As quoted by GailSusan in the previous thread...
"I think that the public views real estate agents as being at the same level of abilities whether we've been in the business two months or ten years and whether we have six designations after our name or none. That is the real problem."

I agree. So... 'splain to me... why do we advise brand new agents to get out there and charge (let's say) 6% right out of the gate? Aren't my services as a 10 year veteran with lots of designations worth MORE than the brand new rookie who's never had a listing?

I was watching Million Dollar Listing the other day on Bravo where a young punk kid in L.A. went on his FIRST listing appt and was trying to justify his $96,000 fee (half of his 6% listing fee)for a $3.2M home. The sellers wanted to pay only 4% total (so the kid would get 2% or $64,000) and the kid was telling them that he was worth more than that. Huh?????

It's his first listing! NO, he's not worth it yet! I don't care how hard he works or even how much money he spends on advertising, my experience is worth more!

G'ahead... Argue with me!

Actually, I'm not going to argue with you. As a newer agent, I would tend to agree. My services are NOT worth what an experienced agent should get particularly on a multi-million $$ property.

For the most part my listings - the few that I have been able to obtain - have been on coops and small condos. I live in Westchester NY and the cost of living here and doing business here neccesitates a 4.5% commission on such properties IF I offer only 2% to the selling side. Unfortunately that rate is about par for the area. The fact is, that I would lose money on anything less, so I can't charge less. I emphasize that I am "hungry" enough to really work hard to market the property. Marketing costs money. I give them a taste of what it costs to advertise their unit then show them what I actually get to take home - and if they are at all reasonable, they recognize that it really can't be done for less. I emphasize that I am hungry enough not to treat their listing with benign neglect and that for their money, they will get more service than with an agent who has 6 or more listings.

I have saught out larger listings, but have not been successful thus far. There are a few top agents in the area that have a "lock" on these and I have noted that going after lower lying fruit is more productive at this point.

My rationale is that by providing good service to younger clients who are "laddering" up. I will have frequent business and referals which will open up the market for listing larger properties without "harassing" or intruding on the privacy of homeowners by door-knocking.

Because your Doctor is a rookie, do you ask for a discount? I thought having the "credentials/license" should be enough to be qualified to ask for full payment.
The same goes for the Electrician, Roofer or Realtor IMO.
p.s. when talking to a NEW agent at A2S @ $2,995, will you try to list for $2k or less?

I'd say you are worth what you can convince someone you are worth. If that new agent can sell themselves enough to justify a 6% commission, then good for them, they deserve it. If you can't, then you don't...no matter how many designations you have after your name.

I would pose this question...if the newby agent can sell themselves for 6%, how come the agents with 10+ years and multiple designations aren't pushing for 8% or 10%? "a new agent gets 6%...I've been doing this for 10 years and have X for credentials"...at the very LEAST - what did the new agent do that the veteran didn't that got them the listing appointment? I would say don't knock the new guy who got what you didn't...they probably did something you didn't do to get it...

then again..

maybe they just got lucky during some floor time.

but then if you were marketing yourself propertly (to that particular customer) they would have called you directly and not "the office"...right?

that's how i see it, anyway. you are worth what someone is willing to pay you. just like a home is worth on any given day, what someone is willing to pay for it.

With all the competition we find a lot of agents cutting commissions to get business. While there is no industry set fee, 6% used to be common. Now it is easy to find 5% or less commission structure.

What kills me is if I do 5% and split it 50/50, buyer's angets inevitably ask "What's up with 2.5% to the buyers side?" I just smile and say "I figured 2% just wasn't enough".

I figure that if an agent is out negotiated on their commission and can't justify the value of their services, how well will they negotiate the value of the homeowner's house?

Yes Pikes, regardless of your opening float, the consumer will counter with less. And contrary to your opinion of A2S, most agents don't start there. They would not be able to effectively handle the load.

Not to get off-topic, but you are not correct about doctors...they have a rookie period called RESIDENCY. 2-5 years of indentured servitude where the work 24 to 36 hour shifts at a teaching hospital for less than $40k a year. They are the workhorses for many hospitals. Lawyers have clerkships and are associates before becoming partners. Their salaries go up as they gain experience too. Many professions build in lower pay for "rookies".

"Value" is a relative term. Some of you are making the mistake of confusing the ability to "con" someone with negotiating ability. I do not think they are one in the same. Quite honestly, I am worth a great deal more than I was last year when I first started. I will be worth a great deal more NEXT year. I am not out to con someone into thinking I am worth what an agent with 20 years experience is....because I'm not.

I DO know that on lower priced properties(condos and coops) that the major players in my area pretty much just list 'em and forget 'em. They have bigger fish to fry. This is where I offer VALUE and can justify my commissions. I WON'T just list and forget a coop - because I truly want to get it sold! I will do more open houses and offer more services than a seasoned agent to get the job done.

Siberian Winter - you really 'get' what I was trying to say and I appreciate your comments!

Here's a quote from my book ... (which addresses your comment above about the loser agents who forget about their clients):

"If you are a new real estate salesperson, I don’t care how enthusiastic, how smart, how cute, how motivated you are, you are not as qualified to handle the marketing and sale of a home as a good, experienced real estate agent. Now, you might be more qualified than a bad experienced agent, and there are plenty of those. But, be honest, if you were going to hire someone to sell your home (or invest your money, design your logo or walk your dog), would you really prefer someone who has never done it before over an experienced professional?

Every agent goes through a rookie year. Somehow we convince people to give us the listing on their homes, and, in most cases, everything comes out okay. At the end of the year, you can breathe a sign of relief that you’ll never have to be a rookie real estate agent again."

This is silly (sorry but Jennifer you seem to have a hard time with this in reading some of your other posts). While you may be right in reguards to your experience then why should the rookie charge less....why don't you charge MORE. Probably because you think that 6% is enough, while I should not speak for you I will make this assumption. So maybe the rookie thinks it is enough as well. Truth is some 1st year agents in my office (yes RE/MAX has rookies) are worth a hell of a lot more then many 15-20 year vets on attitude and work ethics alone. Many newer agents who are tech savvy implement many new ideas and gadgets that enable them to get more exposure and deliver better customer service then some so called experienced ones. I could go on but you get my point...or not lol. As for the doctor a resident is the same as an apprenticeship, ie. when you are a full fledged doctor you charge what you can get away with or what you wish. Many residents in Canada leave go to the states and make much more money and get bonuses to do so, the market for doctors is better state side. So you get what you ask for, if you don't that means you aren't worth it based on your own presentation or the market says your not. Solution= get better at your presentation or move to another market or lastly learn to live with not thinking life is fair. Sorry Jennifer I really dislike this line of thinking....but I think I would like you personally. Cheers.

One more thing, not sure what life is like in your markets but here some of the most dangerous agents working are the ones with more then 20 years service. Most have no clue when it comes to current legislation and standards, many feel disclosure is what you do when you are about to make it with her, many really believe that the mls will sell the house and the internet is a nescessary evil....I could go on but just because you are still with us does not mean you have much more to offer, it may mean that but, it may mean your a greater liability to the unsuspecting consumer.

Tucker TX said:
What is my opinion of A2S? Please enlighten me.

I think Blanche said it best, without me explaining why I deserved to get paid for the work I did when I was a rookie.
http://www.realtor.org/rmomag.NSF/pages/BEvans200209162?OpenDocument

Sellers may not fully understand that commissions are divided four ways but I am sometimes puzzled when agents criticize the occurrence of a 6% commission or even 5% commission (5.1% being the average according to NAR). Do critics mean to say that the successful sale of a residence cannot possibly be worth 1.5% or 1.25% to the listing agent, even if a newer agent (assuming a 4-way equal split between brokers and agents for easy discussion)?

