object to the amount they’re paying you. Read more.
- You have better information to assess a home’s value. Homes listed with a licensed full-time real estate agent sell for nearly 26 percent more than FSBO listings—even after factoring in the agent’s commission—according to the National Association of REALTORS®’ 2017 Profile of Home Buyers and Sellers. Why? Mainly because you have intimate knowledge of the local market and what price it will support. Homeowners may have an idea of what price they want to ask for, but that figure is often not in alignment with market fundamentals. You have the professional training to assess your clients’ situations and position their home to sell for maximum value.
- You know where the system is broken. Full-time agents know where the traps lie in a real estate transaction. Appraisals, for example, are a big setback when they come in lower than expected. You know when it’s the product of a misinformed appraiser and when to seek a second opinion. Also, some federal regulations have put sellers at a disadvantage when it comes to appraisals, and your knowledge of how to work around them can save many deals. You go the extra mile to provide appropriate comps to appraisers, helping to shape their opinion on pricing and maintain an upward trajectory of home value.
- You’re a professional dealmaker. Common sense might dictate that a professional salesperson’s talents are applicable to any industry, but nothing is farther from the truth. The average consumer can’t sell a vehicle as well as a professional car salesperson. The same goes for houses. A natural salesperson might be able to win the confidence of a buyer, but are they prepared for the next step? You can earn a client’s trust, but you also know how to handle contracts, negotiations, etc. Negotiating is generally done on the back end, when the details of the transaction come to the surface. In order to keep a deal together, you sometimes have to play hardball—especially when the opposing side drags its heels, potentially harming your client. Negotiating takes a lot of practice, which you’ve taken the time to master.Your clients need that expertise to keep a deal from falling through.
- A Google search won’t teach your clients what you already know. The real estate business is a complex system. Your customers could search online for the answers to any state or national real estate test, and it still will not give them the full knowledge you possess. Buyers and sellers might be able to glean the basics of filling out a contract—but then what? Even if they could find every answer to every possible question, how long would that take? Google is indeed an incredible gateway to knowledge, but it is no substitute for the hours, days, and years you’ve spent applying your knowledge to real-life scenarios.
- You do most of the thinking for your clients. The brain is a muscle, and when muscles are overused, they get sore and need recuperation. You can supply peace of mind—literally—to your clients by handling the most taxing parts of a transaction for them. And that’s worth every penny of a commission. Your clients don’t need to tax their brains in an attempt to gain knowledge or information you already have. You can let them focus on their bottom line while you engage with those who want a piece of it.
- When you make money, your clients benefit. You might make a $30,000 commission on a million-dollar home, but you don’t keep all that money to yourself. Some of it goes back to your clients in the form of rewards for loyal customers, gas and meals when taking customers out on a day of showings, not to mention marketing expenses such as MLS fees, Google ads, listing photography, signs, and open house events, all to help sellers find a buyer for their home. You put your money where your mouth is.
- You’re properly trained. It’s not possible to do what you do at your skill level without the proper training it takes to understand all the nuances of the industry. Not only are you properly educated and licensed to conduct business, you are required to take continuing education courses to keep your skills in line with current trends. Would your clients make that kind of commitment?
- You have an eye for what sells. Staging is a key factor in selling a home for its full value. You know which improvements or repairs will bring maximum return on investment for your clients. You keep up with home style trends in order to make a property stand out and catch buyers’ attention. You’re skilled in portraying a story with listing photos, and you know how to highlight the attributes of a home and properly address the drawbacks.
- You work in an age-old industry that has weathered ups and downs. The REALTOR® brand has been around for more than 100 years, and you are carrying on a legacy of continually putting systems into place to help consumers, set industry ethics standards, and find better marketing solutions. You’re backed by industry leaders who lobby for better training and laws that protect the client from fraud. And in the end, your clients are better off because of it.
MAY 2018 | BY TONYA EBERHART AND MICHAEL CARR