WHY SHOULD I PAY YOU MORE...

[Steve Shull]

In our Scripts and Dialogues Boot Camp on Saturday we discussed the following situation...

Please explain to me why I should pay you so much more on the sale of a $5mm home than the sale of a $1mm home. Why is the fee $60,000 on the $1mm home and $300,000 is the fee on a $5mm home? What are you doing so differently to sell a $5mm home?

***************
This is a very legitimate question. Please think this through and respond with your best dialogue.

[Sean McGlynn]

If we can agree on commission are you ready to go ahead with me?
Would you agree that in Real Estate many fees are charged based on the sales price such as escrow fee, title insur. fee, city transfer tax, county transfer tax and so on.
I get paid a percentage of what you get for your home. It's standard for the industry and it is my standard of what I charge people.
I'm sure you can find an agent that will do it for less. Is that what you want?
S- No
Can I start the paperwork?

[Susan Smeltzer]

If I can help you achieve your goals, do have any problem with me earning my normal fee?

--Well, yes, I think it's a bit much.

So, my fee aside, is there any other reason why you wouldn't feel comfortable working with me?

--No. But we did speak with 3 other top producing agents, and they all charge 5%.

So is this about the difference between 5% and 6%?

--Well, even at 5%, that's still $250,000. That just seems like waaay too much for selling a house.

Mr. Seller, what do you do for a living?

--I'm an attorney.

And you make a good living, yes?

--Yes. What are you getting at?

Are there other attorneys that you are aware of who aren't making the same money you make, even in your same discipline?

--Sure.

Why do you think that is?

--I'm a better attorney than they are.

So attorneys aren't really a dime a dozen. Do you believe all Realtors are basically the same?

--Are you telling me they aren't?

Let me ask you this -- are you hoping to work with a Realtor who will negotiate the best price for your home?

--Of course.

And what is more important to you -- getting the highest net, or saving money on the commission?

--getting the highest net.

Do you believe your Realtor's ability to negotiate is going to affect the final sales price?

--Well, I'm going to decide what the home sells for.

I agree that you will be the decision maker in this process. But much of the negotiating will be taking place beyond your ears. If your Realtor is unwilling to negotiate a full fee on your transaction, why would you feel confident that they will negotiate the highest price the market will bear for your home?

--I think those other Realtors did offer their full fee, and I think their full fee is 5%. I just think you're greedy.

Do you believe that's true in your profession as well, that other attorneys simply charge less for their services, and you are just greedy?

--No! I can see the difference.

Well, I can see the difference in my field as well. Since you know you can get more for the work you do because you do it well, what does that say to you about the other attorneys who could charge more, but don't?

--They wouldn't get it.

Because they know their value. So they don't ask for more. They "just charge less". Sound like anyone you've spoken with lately? (with a smile)

Who would you rather work with -- and agent who doesn't value their ability to negotiate, and effectively avoids the conversation altogether by charging less, or an agent who isn't afraid to have the tough conversations with you -- and on your behalf during the transaction?

-- I still think it's a lot of money.

$5,000,000 is a lot of money. $300,000 is chicken feed.

If I can get you the most money for your home in this market, do you have a problem paying me my normal fee?

--No.

Let's get started.

[Julie Lubin]

Wow, who can say no to you...or top that. Great job Susan! dido....

[Yancy Whittaker]

I understand that sediment, however, that's the wrong focus.
Let me tell you a story about integrity
My Dear Sweet Mother turned 96 this past Sunday.
She's do'en well all things considered. However, her Primary Care Doctor had her go see a Cardiologist because she has certain symptoms relative to her heart. Turns out he was right. Here's the rub, do you think my Mother's focus was on his fee??? Do you think my Mother cared more about results first and foremost instead of worrying about costs and fees??? Further more, do you think the Cardiologist was about to negotiate his fee, do ya??? Cause it's not the case; as a matter of fact my Mother's focus was insisting on seeing the best Doctor, no matter what the cost to get the results she needs and wants! And that's the difference, the things we care for the most never matter what the cost is...it's the result we want, would you agree???

