Responding to clients’ commission objections

This is the first article in a two-part series based on REALTOR® comments gathered by Melanie McLane through her Facebook page.

Experienced REALTORS® know they’re worth every penny of the commission they charge.

“If you don’t think you’re worth the commission, you’ll never convince a buyer or seller you are,” said Melanie McLane, a REALTOR® and nationally recognized real estate educator.

McLane recently asked other REALTORS® on her Facebook page what are the most common objections they hear from clients. Not surprisingly, she said commissions nearly always top the list of common objections from both buyers and sellers.

With more than 30 years in the business, McLane said she’s found some replies that work when answering clients’ questions about commissions:

• While commissions are negotiable by law in Pennsylvania, brokers in each office set the policy regarding commissions. If a client wants to negotiate the company fee, suggest he talk to the broker. Ninety-nine percent of the time, he won’t.
• When a client compares your company commissions to other companies, make sure you have a comprehensive list of services you and the company provide. Show the client the list and ask which service they don’t need – and wait for an answer. A good response is, “I’m sure other companies know the value of their services. I believe our services are fairly priced for the value we provide. Let’s review them.”
• Ask the client, “Do you expect me to negotiate on your behalf?” Most will say yes, to which you respond: “If I cave in this easily in a commission discussion with you, how confident are you in my abilities to hold firm to what you want in a negotiation? Don’t you want a strong negotiator in your corner?”
•  When clients say “that just seems like an awful lot of money,” you need to explain that as a self-employed  independent contractor, you pay all of your own expenses, including commission splits, both between companies and between brokers and agents. Remind them that unless or until you sell something, you get no money.
• Clients may question why they should sign with a buyer agency and pay that REALTOR® when other agents will show their house for free. If you don’t have a buyer agency agreement, no one is representing your best interests. A good answer: “When you become my client, I owe you fiduciary duties which include loyalty, confidentiality and the requirement to make an effort to find you a property. Most of the time you don’t pay me directly; the fee comes from the transaction as a cooperative fee.”