Buying or Selling a Home with a Real Estate Agent: How They “Earn” Their Commission

I came across an interesting tidbit in the Realty Times, a web site devoted to providing “consumers and industry professionals with helpful, informative news and advice.” The article educates agents on how they can “push back” against downward pressure on their commission, whether buying or selling. Apparently, “prospects” (the industry term for somebody thinking of hiring an agent) try to negotiate a lower commission because of “fear.” If the agent can address that fear — which may have one or more causes — then the agent will more likely get the “full” commission.

While that synopsis may sound relatively innocent, its that actual language used that I find so enlightening. For example, here’s the analysis for “prospects” whose desire for a lower commission really derives from a “fear of change”:

A commission reduction really won’t help with these people, either. We often try to motivate them based on the monetary deal. We have to sell the benefits of change. Identify the worst case situation to prove to them that there is a limited down side. A personal assurance of the next steps and the protection and security you are offering will work well.

You might even build a sense of urgency based on the marketplace, interest rates, or through the fear of loss. Convince them that the window of opportunity is open now and might not be as favorable a few months down the road.

Yeesh, that hardly sounds like a “trusted professional” to me. That sounds more like an aggressive salesperson trying to simply close the deal. And what’s with the “personal assurance”? Is the broker supposed to guarantee some minimum level of success, or a particular outcome? The reality is that, notwithstanding the agent’s — or lawyer’s, or doctor’s, or accountant’s — good efforts, things sometimes don’t turn out well. To promise the prospective client something different up front simply to be retained… well, that doesn’t sound too professional to me at all.

And besides, why discount a consumer’s desire to save money? I mean, Wal-Mart and Groupon are doing pretty well these days, right? Are THEY benefitting from some “fear” in consumers? I don’t think so. But I do think that, by framing the issue in this fashion, this author does a great job of pulling the curtain back on the inner workings of your “typical” real estate broker. They’re salespeople, from start to finish. Consumers forget that point at their peril.

Posted by Marc

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