Now what I'm suggesting here is this, a sellers focus need to be geared on results and how you go about getting the results you want. The results sellers want is the greater portion of the Real Estate transaction. There are three elements to the Real Estate Transaction
1) Fee - sum total 1%
2) Costs to close - sum total approximately 6%
3) Price - sum total 93%
Would you agree that the greater portion of concern to a seller is the Price @ 93%???
Do you see and understand that it is the correct price which will most likely cause the sale to occur that will net you the most return???

Granted, you can find a Realtor who will discount there fee to buy your business, do you agree???
I won't, fee is not negotiable. So, the question for you now is, do you really believe and want a Realtor who will capitulate and fold on their fee up front in your presence to negotiate for you on the price and other terms and conditions in your absence??? Do you really think they have your interest in mind??? I negotiate with discount Realtors all the time and win, so tell me, honestly, which type of Realtor has the integrity you want representing you???

[Renee Ferjo]

The benefit of this last bootcamp for me was the experience of standing up to expose my fetal thinking on a script & to consequently have an entire roomful of talented agents moan loudly "NNNNNOOOO!" I am free to absolutely blunder this imperfectly now. Free at last. I love Boot Camp.

[jefflemen]

At the end of the day mr/ms/mrs seller, there is only one thing that separates a Realtor from his/her peers...the ability to help you negotiate the highest possible sales price for your home. Do you understand how a Realtor's ability to negotiate on your behalf works?

-No.

Frankly, it happens beyond what you see or hear. It happens between the listing agent and the selling agent. May I go on?

-Please.

Typically, a selling, or buyer's, agent will call the listing agent with a series of questions before they write an offer on their client's behalf. One of the questions that is always asked is, "Is there any flexibility in price?" An agent with a discount mentality -- meaning they are not focused on MAKING you the most money possible, they are focused on getting the sale done, which as a result is selling you out -- will tell the selling agent, "Yes, we priced a bit aggressively" or "They're negotiable, write it up and we'll go from there." What do you think this does to the price the buyer will offer? It discounts the price tremendously. Does this paint a clear picture regarding how an agent's ability to negotiate on your behalf works? In this example, it shows how it would work against you, correct? Is that the type of Realtor you want working on your behalf?

-No.

Can I tell you what my standard response is to that question? "Joe (agent), I've performed a thorough market analysis of the property. It should be clear that my sellers have positioned themselves in the marketplace to attract offers. I'm happy to send you the comparables if you'd like. If your client wants the property, they should offer full price or more." That's what I do. Does that sound better than the first example? Even if the offer does not come in full price, do you see how this puts you in a better negotiating position?

-Yes.

Should we get started with the paperwork?

-Well, $300,000 is a lot. Will you do it for less?

What did you have in mind?

-5%

And if we can agree on commission, you are ready to sign the listing?

-Yes.

My fee is 3%. I suggest you offer the buyer's agent 3% as well. If we can agree on that, I can go to work for you immediately.

IF MORE OBJECTION HANDLING IS NECESSARY:

Unless you've dealt with a Realtor in the past, what is the only opportunity you'll have to judge their negotiating skills?

-I don't know.

It's their ability to show an interested party -- in this case, you -- why they deserve their standard, full fee. Much like my ability to show the buyer and buyer's agent why the house is worth more than they had been planning to offer, my ability to show you my value is a form of negotiating.

You do want a skilled negotiator working on your behalf to MAKE you more money, correct?

-Yes.

Let's get started.

[Rick Villasenor]

A. In real estate we get paid not based on the amount of time we spend but rather on the results we obtain for our clients. When I help a seller sell a home, for example, I obtain the best possible price for that person. If I'm able to get an extra 1% for a seller client, how much more is that worth to the seller of a property in the $2,000,000 price range than to the seller of a property in the $500,000 price range?

S. Let's see 1% of $2,000,000 is $20,000 and 1% of $500,000 is $5,000...

A. That's exactly right, so a realtor's benefit to a client can be proportional to the size of the transaction. Let me ask you this, if I help you reach your goals do you have any problem with me earning my normal fee?

S. Well, I guess not.

A. Great. What should the next step be?

[Carol Menconi]

Other than commission, is there any reason you wouldn't be comfortable working with me? No

If I can help you achieve your goals, do you have a problem with me earning my normal fee? Yes, it's too high.

