Front view of apartment building
  • 24 Nov 2019
  • 3 min read
  • By Nicole Madigan

Should you discount your commission to win the listing?

Commission, Considerations, Sales

Most real estate agents would agree, a successful career isn't forged purely on selling homes - you also need to sell yourself, with your ability to win listings being half the battle.

In the course of events, many vendors will try to convince you to negotiate your commission.

The question is, should you slash your fees to win the listing?

It can be a common tactic, as is offering to pay some or all marketing costs or agreeing to receive the marketing payment at a later date, sometimes only if a sale takes place.

Incentive-based commission is another negotiation tool, where an agent receives a bonus if they sell a property above a fixed amount.

The REIQ Insider put the question out to our network, and the responses were fairly unanimous - the general consensus being that while you might score the extra listing by discounting your commission, you're not necessarily doing your career any favours.

"Discounting is a race to the bottom. Value yourself and the service you offer," responded one agent.

Consider the message you're delivering to the client you're negotiating with, one that will no doubt be passed through word of mouth, should the listing go ahead.

"The quicker you're prepared to give away your own money as an agent, how quickly will you give the vendor's money away?" questions another agent.

"You charge what you are worth, and if you don't value what you do, neither will anyone else."

While it can be tempting to use financial incentives to help get the vendor onside, another option is to demonstrate your ability to sell homes, by selling yourself and your abilities.

Many vendors are after value, over low fees, so being able to convince them that you're the best person to sell their home, professionally, efficiently and effectively, is crucial.

One agent suggests ensuring that the evidence you provide is incomparable and shows that you're the agent the vendor should choose to obtain a premium price in a short amount of time.

"Ask the vendor, if you'd like to pay a lower fee, have you thought about which part of our job you are happy for us to do less than our best for you?"

Not everyone agrees though, with one agent claiming making decisions based on principal might cost you.

"Are you happy to lose $20k in commission out of principal? Or would you like to earn $18k, and then another $18k because you met another seller and so on?" she asks.

"If you look at the reality, commissions have increased as sale prices have increased significantly, so potential earnings are higher than ever and there are more million-dollar writers than ever.

While there's no hard and fast rule, consider judging each situation on its merits. Factor in the vendor motivation and expectations, their financial position and the home itself.

"It's not always cut and dried but it's about making a calculated decision on the benefits it serves you," says another agent.

"No point cutting commission on something that's going to be impossible to sell and a nightmare to market.

"Just be clever in making a decision and if you feel it rewards you enough then go with your instinct."

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