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Young family looking at house with agent.

Regardless of how long you’ve been in the industry, you’ve probably had at least one client ask you about your commission. Although some realtors and agents find that this question rarely arises, it’s safe to assume it will become a more frequent request as technology continues to disrupt the real estate industry.

Even though the industry is changing and clients now have more information at their fingertips (and thus more power), there’s no doubt you want to preserve your livelihood no matter what the real estate sphere looks like in another 5, 10 or 20 years.

So how do you handle the commission question in a way that protects your income and grows your clientele? Here are some thoughts to consider when asked to lower your commission.

Mulling Over The Commission Question

When potential clients ask you to lower your commission, it can seem like a dagger to the heart. They may just be asking about your commission, but it’s easy to feel that they’re actually questioning your worth.

Instead of getting worked up, the first thing you need to remember is that these clients are throwing a question at you, not a command. They want to find out if a lower commission is in the realm of possibility; they’re not saying they won’t work with you unless you reduce it.

Thus, it’s your job to begin an open dialogue with any potential client who raises the issue.

Find Out Why They’re Asking

While your first instinct may be to get defensive, it’s important you redirect the question to determine what the client’s motivation is for asking. Sometimes clients challenge commissions because they know someone who got a deal. But usually when clients inquire about realtors’ or agents’ commissions, it’s either because money is tight or they don’t have a full understanding of what real estate professionals do.

So instead of getting confrontational, you should try to learn as much as you can about your clients, their finances and their knowledge of the industry.

Listen To Them Carefully

Relationships between real estate professionals and their clients are built on trust. The problem with the commission question is that it can throw a wrench in the process of building trust if mishandled and ultimately steer the relationship in the wrong direction.

Clients want to know that they can put their faith in you and you’re not just looking to make some easy cash. When you ask your clients why they want you to cut your commission, make sure you genuinely listen to their answer with empathy.

Restate Their Concerns

When clients speak, they want to feel heard. Therefore, you should repeat their concerns back to them after your clients have finished answering your question.

When handling the commission question, John Grimes, a REALTOR® with Better Homes and Gardens Real Estate Metro Brokers, deescalates the situation: “I paraphrase their statement to make sure that they understand I’m hearing them. That often calms people down. People are desperate to be heard and understood.”

Grimes finds that “People tend to calm themselves when their aggression is met with professionalism because the contrast is uncomfortable.”

Acknowledging your clients’ concerns aloud will validate their feelings and make them feel as though you understand where they’re coming from. Furthermore, reiterating the issue will ensure you fully understand the problem and are both on the same page.

Address The Issue

If your clients’ problem is a monetary one, go through their finances with them and help them understand how much money they’ll potentially spend and earn at the close of the transaction. Clients tend to feel far more comfortable with commissions when they have a clear grasp of how much money they’ll be walking away with at the end of the day.

When the issue is that your clients don’t fully comprehend what realtors and agents do, you must walk them through the process. Your clients may think that your job begins and ends with listing their home on a multiple listing service (MLS) and putting a sign in their yard. You need to explain the value you bring to the table.

Either way, the discussion you have with your clients must clarify what your commission pays for, which means you need to articulate all of the services and expertise you provide.

Eve Henry, an accredited luxury home specialist and owner of Eve Henry Homes, explains, “I always take an expense sheet with me to every listing appointment showing exactly what I have to spend up front with no guarantees (pictures, videos, marketing flyers, ads, signage, open house material, Facebook ads, etc.). I then briefly explain that my brokerage takes a percentage.”

Demonstrate Your Worth

Even after you’ve gone through the ins and outs of your services and their costs, you may still need to back up your merit with evidence.

“I show my clients that I’m worth every penny by showing proof of my recent sales,” explains Russell Volk, a real estate agent with RE/MAX Elite in Bucks County, Pa. “I can show how much the house sold for vs. the asking price. I can show how long it was on the market. I can show various statistics that act as proof of the value I bring in a real estate transaction.”

By taking your clients through the properties you’ve sold in and around their neighborhood as well as all the transactions you’ve closed in the last 3 months, you can help build their confidence in you. The volume of your sales will help signal to your clients that you’re experienced and will be a valuable asset to them.