Are there any particular things someone with 10 years in the business can do that are unequivocally out of the reach of a rookie? A rookie can execute a great marketing plan to get a property sold. A rookie can have connections in certain social circles that veterans envy.

Jennifer, when you were a new agent, did you tell your seller prospects that you were backed by a broker with experience or that you had access to people who had more experience than you so that in effect the seller was getting all the experience they needed?

A rookie agent just can't possibly know as much as a veteran agent. There is NO WAY this can happen with a green newbie. The learning curve is very, very high the first 2-3 years. In NYS a mere 45 hour course and a simple test is all that stands between an individual and a license.

What I find odd is that many agents (on this very forum) will say that a rookie "shouldn't" attempt certain things. Most notably BPO's. Go on that forum and you will see just how much some of them resent anyone remotely new even attempting to do the work. I had a few comments that one shouldn't even ATTEMPT it for 4- 5 years. My take was that if you preview a lot of homes (which I do) and limit yourself to a specific geographic area that you are very familiar with, it is NOT rocket science.

Also, a lot of veteran agents crow about how the 6% people are paying is worth it because of the years and years of experience that they offer. Well....you can't have it BOTH ways. If people are paying for your EXPERINECE and EXPERTISE, then 6% doesn't make sense for someone with NO experience and only a 45 hour class behind them!

My guess is that there is a lot of protectionism going on for high commissions. A lot of veteran agents fear the impact of newer agents offering their services for less in order to gain a toehold in a market. After all, if we don't make, there is more business for you.

Finally, a lot of agents get precious little support from their brokerage. In the more cut-throat offices, all they are interested in is a couple of quick deals with nice fat splits from the rookie's SOI and are really hoping the person will fail in the long run. I was in a miserable situation for over a year. I didn't realize just how bad it was until I finally left.

How much value is there to the seller of a $3.2M home if the home is sold by an experienced agent? If the home were sold by a less experienced agent for the same price, would the value to the seller be less?

I don’t think anyone disputes that veteran agents generally know a lot more about real estate than new agents. However, I reject the notion that a new agent’s earning value should be measured by knowledge and restricted if it is not high enough according to someone’s subjective standard. A new agent's economic value is determined by the number of deals closed in the open marketplace. Real estate is not fair just as life is not fair and if experienced agents are jealous of new agents who land or nearly land $3.2M listings at 6 percent, well that is too bad.

I think a lot of people are forgetting about "reputation". New agents have to build up a reputation that is why the average time for a new agent to sell his/her first home is 6 months.


Don't look at the fact that new agents and pros make the same commission, look at how much each makes a year. The Pro will have a lot more contacts, leads, investments, and be able to handle large amounts of BPOs.

If a new agent has a huge roledex full of contacts, is doing 50 BPOs a week, and is flipping houses all efficiently and with minimal help then I would call him a pro and that he earned his money.

Well, there is quite a polarity here, and that's fine. You aren't going to change my mind and I won't change yours. But here's a related question for y'all...

On a thread from last month, several rookie agents stated that they would do anything for a listing, even if that means overpricing it, just to get their sign in a yard... Well, I challenge the rookie agents who "will do anything" for a listing to go out there and "buy" listings (with the lowest commision, not the highest price). For two reasons... 1st, if you're desperate for business (which is nothing to be ashamed of these days!), YOU take the hit so that the seller can reduce his asking price to a more reasonable one and 2nd... if you're willing to allow your client (someone you have a fiduciary duty to) to overprice his home, you AREN'T worth a full commission. Being able to properly price a home and to communicate WHY proper pricing is important is a critical skill of a professional, competent real estate agent. If you aren't able or willing to do that, you aren't worth a full commission.

As I said earlier, a really great new agent is worth more than a really bad experienced agent. But in my first year, I did some stupid things that cost my sellers money, even if they never knew about it. You did too. As I gained experience, my sellers benefited from that experience. I was able to save deals that would have fallen in less competent hands. I was able to head off problems that I wouldn't have even known existed as a rookie.

Blah blah blah. It's a rainy Monday...

I think the idea of "buying" a listing is a horrible idea. Simply put, if you plan on going with lower prices, you need volume. As a new agent, you will not get volume. You'll sink under your expenses.

Plus, and this is a big one, years down the road when your "bought" listings come back (let's hope!) or send referrals, they will automatically expect your discounted fees, even if you've moved on.

New agents need to work on their skills and abilities and not on their commission fees. New agents need to learn how to handle this objection with conviction and not like a deer in the headlights.

The only problem with higher education standards(4yr as was suggested), less commission for new agents, and more boundaries is the fact that there would be no more new agents coming into the field. This would accelerate the death of the realtor and the birth of the FSBO internet future.

Think about it...... who would go to school for 4 years for a job with a 10% success rate? Who would be able to afford paying off their schooling while trying to support themselves when the first sell doesn't come for 6 months? When a student goes to school these are the most important questions hes going to ask. If I go to school for 4 years and then worked as a realtor for 2 years and Im not part of that 10% then Ive just wasted 6 years of my life.

I think there are many things involved that determine whether or not a "rookie" should be paid full commission. I spent 6 months in a very small brokerage following around an agent and learning how to research information at town hall (we weren't even on MLS and didn't have a lot of on line resources) and having the forms explained to me. When I went to a larger agency I had a broker who accompanied me on my first listing presentation and pretty much DID the presentation for me. The homeowner was a friend of a friend and knew this was my first listing. In fact he was dissapointed he wasn't also my first SALE. My first sale was a lucky "up" that the 3 agents who were in my office encouraged me to take. Although I didn't have all the knowledge I have now (and I still have plenty to learn), I am quick to learn, I observe well, I am an intelligent person, and I give people the appearance that I know what I am doing. I am a good negotiator by nature and I think I am worth my commission. Maybe because when I knew LESS than I do now, I wasn't afraid to ask for help, and I'm still not afraid to ask for help.

An agent who is in the business longer has a bigger sphere of influence and more referrals. Someone who knows more people is worth more? Is that what you are saying? No wonder I've been doing well, I know everyone in town!

Why Pick on the new, many experienced agents buy listings, many don't. It certainly is not exclusive to the newbie. As far as the subjective value of "experienced agents" I stand by my previous posts. Just in case you are wondering I have been at it 7 years and counting Charge the same today as I did in year one and proud of it. Truth is I new more about ethics and standards then, The knowledge of technology has gone up but even then I was more in tune then 90% of my board, and as far as knowledge to complete transactions I would definately say I know more now. If I would have charged less back then I would not even be here now and if by chance I was, I certainly would have trouble getting 5 or 6 as I would have a past client's that would expect less and would have told their sphere that I will do it for less. NOT GOOD.

I think most are missing a critical point.From having multiple businesses in the past you learn a few things.

When you compete on price you LOSE.There will always be someone cheaper coming along and undercutting you.These types of consumers care about one thing price,most could care less about value.

Example when I owned my pizza business you had 2 sets of people the coupon cutters who would see who was the cheapest each week,they wouldn't care that it taste like &*^t they were cheap.
Then you had the loyal customers the ones who if there was a coupon great but if not they still came to your store because the taste was great and the service was good.

Real estate is the same way.I would personally offer more value and give better service than to discount our services.

I am one of the people protecting the commissions and I say we don't get paid enough!Did you know paperwork is increasing by 50 percent worldwide every 3 to 5 years?The contracts we negotiate are getting longer and more complex every year.

Let's be real the people cutting commissions are desperate and just trying to survive in the long run that does not help our industry.People might say that home prices were cheaper back them when the agents made 6 percent.Great I say homeowners weren't making huge gains in equity back then and the contract was a simple 2 page form.Today there is alot more paperwork,internet marketing,advertising,and longer contracts with tons of stips and addendums to negotiate and homeowners are making huge gains ont here homes.

