When representing a Buyer I often get asked, “Is your commission negotiable?” Quite often, my reply is, “Well, anything is negotiable – but my bottom line does not move, I’m sorry.”
How rude.
Really?
The way I see it, and I am confident that any good Realtor sees it – is that they are worth something. My time is worth something, so is my effort and my results. But enough about me – what about the client?
How does a discounted commission effect the people whom we represent? For one – Buyers signed up under Buyer Agency Agreements (BAA) have me and my entire brokerage behind them finding them the best deal possible. In this BAA we talk about big bad commission and how much money we are going to make by doing all of this work. Quite often enough, the commission is set at 2.5%. I let my buyers know that in the event that the listing end is NOT offering 2.5% to my brokerage, then they will be responsible for the difference up to the stated amount (i.e. Listing offering 1.5% and Buyers agree my brokerage should get 2.5% – the BUYERS will pay the 1% deficiency). I also tell my buyers that there will be a deficiency BEFORE the offer is made, and that they may have to pay themselves. So what do they do? What would you do? Let say the offer price is $250,000 and you now realize you will have to pay me a $1000 shortfall. What would you do? Just as I thought – you would offer $249,000 and pay me. So who’s pocket does the money come out of? RIGHT! – the SELLERS (they got $1000 less in their pocket, and the Buyers still paid the regular price in the end).
So tell me – why are sellers only offering 1.5% up when the offers coming in are going to be 1% less to make up the difference?
What’s worse is that it is possible that these Sellers who are not offering a fair commission to cooperating brokerages, are not getting fair exposure to buyers because other Salespersons may be hesitant to show properties that aren’t paying! These Sellers are often seen as headaches to a lot of people (sorry to say, but Im being honest) – when it doesn’t even make a difference to how much $$ is involved! Why make yourself a headache for no reason? Why put a big X on your forehead for NO REASON?
So the money comes out of the SELLERS pocket regardless, and now the seller is hurting their chances of getting the BEST kinds of Buyers in to their house (qualified by buyer agents aka they HAVE MONEY), AND they have set the stage for a potential deal with two picky and unhappy parties. Who wins? The sellers don’t, I know that much.
So what about the Seller that has a Professional Real Estate Salesperson list their home for them and who agrees to take a hit on their commission to get the business?
To this Seller I have one question: Do you REALLY want a Salesperson to price, list, negotiate, and close on your home – one of the biggest investments in YOUR life (not theirs), one that is supposed to represent your best interests and fight for you and your bottom line – if they can’t represent their own best interests properly, fight for themselves or their own bottom line? Do you? What if I told you this discount commission you are ‘saving’ is actually coming out of your pocket REGARDLESS in the form of a % difference on incoming offers to pay the buyer agent? WHAT IF the salesperson employed is giving you a certain % of their effort for your certain % of pay?
You shouldn’t want that. You should want a strong, smart, resourceful and determined Salesperson that will not only stand up for themselves, but stand up for YOU and YOUR INVESTMENT and YOUR MONEY.
I wouldn’t hire a discount army to defend my country and I wouldn’t hire a discount doctor to look after my loved ones. I don’t even want a discount dry cleaner to clean my suits for Pete’s sake! Why would anyone want a discount Realtor to represent them with hundreds of thousands of dollars in the balance?
Do a good job, deliver what you said you would, and make me happy and you will get my business.
This country was founded on hard work that relied on honourable businessmen with integrity and an unbreakable work ethic. When my grandfathers were working in the bush and risking their lives to feed their families, or working with the military to rescue my relatives from abroad – they did so with by being strong, prepared, qualified, honest, smart, determined, and hard working.
As they were – so am I.
I will not negotiate my bottom line, and I will not negotiate yours.
The Evans Real Estate Group Blog 
“I let my buyers know that in the event that the listing end is NOT offering 2.5% to my brokerage, then they will be responsible for the difference up to the stated amount ”
Nice! A pretentious agent. Sign me up!
Hi Jeff,
Thanks for your comment.
The part about me letting my clients know that they will be responsible for the difference is absolutely true.
The part I left out is that I will never and HAVE never made them have to pay for the difference if they can not do so, but there are brokerages that would insist on it.
I have worked pro bono before and been paid out of goodwill – so it works out sometimes!
What I do first is talk to the Selling side and let them know how their discount offering is only generating discount business. If I can not get them to pony up a fair share, then I tell my buyers they MAY be on the hook for the difference and see if they will want to discount their offer if they can not make up the difference. 3rd option would be to see if it is feasible for me to do it for some kind of compromise, which may be possible. Finally, if all else fails, I give my clients the tools they need to do it themselves, I sign them up as a customer and provide them with customer service throughout.
the bottom line is that my clients get taken care of regardless, and those that try to cut corners in the sytem end up cutting themselves. I get business done in the interest of getting my clients happy, not stuffing my pockets first. In a refferal based business, working with and FOR people is key, and is the only way to build any kind of reputation. Sticking it to my clients is a sure way to end up being despised.
Thanks again for the comment!