What is more important to you---saving money on the commission or netting the most money on the sale of your home? Netting the most money.

No matter how expensive the home is, the commission is only a small part of the deal---6%. Closing costs are 1%. The other 93% are your proceeds. My focus will be on that 93%---on getting you the highest possible price for your home. Is that what you want? Yes

Once again, if I can help you to achieve your goals, do you have a problem with me earning my normal fee? No

[john steiner]

It seems to me you are saying,that," if I save on the commission I will have more in my pocket at the end of escrow"?

No I just do not see what additional work is entailed in selling a home for 1 Mill rather than 5 Mill.

First things first, have you decided that you are going to list with me?

That depends on your commission.

So commission is the most important factor in you decision?

No, but I want a deal.

Then what is it that you see in me?

I can read you, you are not going to be able to put one over on me.

Then why are you afraid of paying commission?

I am not afraid, I just don't see the value in paying more that I would have to for a 1 Mill sale.

Oh come now Sam, you are a very successful business man and you know how the world works. If I can get you what you want why should I not be entitled to a normal fee?

What more are you doing for me at 5 million than at 1?

Do you believe my ability and experience counts for anything?

You are a good agent yes.

Do you believe that is important to your bottom line?

Yes.

And do you think a bad agent might do the reverse?

May be.

If we remove the 6% for commission and the 1% for closing costs, what are we left with?

93%

That is 930,000 on a one million sale and 4,650,000 on 5 million. Now, although my work in both instants may appear to be the same to you, if I do well or badly at one Million the end results may not be noticable, but at five million you are going to be affected dramaticly. That is where my value is. I don't get paid for my time I get paid for results.

I will be watching you.

You are great at selling software let me take care of selling your home.

[Gary Price]

Is commission your only criteria for selecting the agent who will represent you?

If I can help you reach or exceed your goals, do you have any problem with me earning my normal fee?

What is most important to you, saving on the commission or netting the most money from the sale?

There are 3 factors that impact your net after sale, the commission is 6%, closing costs around 1% and the sales price is 93%. So which of these factors has the greatest impact on your net?

That's right the 93% and thats what I focus on. Is that important to you?

Do you believe an agent's ability to negotiate has an impact on the final sales price?

A good portion of the negotiation goes on prior to the offer being written. I can't tell you the number of times in speaking to a listing agent who is focused on getting the deal done rather than netting you the most money, how easily I have been able to get a price that the seller will accept and its not your asking price. Is that the kind of agent you want representing you? They will sell you out everytime to put the deal together.

My response is always "I know the seller will take more than asking". I'd be happy to provide your clients with comparable sales of similar properties to support our price. I am working to generate the highest possible sales price on your behalf.

Knowing this, which agent would you prefer to represent you?

[Josef Szigeti]

Would you say that the pool of buyers for a $1mm is much larger than for a $5mm home?
Would you agree that the expenses and the risk of selling a $5mm are larger than a $1mm?

[Steve Shull]

I found it interesting to see the direction some of you went with regarding this situation. I think many of you did not address the real issue. I think the objection above is one of the toughest objections you will ever get. Therefore I see great benefit in working through this one with great thought.

Here is what I scripted.....

Agent: That is a great question.

Ultimately, how can a real estate agent create value for you as a seller?

Seller: By helping me net more money on the sale of my home.

Agent: Exactly.

And how would an agent net you more money?

Seller: Through their ability to negotiate.

Agent: Absolutely.

And this is why the fee is higher on a larger sale in terms of absolute dollars.

Seller: Please explain.

Agent: My real value to you as a seller is my ability to negotiate a higher sales price for your home. On a $1,000,000 home if I can negotiate an extra 5% for you that puts $50,000 additional dollars in your pocket. On a $5,000,000 sale that same skill, negotiating an additional 5%, turns into $250,000 more dollars to you. So even though I may be doing many of the same things to sell a $1mm home as a $5mm home, the benefit of my skills is very different in the 2 situations. One seller benefits by $50,000, the other seller benefits by $250,000 for the same skill.

Does that make any sense to you?

Seller: I see your point.

Agent: This is why it is so important to pick a skilled negotiator as a real estate agent. The skills of the person you select are magnified as the price of the home increases.