I say do not sell yourself short if you can get 8 your first year go for it.By having systems and items of value that the other listers DO NOT bring to the table they will see you as more valueble.

I respect everyones opinion on here but do not agree with everyone.

It all comes down to philosophies and that is why one mentor will work for you and others won't especially if you do not believe in there way of doing business.

Wal-Mart disproves that theory in a big way.

I believe you have to be either the best or the cheapest to excel. Being in the middle is how businesses flounder.

As for what I do to justify my "high" commissions, well, I don't really have to do anything. I simply earn them. If someone doesn't want to pay what I want then I walk. If and when commissions drop to a level where this business is no longer attractive to me, then I'll move on.

And veteran agents DON'T "BUY" listings? PLEASE!!!! One thing I won't do is lie to people. That means I won't OVERPRICE a listing just to get one...Do you know how many "veteran agents" I see doing that??? Tons. Some are top producers! They are LYING throuh their teeth to their clients in order to snag that listing. In some of the more expensive homes in Scarsdale I've seen listings that are almost $1million overpriced.

Newbies have a very low success rate - as has been said over and over again. The serious ones will do what they MUST to stay in the game. I will do what I must without lying to my prospects. If that means a reduced commission, so be it.

I calculate the % fee based on the price of the home and the amount of work it will take to sell it. If its a house, I can usually make a reasonable profit at lower cost to the homeowner. Now, I am talking about properties that are over $700k. I am not the only one doing this. Many long-time agents would rather make $7000 at 4% rather than "lose it" going for the $8750 at 5% (assuming a 50/50 split). 6% is unheard of around here unless it is a small coop.

The logic that fewer agents would accelerate the death or real estate makes little sense to me. It might lower some of the intense competition for business and make it more profitable to be an agent. It would raise competency certainly and make good the claim that when you are dealing with a licensed agent that you are dealing with a professional and not someone who wants to do a little "something on the side".

By lowering the competition, the success rate might increase. Of course, the fallout would take time and no one can be certain of the result.

However, 4 years is a bit much. Real Estate, though complex is NOT rocket science. Although there is a high learning curve your first couple of years - much of this is necessary "on the job" training. Most people graduating from 4-year colleges require similar on-the-job training and find that much of what they learned in school is not useful. I have a Ph.D. and I value education as much as anyone. But a lot of my undergraduate training did little to prepare me for the day-to-day work in a laboratory. That training was on-the-job.

As to "low success rates" determining whether one would go into a given program...well, that's happening now in dozends of fields. People flood into "hot" and popular fields like locusts all the time. You need look no further than law school and MBA enrollments to see that. There will eventually be enough of a glut so that many will lose all the money they spent on their educations. In my field, the success rate used to be very high with good salaries in biotech. Now that all of that is being "outsourced" the success rate is nothing short of pitiful. 10% is actually GOOD by comparison.

Plus, just because one is new to real estate doesn't mean one is new to sales, negotiating or any of the other areas that real estate sales involves.

Exactly. Three newer agents (2nd or 3rd career?)in my office, one is coming from a title company, another is an appraiser a third was the mall manager. There is no reason in this world that they should take a pay cut because they are new agents. Each also has a mentor to assist if help is needed.

Wal-Mart disproves that theory in a big way.

I have to disagree with you on that one.

What built Wal-Mart into the super power was not prices.It was a man by the name of Sam Walton.He valued his employees and the people around him and was just a regular guy,how do I know this as a teenager I worked for wal-mart and the way it is ran today is horrible.

I know many people(employees) that became rich with wal-marts growth with stock splitting every 2 to 3 months.Today the company is worthless and the stock has not split in years.They have been regulated by the stockholders to manage and revamp the stores they have now instead of keeping adding them because the sales just aren't there.

Home depot was the same way employees cared about the company because they became rich off of the stock.Today go around and ask the employees what they really think of wal-mart or home depot and you would be shocked.

There can be only one that's the cheapest and that's wal-mart's claim to fame.It's now all about pricing because the service is no longer there at wal-mart.

I have personally seen some really dispicable things happen at wal-mart.A store manager that was retiring in 2 years was written up on made up stuff so they could demote him and then he either had to quit or become a department manager.There were and still are many cases of people working off of the clock that are pushed by the assistant managers to meet the numbers.

I do agree with you that if commission went way down I would just do only investing,I will not work for peanuts.

I think if Sam looked at wal-mart today he would roll over in his grave.

Walmart is a bad example. It is actually looking pretty threadbare these days. After all of the hype about locking people in the building over night etc. I cancelled my Sams Club membership and joined Costco. It costs a bit more (actually most of the products are more upscale) but the employees are actually paid a decent wage, get benefits - and KNOW what they are doing! Much more pleasant. I know plenty of people who will pay more to shop at Target. Interesting observation: There is a Walmart and Target across the street from each other in my city. The Walmart is not doing well. Target is always packed!

People WILL pay for service - and service is value. There is one big discount brokerage that has flooded the area (name begins with an "F"). Did they push down commissions across the board - YES! But were they successful? NO! The number of expired listings and frustrated sellers is legion around here. Word is getting out NOT to use this company to list.

Everyone,, including us agents, all we do all day long is try to reason out why we are worth what we are.. and we are our own worst enemies.. I am worth my fee and I don't compromise.. If you don't like it, there are other agents out there..

I skimmed through this topic but I didn't see a very important issue that should have been brought up. Being in real estate is a BUSINESS. Each agent is a business owner and even more importantly they are in a SALES business, not an "experience" based business.

I'll use myself as a personal example:

I work for a 100% company and I pay $799/year for E&O and MLS, $299 per transaction and a percentage fee to one of our other MLSs. Basically I average $500 to my broker per transaction. The rest goes into my pocket.

Knowing this, I have set up a BUSINESS model. In order to make the income (profit) I desire, I have to set a price for my product/services, and I have to be able to sell that product to a certain number of people. In my case I work for 3% per side, and for listings I recommend a minimum 3% co-op as a competitive "marketing" fee. If a seller is willing to offer 4% as a co-op they also get my "Sold in 120 Days or I work for FREE!" guarantee, and I'll pay for a 1 year home warranty, deluxe yard sign, the works. I package these on negotiable terms, give the sellers options, and sell MY product/services.

My job as a salesperson for my business is to explain, validate, and SELL the value, price, and terms of my unique offer. Period. Competing with other agents is like competing with other businesses. If price were the only factor in choosing a realtor, "discount" brokers would be the norm, not the "threat."

If only every agent were to shape their career around a sound business model. There wouldn't be nearly as much pointless talk/worry/time wasted about what everyone else is selling their product for and everyone would be competing to be a BETTER business. The competence, professionalism, and perception of our industry would be greatly improved.

So yeah, that's where I stand.

Well stated.

Excellent point!
Every agent should charge what they think they are worth.
To try to say how much a rookie vs. an experienced is worth is like trying to tell a discount rookie agent they have to charge half because they are new to RE.
Most rookies start at less of a split already, making their broker more money, now they should charge less on top of that? That's a double whammy.

It may be a double whammy, but it also may be the only way to get business. If you aren't makinga penny, you can't "hold out" for a high commission and stay alive. Fact is in my area if you tried to get 3% on one side of a deal you would find yourself with NO business - ZERO - ZIPPO. The only time 3% will work is on a coop that will have a tough time selling for reasons that are beyond the control of the seller - like school district.

Fact is that market forces outside the realm of the agent also determine what you can charge. An extreme glut of agents (which we have in my area) will create downward pressure on commissions for even the most experienced an productive of agents.

Pretty much.

I learned the expensive way that 5% of something is better than 6% of nothing.

