I am still a big believer in charging 6% and keeping 3.5% on the listing side.
CALL ME CRAZY!!
You probably think it can’t be done.
You probably think doing so will cost you lots of business.
You probably think it is a losing strategy or a bad business practice.
You may even think it is unethical.
And you are certainly entitled to your beliefs.
Are you totally against the idea of charging 6%?
Have you completely given up on the idea of charging 6%?
One of the most difficult questions you have to answer in your business is….
“What is your fee?”
Every day someone is reaching in your pocket in some way or challenging you on the fee you charge.
The 6% standard became 5% and now…
There are many agents who are willing to work for less than 5%.
ARE WE REALLY THAT FAR AWAY FROM 4% BEING THE NEW STANDARD?
IS THAT WHAT YOU REALLY WANT?
I think there are four big reasons agents discount their fee…
- Guilt/ Lack of Perceived Value
- Lack of Skill
I think the biggest reason agents lower their fee is Fear – fear of loss.
“If I don’t lower my fee I will lose business.”
Next is Strategy.
Some agents view discounting their commission as a way of getting market share and growing their business.
“I am going to more than make up what I give away through doing a volume of deals.”
Third on the list is Guilt and/or not Valuing what they do.
“No matter what the fee… it is a lot of money for what we do.”
And last is… Lack of Skill.
I think this issue is a big factor anytime an agent reduces their fee.
“I don’t know what to do or say when someone really presses me on my fee.”
I am a big believer in charging 6% and keeping 3.5%.
I know I am in the absolute minority and most agents will fight me that it can’t be done and still do a lot of business.
Fortunately I have enough clients who prove me right.
I KNOW the following to be true…
When you raise your standard in regard to the fee you charge…
You become a better agent in the process…
And you actually end up doing more, not less business.
It takes zero skill to lower your fee.
It takes tremendous skill and effort to be a 6% agent.
Most agents choose the lesser path.
And what most agents fail to do is… the math.
When you start at 5% and factor in your split and normal business expenses and what you will probably end up kicking in to make the deal go together…
What you really net is closer to 1%.
And again if you do the actual math (and I am happy to do this anyone who wants to go through this exercise)…
The average agent is giving up somewhere between $750,000 and $1,000,000 every 10 years they are in the business in discounted commissions.
THIS IS NOT AN EXAGGERATION!!
On any single deal…
The amount you give up does not seem that significant.
It really adds up!!