What’s Your Commission?

What’s your commission? When you’re worth it, you’ll know it.

The question is often asked because the answer is always assumed to be “negotiable”. When your fee is negotiable, be prepared to negotiate. Simple idea: Remember there are 4 to 10 reasonable stopping points between two whole number. Assume the commission rate you built your business model on is six percent. A client wants to negotiate your six to his five…I’ll skip the rest of the discussion a Realtor might have with the seller and assume the conversation ends with the Realtor conceding without negotiating.

Now, imagine the Realtor was expecting the question because she knew Google Trends showed Realtor Commission was a trending search this time of year. Let’s say the house will sell for $500,000. One off of 6 is not one percent. It’s a 16.6% reduction. But instead of percentages, let’s look at what we are really conceding. Five thousand dollars could end up being a 33% discount, donation, you made from your fee. If you can find 33% off of anything you should probably buy it and sell it on E-Bay for a 20% profit.

Thirty three percent probably is a reasonable discount to expect from some agents. They’re not all alike. If you aren’t some agents, it’s reasonable for you to stay close to your established fee. When you choose to make a concession think Hindu-Arabic numerals. Another number less than 6 is 5.75, 5.5, 5.25, or even 5.6. If you concede 1% your $5,000 donation is not a tax write off. I’m not saying don’t make concessions. I’m saying there is money to be earned by developing conversation skills which will help you turn that expectation of 1% concession to maybe a .5% or even .25% concession. You and the seller can move on knowing you each just made $2,500. What will you do with your $2,500? Put it in the bank? Donate to a real charity of your choice? When you’re worth it, you’ll know it.

Author: Tom Meyer, Owner-Broker, Essential Real Estate, LLC Madison, WI

The real estate transaction, disclosure, and confidentiality are the business of a Wisconsin licensee. It's in the transaction where the skill of the licensee, and their commitment to the law where the public is protected or placed at risk. Essential real estate services are specified in real estate license law. Those services are worth professional fees. Paying professional fee rates for administrative services is a choice when an alternative exists. We are that alternative. Old business model commission rates are taxing the home equity of American home sellers. Essential Real Estate LLC was created so our clients keep more of their home equity, spend less on broker fees, and receive skilled representation in negotiating purchase agreements.

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