OTOH, the seller learned that he got what he paid for with his discount agent (not me), though. He lost about $60K on the sale. (schadenfreude)

Our industry works on the principles of supply and demand just like any other. We are also in a very competitive but traditional sales based business. You can't expect people to just lay over and agree to do business with you at a high price. Like any other luxury sales business, if you want to be truly successful you must have decent professional sales skills.

Why do people buy Mercedes, BMW, Lexus cars when they can go get a Kia for WAAAY less? About 20% of people make their primary decisions based on price. Price alone does not sell, and if you build your business model on price cutting, you will attract the 20% of business that is the most difficult to work with and miss out on the other 80% who look for solutions to their problems before they make their final price judgement.

This is basic business sense. Unfortunately, many agents think that real estate sales somehow works on some other plain of business. It doesn't. The product you sell is a marketing/negotiation service (not the house itself). It's just like construction supplies, appliances, TVs, furniture, cars, machinery, boats, computers, blah blah, except that you can't "see" it.

Regardless, the sales skills and buyer psychology are the same as any other industry.

Example:
I moved to a brand new market and brokerage in December where I didn't know ANYBODY. Within a week I picked up my first listing (a tract of land) for more than 10% commission, and guaranteed my first buyer client that I'd be able to get him more than $5,000 in builder concessions on a $134K new home (pre-built). He went to closing with the builder paying $3K in closing, a $1,000 refrigerator allowance, and $2,000 worth of miscellaneous requests, not to mention my client paid LESS than list price while every other home that closed in the Dec. and Nov. (about 10 homes) received MORE than list price.

It isn't luck, and nobody is going to roll over to pay 7% commission. It's LEARNED sales skills that allow you to politely, firmly, and confidently convey your offer in a way that makes it the most appealing option to relieve the client's "pain" (in this case selling their home).

Sales/Negotiation skills AND experience are what pay in this industry, not experience alone. Study people like Hopkins, Ziglar, Gitomer, etc. and implement their ideas into your daily life until they are "yours." Practice and use those skills and you WILL be able to command your own price on your own terms. It's not rocket science, just smart business practice.

That's not the point.
Regardless of type of business model the agent choses to work under, why should a rookie agent work for less than a seasoned agent? It doesn't make sense.
And in my area, if you don't offer 3% co-op, it will most likely expire. Some builders are offering 7% today (i.e.Pulte).

That's so funny. Same in my town. The funny thing is, when the Target opened, IT was empty for about a year. Then all of a sudden the Target took off!

You probably haven't been heavily hit by the discounters. If Foxtons comes to town - watch your wallet! They came in in droves - drive around in little VW's that are wrapped with the "Full Service! - 3% Commission" all over the place. The kicker is they "claim" to offer the selling side a "full commission"! Yeah right! They offer 1%! That's right, measly 1%! They don't sell of course. Agents just won't show them. But nevertheless, their presence changed people's mind-set and commissions across the board took nosedive. You simply can't convince anyone to do something for 6% anymore. Not even the top producers.

So yes, you can promote your "brand" to your heart's content. But the analogy of driving around in a BMW vs. a KIA isn't very compelling. At the end of the day, you can't drive around in a fancy new ride if you gave your agent an extra 1%. Sellers figure the house will get sold no matter what they pay. The wealthier clients think of it this way.."If I can squeeze my agent hard enough - I can get full service for less and BUY that BMW with the savings."

I think the people who are arguing that you can set your own price are not dealing with areas that have a serious agent glut and heavy discounter activity. If you were, you'd sing another song.

As for new comers taking listings for less. I've done WHEN I CAN. I determine whether I can or can't. For example, if the sellers are determined to overprice the listing, I insist on a higher rate. Sometimes, by offering a lower rate IF they reduce gets me a faster sale. The money is a "wash" for the seller. If its a coop or small condo, I can't lower my commission and make money - so in that case, I have to stick to my guns. I won't take a listing at a loss.

That is presumptuous, considering mine is the state that is the home base of HuS.
One of the strongest agencies here is A2S. We have it all from A-la-Carte to “Buy from me Sell for Free”.
If you think you are the only one with competition, think again.

Discounters or not (I'm in Atlanta, we have our share), sales is sales. In every industry the buyer will try to spend as little as possible. I come from a sales background, and it's plain to see that the price cutting issue is the same in all sales businesses including real estate. The discounters will have their market share, and that's fine.

It is the agent's JOB as a salesperson to validate their company's fee. It is not the job of the consumer to just accept higher fees because that's what all the agents WANT to charge. Besides, if discounters aren't selling homes, that is a GOOD THING for people who charge more for true customer representation. Bad word of mouth spreads fast, and a good agent will build a faithful clientele that are loyal to the agent.

My personal opinion is that an agent who makes their commission the focal point of their ability to list and sell homes, either A)has little or no formal sales training, B)don't believe in their own value, or C)believe that all agents and all agent services are equal, or D)have no idea how to differentiate themselves from the competition.

Ultimately, discount services are a disservice to the client and the industry. Surviving the discount phenomenon can be overcome with simple objection handling techniques and confidence. You won't win EVERY time, but you will still obtain adequate business.

Besides, just think how much all the other agents will love you if you can offer better co-ops than everyone else.

Fact is, we AREN'T all that different. Full service agents offer pretty much the same deal no matter what brokerage they are with or what they do. We offer a service. Period. The rest is differences between individual personalities. Fact is, you list it on the MLS, price it right and offer a decent commission to the selling side, it will SELL. The rest is all fluff. The only person you are kidding when you indicate that you have ooooohhhh soooooo much more to offer than anyone else is yourself. I'm too honest to play games with people. If I can sell it and make a decent profit - but can do it for less - so be it. But I won't LIE to people indicating that I can get that much more than the next person. The market pretty much sets the selling price. I do offer full service and I do work hard for it. But much of what we do is merely to mollify the client. Alot of it is just for "show".

THere is an underlying fact here that everyone is dancing around. THere ISN'T that much difference between agents. That's why the competition and price pressures are such a large issue to begin with.

If agents were all the same, we'd all have an equal market share. There is an unlimited supply of ways to become a better, more effective agent for your clients. Frankly, if you don't believe that you have a competitive advantage, then you probably shouldn't charge a higher rate.

However, for those with an open mind, here's a brief list of simple/effective things that agents can do to differentiate themselves from their competitors:

1) Use only EXCEPTIONAL pictures in MLS listings. Most agents have VERY poor pictures.

2) Study how language in your MLS remarks affects buyer psychology. Buyers see and form impressions about a property beginning when they see it online.

3) Study and implement sales skills that will help you persuade other agents to work harder to convince THEIR clients that your offer (or counter) is fair.

4) Build/Advertise your business to attract other agents to WANT to sell YOUR properties. A great way to do this is to CONSISTENTLY offer a higher co-op than others.

5) Study buying psychology so that you can help sellers learn the priorty of how to prepare their home for showings.

6) Use buyer psychology to help you lead your own buyers to a favorable decision.

7) Use only those services that will ACTUALLY help the seller get buyers INTO the home. For example, in my area, less than 1% of homes are bought through an Open House. I can find just as many prospects in an hour as I can through an open house and avoid dissappointing my sellers when no one buys the house that day.

8) Exude positive attitude. It's infectious, and it will increase the chances that others will want to do business with you.

9) Quit focusing on how much the seller has to pay for services. Make the focus on WHAT you WILL do to help them solve their problems. If you minimize the commission issue to just a cost of doing business, it will help them to accept your fee.

10) Quit giving in to ever seller demand. If you give once, they'll ask for concessions again and again. If you stand up for yourself, your business, and your worth, you will command more respect. More respect/trust = bigger paychecks and better referrals.

11) Study how you react to other salespeople. What do they do to cause you to put up a "wall?" What do good salespeople do to make you want to buy? Eliminate the bad ideas. Implement the good ones.