Providing your clients with testimonials from those you’ve previously worked with is another excellent way to help convince them of your worth. Testimonials help gain clients’ trust because they prove that others have trusted you in the past. Clients want to be reassured that you’re the right person to work with, and the best way to convince them is by having someone else tell them.

Make sure you’re not only knowledgeable about the industry but also about the people working within it. “I think that knowing your competition goes hand in hand with knowing the client’s motivation. You can use the stats against your competition and shine a light on what you are offering and what you can do for them,” says Jennifer Murtland, a REALTOR® with Team Synergi, eXp Realty.

When explaining the value they add for their clients, Murtland and her team pull stats on competing agents’ list price to sale price ratio, average days on the market, percentage of sales in the area and expiration rate. She explains, “Bottom line is to use the stats that work for you. You control the information.”

The commission question doesn’t have to be a point of contention. If you do your homework, pay attention to your clients’ concerns and explain your business clearly, it can be an opportunity to impress your clients.

Have you dealt with the commission question recently? If you’ve got other tricks up your sleeve, tell us about them in the comments.

This Post Has 13 Comments

  1. I always tell my clients that ask for a commission reduction that even if the listing agent is willing to discount their commission it doesn’t mean the Buyer agents( who will sell this home) will. They may show all the higher commissioned homes before they present your home. Also if I’m willing to lower my commission just because you asked what will happen when I need to negotiate issues for you when they come up like reply to inspections etc… When you get a discounted commission you get a discount agent often on both sides. I tell them my negotiating skills, in the end, will bring them more walkaway money. It will also influence the buyer agent to keep the deal going when issues come up on the way to settlement.

  2. If asked after my presentation or after a contract is presented to the seller, I will take the listing side of the commission and put it into Dollars. Then I will put 1/2 of 1% on a $500,000 sales price $750.00. I ask them if they would not want to sell their home over $750.00? Then I calculate 97% into dollars the will gross at closing. They usually do not pursue it. I have also said if you buy your next home from me I will do a 1/2% discount and I will write that in the listing agreement. Or If I know they are moving out of town I ask
    To refer them to an agent in their destination city. I discount it 1/2% I always get something more if I give something and it costs them nothing. You must show your value and always follow up with stats, comps and new on market listings the are competing with. That is my job to keep them informed with any change in the market. This is my 31st year in Real Estate. I love my job and I’m very good at it. Pat Broghamer / Remax Alliance Mt. Pleasant SC 843-725-8095

  3. Heard it many times over 20 years…
    1. Best answer- yes if I lower my commission 1% you get to keep more at close….but

    2. An agent who works for less will also not have the ability to negotiate best numbers which is relation to 1%- is change. Thousands of dollars might be left on table by 1 faulty realtor trying to close a deal… never sell short unless you are new or don’t know the business.

  4. We address the commission head-on during our listing presentation. We present the seller with a range of fees. We then explain that there is an excellent chance that another agent will be the one bringing the buyer and that our job is to present the house in the best light and market it not only to the public but to other Realtors as well.
    We explain that a higher fee will not necessarily attract buyers but it will get the other agents excited about bringing their buyers to the listing.
    We consistently get above-average fees and almost never get asked to discount.

    1. Address fees up front! Set expectations first meeting. Show your (supreme) value and professionalism then. DO NOT DUCK THE QUESTION.

  5. Ive come across this question quite often. Usually while negotiating the deal itself or after the deal has already been negotiated.
    The way i handle it is by asking a few simple questions.
    1. Are you satisfied with the service I’ve provided you ?
    2. Are you satisfied with the price I’ve gotten you regardless of the challenges of your property? (tenants , condition, issues arising during the negotiations and after contracts are released)
    3. Since you agree that I’ve provided you impeccable service and have overcome many challenges associated with the sale of your property .. then wouldn’t it only be fair to compensate me for my hard work and not discount it? At the very least what we’ve initially agreed?
    If fact, if you’d like to show your appreciation we would always be more than grateful if you’d like show your gratitude with an extra bonus of 1%? Usually by that time they’ll just back away out of embarrassment and be ashamed for even asking.

    1. Thanks for sharing your strategy for handling the commission question, Avi! As you illustrate, the best method always involves having an open dialogue with your clients.

  6. I’ve read your postings picked up by Professional organizations to which I belong. I have found them informative; therefore I decided to sign up.

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