Mar

26

Real Estate Agents: Fee For Service

Filed Under Sellers, Sellers & Buyers | Comments Off

Right now, there are 246 homes for sale in West Babylon, New York. A majority of the agents who have the listings are offering a 2% commission to be paid to any other agent who brings a buyer. This is how the real estate business works. There are listing agents and there are selling agents in nearly 95% of real estate transactions.

So getting back to that 2% figure. With too many homes on the market, prices continue to drop and buyers are capitalizing on great opportunities. That 2% figure is a recurring theme throughout most listings. I have to elaborate on this point.

As a real estate agent, I place a value on my time. Each agent and brokerage is different. Each offers different service. When people weigh in on paying for a certain service, they usually look at three main items. They are:

1. Quantity of Service – How much they’re going to get.
2. Quality of Service – How good the service is.
3. Price – How much the cost is.

When I talk with prospective clients, I focus mainly on these key factors. If you’re going to negotiate a fee for service in the real estate field, you’re going to talk about the “commission”. The “commission” or fee for service is split between how much the listing agent is going to receive and how much the selling agent (or the agent who brings a buyer) is going to be paid. There are all types of splits. Many agents will negotiate a 5% commission fee and split it as 3% being their fee and 2% paid to a cooperating brokerage. I never advocate for a split like this. 50/50 is my policy. Why? Not because it’s “honorable”, but because the more I can pay out to another agent, the better.

Whenever everyone else is offering 2%, like most of the listings in West Babylon (and most other towns), and then there’s my listing, paying a respectable 3%. That 3% stands out. It calls out to other agents, “Show me. Make more money.”

When I “take a listing”, I do not do it with the intent on having a nice sign in the front yard. My objective is to sell that listing for as much money as possible. In this market, selling faster means more money in my clients pocket.

I also put a value on my services. Getting back to the point about the 3 key factors that people look at when deciding on what service to purchase, they look at the quantity, quality and the price. So ask yourself this, “Which of these do I want to reduce?” The answer is obviously price. However, with a reduction of the price, or fee for service, comes an inevitable reduction in the quantity and ultimately the quality of the service.

So this leaves only one option for someone like me. I try extremely hard not to reduce my fee for services. While every other agent lays down because of a “down market”, I’m obtaining my full fee for service because I know that I will basically be able to render more service, better quality service because I’ve priced my services correctly. I’ve priced my fee for service to accomodate the demands of my clients.

Lastly, if I, as the professional, allow myself to be negotiated down by a homeowner right from the beginning, where does this leave me down the road when I want to make the most of my client’s opportunity to sell? If I allow my services to be priced at a low point, how can I negotiate effectively down the road when offers come in?

Allow me to explain. In the real estate business, offers come in and sometimes, the “commission” may be reduced in order to make “the deal” work. I do not normally or readily reduce my fees, but if I can make something happen as a last resort in order to help sell my client’s property by lowering my fees during the negotiating process, I will do the best that I can. However, if I take the lowest number up front, where can I go from there? And ask yourself this: If I allow you, the propertyowner, to convince me to take the lowest fee possible, how well do you think I’m going to negotiate for you when offers come in? Will I take the lowest number then? Will I get in the way of you getting more money? Will I try and convince you to take less too?

I value my services and price my services accordingly. Remember, you get what you pay for.

(c) Copyright, 2008 www.tommcgiveron.com

By Tom McGiveron


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