12) Study personality types to help you learn how to work with others in the most productive way. For example, if you're receiving an offer from a dominant personality agent, understand how to treat them in order to get them on good terms with you and less likely to negotiate hard.

13) Make long-term positive contacts so that you can call all kinds of people that might know someone that wants your newest listing.

14) Network with movers and shakers in your community.

15) ALWAYS be pleasant.

16) Focus on generating listings. It helps you find more buyers for your sellers.

17) Track your advertising results so that you can maximize your dollars for generating buyers for your sellers.

18) BELIEVE that you have an advantage. Your sellers will have more confidence in you thus improving their overall experience.

19) Study the art of sales questions. How you ask for information and business affects how prospects FEEL about you. Make their experience pleasant by being pleasant and professional.

20) Don't judge prospects over trivial matters.

21) Don't "educate" your prospects. They don't want to be told what to do/say. What they want are solutions to their problems. Just show them how to solve them and they'll often go right along with it.

22. Don't be rude.

23. Network with other agents. Encourage them to look at and show your listings.

24. Offer to guarantee your work. Nothing outrageous, just something to build confidence.

25. Do what you say you'll do exactly when you said you'd do it.

26. Underpromise your services, then overdeliver.

27. Never stop learning.

28. Believe that if a prospect chooses to work with someone else, they missed the opportunity to work with the best agent in the area, you!

29. Communicate with your clients on a WEEKLY basis and keep them constatly informed. Many agents lose their listings due to poor and inconsistent communication

30. Surround yourself with friends and business people that want to help you succeed. You will become more confident, successful, and it will affect the experience you provide your clients.

31. Always look for ways to add "the little extras" to the services you offer. Most agents think "we're all the same" when in fact you do have the ability to differentiate yourself and offer something better to your clients.

The list is endless. If all you do is put listings in the MLS and write contracts, you have nothing of value to offer and shouldn't receive a higher commission. There are too many agents that are willing to do all of the LITTLE things that add up to one huge competitive advantage. The product that you sell is a service, but when it comes down to it, you're selling the entire experience. There's a sales saying that goes, "Sell the sizzle, not the steak!" It's true in real estate as well. Sell the whole solution, not just the MLS listing and paperwork.

People BUY based on their emotions (either to remove pain or to receive pleasure). Price is a logic based topic. If you can sell your services based on the clients emotion, they will find a way to logically validate your fee on their own with statements like, "Well, Ya get what you pay for."

The bottom line is that sellers will buy (your listing services) from you because you can help remove their pain (sell the house) so that they can receive pleasure (get into the new house). Price is secondary to effective solutions. That's is a sales 101 fact.

Become a better salesperson and you will be able to offer a better experience to your clients and THAT is the most competitive advantage you can have.

What you are describing is a competent agent....there is nothing inherently "special" about them.

As to "selling". I refuse to con people. The fact is that there IS NO "sizzle" in our market. Most buyers are so bitterly disappointed at how little they can get for their hard earned money that they are simply disgusted. Everything is such a huge compromise that I have to "sell" the idea that renting is a waste of money. Sometimes it works, sometimes they sulk and continue to pay rent. I try to sell these people the "dream" that several purchases down the road is the house they want so badly. It will take them two to four moves and a good deal of amortization to get there - but if they want it, they will have to "ladder their way" in.

Well, the Atlanta market is great. Decent prices, low taxes, great homes, plenty of incompetent agents, and lots of sizzle to work with.

Well it's the same on Long Island! You have to teach them that you move up to your dream house, not buy it as your first home when you're 24. A lot of my listing presentations are to people with 2 or 3 kids in their early 30s, late 20s, they bought into a cheaply built plastic "victorian" in a cookie cutter community, have 2 new cars, a plasma TV, pool, etc etc and want to sell the home they bought 4 years ago for 329,000 for 700,000 because they owe so much and it will cost them that much to pay off their debt and buy in NC free and clear. Even when you point out that the identical house next door sold for 519,000 3 months ago they don't want to hear it...

As for us being all the same, I disagree with that. That is what you have to sell--yourself. You have to show them why they should hire YOU.

Around here its the cheap cookie cutter colonial! Same idea though! Although we haven't had big price drops here. Unless they got in in 2005 or they had a terrible mortgage with negative amortization - they don't generally owe more than they can extract.

The problem is that a lot of people hoping to "buy into the downturn" were waiting on the sidelines for the "big bargains" that they thought were just around the corner. They thought they were being clever by renting. That hasn't materialized. I have to convince them that there are no "big bargains" coming in the near future and that they should buy what they can afford and build some equity. These guys were betting on the market going down about 50% - and as I said before, they were bitterly disappointed.

Prices have come down here. Some were betting on the market coming down 50%, you're right, but the best thing that happened is that a bunch of people did jump in at the end of the year and it was actually a pleasure to be able to tell some customers "sorry, that house you've been looking at for the past 3 months is in contract. No, that one is, too!" Some buyers were motivated by the fact that they were losing out.

I saw one of those - cracked me up! The MLS said "Seller is motivated!!" hahaha!

The listing expired, 'natch.

I couldn't sell it even if I wanted to - my broker would have taken all the commission and I don't work for free.

So you are saying that you would refuse to show that house to your client if they had desired to see it or it had perfectly suited your buyers criteria?

Sounds like an ethics violation in the working! Would you have told that client "sorry but they are not offering enough of a co-op fee so I won't show you that property."

The 1% co-op is just another reason for using an EBA. With an EBA that states what you will be paid you are free to show lower co-op's, FSBO's or any house that best fits what your clients are looking for in a home. The EBA allows you to negotiate for a higher co-op fee or for your buyers to include the higher percentage to be paid by the seller in the offer.

^^ Paul, you are dead to me.

EBA commissions do not necessarilly provide any assistance increasing co-op splits.

True, however, you can be assured to get paid for what the buyer agreed to, no more, no less.

I show my clients anything they want to see, and don't even look at the BAC, because I've got all of my buyers on a Buyer Broker Agreement. I'm making 3% whether the BAC is 2.5% or $100 flat (I've seen that here), and I don't have to worry about losing them to someone else, either.

Pardon my (temporary) ignorance, but we don't really "do" buyer's agency yet where I am, although it is started to come into use. If the co broke is 1%, your buyer is going to kick in the other 2% above the selling price of the house to you?

Either the buyer will pay the difference of more common they will include in their offer that seller is to pay the difference in the fee.

Thanks Paul, I'm taking a buyer agency class next month, I guess I'll learn all I never wanted to know about buyer agency.

Paceryder - we do EBA's (exclusive buyer agency) agreements here in MA all the time. Although the clause is in the contract that the buyer pays X commission, usually $0 is entered in that clause.(at least in my area)

So it probably differs from state to state (or even region to region). I've found it amazing how different the details are handled - even within the same state.

The form we use in Westchester is similar to what is described by Concepts05. There are two spaces where the buyer either agrees that you, as their buyers agent are supposed to get a to a set commission. One space provides for a specific dollar amount, the other provides for % of sale.

You determine the parameters of the exclusivity. For example, I generally include most of Westchester County and exclude some inaccessible areas of upper Westchester unless it is for a large property.

For a new client, I often have them sign the EBA just for the properties I show him/her. I put the addresses right on the form. This gets things going without forcing them to commit to me for the entire deal. It also attaches a few strings. Other agents are less eager to snatch up someone if they know that there is a binding contract for specific properties should the client choose them. Since the glut of agents is huge around here, most agents really don't care if a client is already working with someone! They'll go after them no matter what. But why show someone around who is already obliged to buy through another agent should they decide to purchase any one of several properties? Might just be a big time waster. So its a good way of starting to tether a client to you early in the process.

Concepts05,
Just curious who told you to put $0 in the commission blank? What reason did they give for doing that? Seems strange not to use the full protection that the EBA offers.

Paul,

No one told me to - its my own preference (I am the broker). I use the protection of the EBA so that the buyer is "mine" so to speak for a specific amount of time (3 months usually)for any and all properties (even Open houses) they make an offer on.... but am not charging them for that service.

I may be wrong but I think it would be difficult in this strong buyer's market to get a buyer to agree to pay a Buyer's agent a commission out of their own pocket. It sure would be nice but it would be a hard sell here in MA.

Many agents here don't even have their buyers sign an EBA at all, so they are leaving it up to the buyer to be loyal to them.

Why would it be a hard sell? The buyer can include the x% into their offer if the co-op does not cover your fee. It is the only way that the offer can be used to address a low co-op fee without violating the COE. Yes it could obligate them to pay the difference should the seller refuse to pay but that would be the exception and not the rule. Have you ever tried to include say a 3% buyers commission? Try telling the client that if the co-op fee covers the percentage nothing would be coming out of their pocket but for example if the co-op was 2% they would include in their offer that the seller agrees to pay an additional 1% to the buyers agent. The same would be said for a FSBO their offer would include a clause stating that the seller agrees to pay 3% commission to the buyer agent.

I am anxious to have the opportunity to act as a buyer's agent. Right now when I explain the disclosure I feel as if I'm telling them that I work for the seller, but they can have their own representative but they can't really have their own representative because we don't do buyer's agency! What kind of response do you get when the buyer finds out that if the selling agent is offering 2%, they will have to either supply the other 1% or add that into their offer. Isn't this just expecting the buyer to act kind of in cahoots with you to get another % out of the transaction? And don't buyers react the same as sellers when you explain commission? I imagine a buyer is going to think I'm going to make quite enough on this transaction, thank you very much, without having pay me MORE. Not trying to insult or start an argument, just trying to figure out what I am in for once i begin doing this.

Paceryder,
Once I started using an EBA I never looked back. I have had several buyers over the years say No I will not sign that and I simply look at them and say " In that case I would be happy to refer you to another agent because I will not be working with you because I require all my clients to be under contract." I also ask them if they go to work every day with no guarantee of being paid?

I state right up front that I charge 3.5% as a buyers agent. There are several options regarding payment.
1. The buyers can pay the Buyers Agent fee at closing themselves.
2. If the co-op fee offered by the listing agent covers my fee I can accept that as total compensation.
3. If the co-op fee is not enough to cover my compensation they can include in their offer to purchase that the seller shall pay the difference between what is being offered by the listing agent and what our EBA states.

You need to get very good and comfortable in explaining your compensation. I explain to the buyer or seller that I am a business and have all the expenses that any other business has in addition to the expenses the non-business owning person has. I have a spreadsheet I put together that lists all of my business expense categories and sub-categories. The majority of my clients in the later years were investors that were well aware of the expenses to operate a business. The average person fails to realize that a Real Estate Agent is actually a business and as a rule agents do a pathetic job of education the public to this simple fact.

I look at the EBA as tool to qualify buyers!

Paul, if you can get your clients to sign an EBA with a commission, then more power to you. I've read your posts so I know that you're honest (& sometimes blunt!). I'm not doubting that you're able to do this.

I'm guessing you are very well established and perhaps considered a "heavy hitter" in your area.. Do you buy and sell just commercial? - or are you able to get even your residential clients to sign an EBA with commission clause?

I work with many first time buyers and they are scared to death of signing the EBA anyway...let alone one that could potentially have them paying my commission out of their pocket.

My guess would be that in this area only the agents that are specifically marketed as "buyers agents" are charging commissions to buyers. I would love to hear from someone in New England that this is working for.

Don't get me wrong, it's a great idea if it works for you. Maybe someday when my phone is ringing off the hook, and I can pick and choose my clients, I'll give it a shot.

Concepts,

If you treat each step of the buying (or selling) process as a mini sale, and create effective scripts for each phase (and the likely objections) you can get buyers to sign up.

The benefit is that you stop working with "lookie-lou" buyers. You'll spend your APPOINTMENT time with quality prospects, and you'll free up your other time to prospect for more good clients. Don't wait for business to find you, go find it yourself.

In the long run, it will save you both money and stress, help keep your business consistent, and you'll likely have a more enjoyable career.

Many agents "work with anybody," and that's just not an effective business plan.

Here's an example of how I sign up first time buyers. First, it's important to understand that first-timers are going to be scared no matter what, but when you take the time to go over the purchase agreement, the legal obligations that they'll encur, and how hiring you (in writing) means that you become legally responsible for representing their best interest AND your services will likely be paid by the seller, suddenly not having an agent is scarier than having one, and you're right there to take the order.

Your clients will respect you and trust you more when you're thorough, professional, and are willing to show "this is how I do business, and I'm not desperate for yours."

It's all in the approach. Remember, people make decisions based on moving toward pleasure or moving away from pain. If you can remove pain (fear, etc.), you'll be in control, and they'll be happy to sign up with you with the commission.

Note: In Georgia, our EBA clearly states that the buyer's agent will be paid by a co-op, or will seek a one-party listing, or other compensation from the seller, BEFORE the Buyer would be required to pay.

Here we go again.

Note the LOCATIONS of the agents who are able to insist on an EBA before they do anything? Note the LOCATIONS of the agents who feel they CAN'T insist on an EBA. Now use some deductive reasoning and STOP beating up on those who feel they can't insist on protecting themselves! It's been said over and over again that real estate is a "local business". This is a tale of TWO DIFFERENT MARKETS. News flash! If any of you moved to NY, MA, or CA - you would find that you wouldn't be able to sell anything. People would walk in, listen to you, and walk right out the door because you were too "greedy" too "pushy" and wanted a committment when the top agent down the street doesn't even insist on one.

The coastal markets are far more competative. I don't care WHAT you say about how tough it is in IL, or CO or GA it's worse in NY, FL, MA and CA. The markets that coastal people are in is far more brutal and none of us can afford to give ANY customer their walking papers. I use the EBA to tether people to me because if I don't, they tend to go out with any one or anything. However, I find it almost impossible to get a full committment from anyone early in the process. I use the EBA to ensure that if they purchase the home I showed them, I get paid. After several showings, I go for a full committment. It also makes it harder for other agents to work with them because they DID "sign something".

Even top agents in my area won't try to get a full and binding EBA locked down with a specific commission right off the bat. Why? Because too many commissions would walk out the door.

We can help each other if we understand that each market is unique - and the agent's actions are a function of that particular market.

I agree with you SW and I'm impressed with Paul's ability to get buyers to sign an EBA with those terms, but I don't think it will work as well where I am. I am glad that it will be another tool in my arsenal, though.

SiberianWinter is right - it's easy to be a big fish in a small pond.

A dirty little secret I learned about our local Top Producers is that even though they'll list at 5 or 6%, they're rebating to their sellers like mad on the backside.

Interesting. In my area they don't even pretend any more. We have a new MLS that shows the full commission (optional I guess - haven't put a new listing in yet). Anyway, an agent who is a household name in our area just put in a new listing...at a rate that would be considered "discount" to almost anyone who wasn't local. Let's just say its only 1% higher than our biggest discounter and that was just to give the selling side more than the pathetic 1% they give. Yes, this 25 year veteran is getting the same amount from the listing side that the primary discounter in our area gets - for full service. This agent has sales awards coming out of her ears and is so well known that when people think "real estate" they say her name.

Why is she doing it? Welcome to the coastal market. You are either flexible about your commissions and EBAs or you go without. This agent is smart. She recognizes that its better to be in the game and make some money, even if it isn't what she used to be able to get.

Before I moved to Atlanta, I STARTED real estate in a market where there were only 1,200 transactions per year (yes 1,200 closed transactions a YEAR) split among over 400 agents. (Average sales price was about $70K) My FIRST two months as an agent, I took 3 listings and two closed transactions at full commission on MY terms. I don't need to be lectured on competitive markets, and I know what works even in a highly competitive area.

Has anybody here put a definition on what it is to be a "Top Producer?" I'd be willing to bet that many of the top producers in any "competitive" markets have zilch bottom line profit BECAUSE they constantly give themselves away or blow it on billboards, while the guy in the background that knows his clients emotional buttons, has few advertisements, knows the art of SALES, closes fewer transactions at a higher rate, has a more sound business plan, probably has profit out the ears and money to burn.

The name of the game is not market share, billboard recognition, and closed transactions, it's PROFIT, just like any other business. And once you've been known to give yourself away, everyone will do business with you, but you'll lose all your money in the long run.

Sales is sales in any business, anywhere. Perfect your sales skills, and close BETTER deals, not just more deals.

How many agents, including everyone here, do y'all think have a detailed business plan for their personal real estate business? Mission statement, specific product offering, know the cost of each transaction you make, the number of raw contacts you need to meet your goals, exit strategy, etc....in WRITING?

Less than 1% around here.

I don't care what your market is, it's usually the BUSINESS that is failing, not the consumers that use your services. The problem of people not wanting to pay for products and services is GLOBAL, not just a real estate issue.

Adopting a true business philosophy is even more important in a tight market than it is in an "easy" market. My market is pretty damn competitive. Atlanta isn't exactly a ho-dunk town. It doesn't have the skyrocketing or plummetting prices, but damn if every homeowner I meet doesn't have 10-12 agent business cards within a week of going FSBO. I flat out ask them how the other agents treat them, how they feel about that treatment, etc. and guess what...they often dislike those agents, and I come across as the nice guy.

80% of people buy PEOPLE before they buy price. You really are doing everyone a disservice if you base your business plan on price. It's a philosophy, not a necessity.

Oh and as far as insisting on commitments up front for an EBA, it's not something that you just say, "Here, Sign This." You have to help them discover WHY it's in THEIR best interest, and let them come to the favorable decision on their own. It takes time, gentle persuasion, and encouragement not blood-thirsty, greedy, slimy, dishonest, fast talking "salesmanship."

Fivostang - ever hear the phrase "big fish in a small pond"? To be in the top 10% you have to be better than 1260 other agents. Not easy, but more doable than the over 7000 agents that I would have to best to get to the same place. BTW, statistically, you had more opportunities with 1400 transactions spread among 400 agents than we did around here last year. We were so saturated with agents that all things being equal, the average agent would be involved in 3.5 deals a year. Assuming there are two sides to each transaction! Otherwise, it was less than 2. By your stats the opportunity level translates into 7 deals a year.

80% of people buy people before price??? Sorry, not around here. Not happening. That phrase tells me that you are totally ignorant as to competitiveness of our local market. They will buy “people” BUT only at the “right price”. If the price isn’t right, there are enough heavy hitters around to pick and choose. A name will only take you so far in this kind of market and the top producers who are SMART recognize the reality and have lowered their commissions. NY is a very hard hitting place with extremely savvy consumers. It, along with the other coastal areas is world unto itself. When agents whose names DEFINE real estate find themselves taking what amounts to a discounted listing - you are dealing with an entirely different market unlike anything you have experienced.

Siberian,

1200 / 400 = 3 deals a year average.

I now work in an area where I compete with 7,000 plus agents in my county, and there are about 12-15,000 transactions a year.

Now don't misunderstand me. I'm not saying that your market will BEAR 6 or 7%. I understand supply and demand. Even still, in basic business/sales in ANY market, in ANY business, if you are making PRICE your primary basis for attracting business, you are making a fundamental business flaw. In the long run, price cutters only hurt themselves. That's why profit is king, not market share.

There's a big difference between making a choice and being forced to make it. All things being equal, if agent A is cheaper than Agent B, the seller's preference is obvious. If Agent B wants to put money in their bank account, they're going to do what they have to do - compete.

Here in Colorado Springs we have a group called the "Elite 25". The agents who are invited to join the group are the ones who closed the most deals on high-end homes ($500K and up I think...). I've noticed at least a couple of people in the group that discount heavily. They don't advertise that they discount, but I know first-hand from 3 sellers that at least one of the agents listed each of their homes for 4%. And I know another who listed one for free because the proeprty was very high profile and in a great location with lots of drive by traffic to see the agent's giant banner. It got me thinking... it might be worth it to discount for a while if it could get you into a position where you could say you had the highest sales volume in your city... as long as that reputation of discounting didn't follow you. Maybe you could have the sellers sign a confidentiality agreement???? But it's not like the buyer's agent wouldn't be able to tell what's going on from the settlement statement. Not something I'm seriouly considering- but thought I would jump in on the topic.

It is the salesperson's JOB to create a perceived difference between himself and the competition. THAT IS SALES. The customer (in all sales based businesses) is going to think everything is equal until the SALESPERSON helps them change their mind. The whole point is to MAKE yourself unequal (even if it's just perceived) in YOUR favor, and charge a little be more for it.

That is SALES. Period. Any business. Any market.

I also want to point back to the question in my last post. CLOSED TRANSACTIONS does not always equal top producer. You can close a million transactions but if you spend all your money on advertising and you have no profit, you're just as broke as the next guy.

One of the big names in my area sells 450+ homes a year. Her bilboards are on EVERY CORNER, my family has been receiving her mail for years. Within weeks of moving back to this area, I've talked to homeowner after homeowner that can't STAND her, and will gladly pay more for more friendly and competent service.

Supply and demand dictate this business in every market. Maybe you can't charge 7% where you are, BUT you can still charge a little more than the next guy by working hard, smart, and better. Competition is fierce everywhere regardless of the "average rate" in any area. Perhaps the supply of agents means that YES, you have to charge a little less than another market, but it doesn't mean that you have to be LOWEST in order to get business and it certainly doesn't mean that your prospects aren't affected by the similar sales psychology.

FIND a way to provide more value to your prospects BEFORE they sign up with you, and validate your commission instead of just giving it up because "everyone's doing it."

I was wondering if I was confusing the issue. When I think "transaction" I think one full deal. That is: one closing. Since most people don't sell their own listings that meant (to me) that each closing provided two opportunites per agent. So in my area (with both sides accounted for) it was 3.5 transactions a year/agent during my first year.

I don't do listings just to generate business. The type of listing someone as new as me gets isn't worth that anyway. I would never generate enough from it to make up the loss in the first place. There is only so far that I am willing to discount. And I can't discount on something like a 1 bR Coop. I could (maybe) understand it on a big house in a premier area. Since those listings are like pure gold. If you get enough traffic through them it might be worth it just to latch onto a lot of buyers (many of whom are from out of town). But it would be a VERY big risk. However, most big time agents DO discount those larger homes. It would be very tough to get a listing in a neighborhood like that without discounting. These sellers have gotten too used to getting them. Agents still make money, but they can't do nearly as well as they would like.

Actually, why would I calculate success as volume? I don't. But I needed a benchmark to go by and the number of raw transactions was all I had to work with. Newbies are given the crumbs anyway. I was lucky enough to close on one house early in the game. I was probably the only one in my former firm that was able to do that in their first year.

Once again, you fail to understand OUR market. These are very savvy sellers. They aren't going to fall for a name or a gimmick. There are enough household names out there willing to discount. You are FORCED to discount no matter WHO YOU ARE OR WHAT VALUE YOU OFFER.

If that's the case, why not work for the 1%, discount, a-la-carte company and make some money without pretending to be full service? If what you say is correct, they'd be swamping you with business.

If you don't think 450+ homes a year isn't a top producer.....how do you define "top producer".

The broker/owners. Most here put 0 in the buyers agent box. Our MLS only requires you specify compensation for one or the other: buyer's agent or selling agent. Doesn't have to be both. What reason do they give? I actually don't remember if we ever got a reason why. I now put in "neg." for negotiable after a very bad experience with an agent who knew nothing about being a buyer's agent. (Not to get into it, but she brought someone to my listing and 3 days later when she gave me an offer informed me "I'm working for the buyer now.")

Not Concept 5, but we also put $0 so I'll answer, for myself.

The broker/owners tell us to. Most here put 0 in the buyers agent box. Our MLS only requires you specify compensation for one or the other: buyer's agent or selling agent. Doesn't have to be both. What reason do they give? I actually don't remember if we ever got a reason why. I now put in "neg." for negotiable after a very bad experience with an agent who knew nothing about being a buyer's agent. (Not to get into it, but she brought someone to my listing and 3 days later when she gave me an offer informed me "I'm working for the buyer now.") [/QB][/QUOTE]

Pace,

I defined my definition of a top producer in a previous post, but I'll repeat it.

The focus of any business is profit. Without it, nothing matters because the business can't operate. Some of the biggest named agents are broke because they spend so much time feeding their ego's with ads that they don't track response rates from.

As far as that one "top producer," I've heard TOO many horror stories about her. She's been sued and reprimanded repeatedly, her ads constantly violate license law, and frankly, I do not envy the miserable position she's in. She's bad mouthed repeatedly. Agents complain about her "ethics" constantly. I have never heard ONE good comment about her from any of her previous clients, other agents, or homeowners that have mentioned meeting her. Oh, and a friend of mine for an unrelated sales company has been to her personal residence. According to him, "For such a well known real estate agent, her credit was trashed. We couldn't have sold to her if we wanted to." Funny. I would think 450+ transactions a year would fix any credit problems you might have....if you knew how to run a business.

If that's what being a "top producer" is, then I'm quite happy not being one, although my team gets started in about three weeks and I'm looking forward to 3 digit transaction numbers.

Back to the point. You are a business. The name of the game is profit. A top producer should be seeking PROFIT before market share. It's the only way to gro. If you base your success on market share, you're not tracking your business appropriately, and will struggle when competition is tighter. It's that simple.

Oh and you clearly missed the great business opportunity that you so nicely requoted for me. That particular agent is peeving off enough people to allow agents like me to come in and charge MORE while earning their business. Hmm. Validating my commissions, charging more than the "top name" in my area. What a concept. If that doesn't put dollar signs in front of your eyes, I don't know what would.

This is all basic business sense. Not rocket science. The money is there, you just have to know where to look for it.

Instead of 0$ or % for buyers agent compensation, I put in "the amount offered in the MLS, or by FSBO or Builder, but NLT ie. 3%", and that sounds reasonable to the buyers.
The National Homebuilder Pulte Homes here is paying 7% right now for example.

Siberian,

I like what you said about discounting the bigger homes. That makes sense. There's no point charging 7% on a multimillion dollar home in my market. I'd be laughed at.

I've been discussing this from an "average" home perspective. High end stuff is a little different, but not much. I still shoot for the high rates until they start giving me VALID objections as to why they won't pay it. However, since the cost of doing the transaction remains relatively stable, as long as you maintain a profit when you discount the "big one" you're business will still be fine. Still, that should be the exception more than the rule.

Thank you so kindly for repeating yourself. I sometimes miss new posts in threads. I prefer the type of message board where you don't see the posts you've already read at all. If you can set the preferences for this board that way, I'd appreciate if someone told me. In a PM of course, to make sure I SEE it!

Paceryder,

I am not talking about any MLS requirement. I am talking the EBA that is between you and your buyer client.

Fiveostang,

I believe you are talking about k4y k8m in the Gwinnett area no?I have also heard of the reprimands and that she has been in jail before.

My friend works in that area and get's her mail too.

All I can say on the discounting is I don't have to do it.I do hairbrained things that most other agents do not do.I work on land assemblages for developers,track down owner of properties and get them under contract.

I also help people in pre-foreclosure,they could care less about my commission,on a short sale the bank pays it anyways which is the situation alot of them are in.The sellers are just glad I am there to help get themountian of weight off of there backs.

I don't mess with sellers "waiting to get my price" all the other starving agents can have all of those people they want.When you specialize in a certain niche the competition narrows because there are less people that do what you do and you are in higher demand.If the market is flooded with everyone that has the same skills,it's hard to command a higher price for your services because you are percieved as a dime a dozen and not valuable.

Pace, I'm sorry I didn't get back to reply quickly, but it looks like you go the right answer and a lot more!

I haven't had a buyer say no to a BAC yet; they seem to have no problem understanding that this is how I get paid, and 3% is fair.

Part of the reason I do it with relative ease is that I really believe that the Seller paying the Buyer's Agent is an outdated and unfair way of doing things. If I'm not getting paid by my buyer, how can I be seen as being loyal to their best interests? They clearly get it when I explain it that way.

The problem with that is that then you can't do anything about agencies that offer 1% - FSBO's for that matter. For "normal" listings that would work. But when you are a buyers agent you have an obligation to show the client everything available. If you don't put a percentage in, you have no protection.

Why would I not get paid with the paragraph as stated below?
"the amount offered in the MLS, or by FSBO or Builder, but No Less Than, ie. 3%",

Sorry - it had been a loooong day.

Yea, I had my senior moments earlier.

I'm not going to elaborate any further on who that particular agent may or may not be, so as to comply with the Code of Ethics. I'm not going to speak poorly about a named agent. However, similar "stories" have been told about the agent referenced above, and few if any have been positive.

Needless to say. I don't discount my services. Personally, I feel that there are still plenty of ways to stand out above the crowd without making commissions an issue.

I just had a customer that I thought was loyal to me. It turned out he was loyal in my area. He bought a house about 40 miles away. If I had an EBA with him, how would I know that he had bought? I mean if they just said at some point "we're taking a break from house hunting".

Well... I dunno about that. I have (1) listing, and it is a lead-generating MACHINE. It's a home that is going to take just the right buyer for a couple reasons, and my sellers want to hold out for a top price. So be it. In the meantime, I have picked up 6 or 7 HOT buyers, for whom this was not the right home but they liked ME a lot, one of whom goes into escrow on Monday.

A listing is a wonderful thing, even one that is a tough sell, AS LONG AS your sellers are the ones driving the process- IE, they know it's not selling because they are trying for top dollar and are willing to be patient. That's a big "as long as", I do realize that.

-jeff

-jeff

It sounds as if your seller is very reasonable and realistic in spite of wanting top dollar. Those seem to be few and far between though! There are only 2 neighborhoods in my area where such a tactic might indeed prove worthwhile - as long as I break even. But it would take a very special seller who would not demand 20 open houses and massive advertising.

I usually put geographic parameters in mine. Unfortunately, if the client decides to buy something 40 miles away I'm SOL. But really, do any of us (particularly in congested areas) want ot have an EBA with someone who is looking 40+ miles away? Depending on the time of day and location it can take me two hours to drive to and from locations that far north of me. That's a lot of time - not to mention cost. It would have to be a client that was very high end and VERY certain to buy SOMETHNG for me to do that.

One of the things that drives me crazy is that I lose a lot of clients to the Stamford Ct area. So I can show and show and show - only to find that the siren song of lower taxes lured my clients to another agent in another State. This is a big enough problem for me that I am considering getting licensed in CT. NYS has to get its property taxes under control! Its the school taxes that are killing us - and they could kill the NY market.

two things:
what about 8%
do you feel that there is an industry norm or top level?


commission % is just for info purposes only