Janelle D. By Janelle D. • March 5, 2019

What Everyone is Saying About Low Commission Rates

What do you do if your real estate client asks you to lower your commission fee? Would you lower it to avoid losing the client? How do you convince your client that it's worth it for them to pay the full commission? Let's take a look at ways in which you can respond to clients who request a discounted commission. 

Wlower my commission_hen your clients learn 6% of the sale price of their home goes to the agent's commission, they may ask to have it lowered. To help your clients understand commission, start by educating them during the pre-listing stage. Share a breakdown of where the commission goes and, in addition, outline how your services add value (ex. CMA, marketing, professional photographer, staging, etc.).

By outlining your marketing plan and the amount of exposure their home will receive, they will get a better idea of what they're paying for and why you're deserving of a full commission. After describing everything included in your services, you might want to ask your client "What would you like me to eliminate in order to fulfill your request?" Most clients will stop asking for a discount after being asked that question.

  • CMA
  • Marketing
  • Professional Photographer
  • Staging
  • Broker Fees
  • Office Fees

Share your track record. If you've sold numerous homes in the same neighborhood, point out when they sold, the sale prices, and how long they were on the market. For example, you sold 4 neighboring houses over the past 6 months, within 3 weeks of listing them, for more than list price. This will instill confidence in the seller and diminish their desire to reduce your commission.

If they're threatening to go with a different listing agent who will give them a lower commission, don't hesitate to ask what that agent is going to provide. Will it take longer to sell the house because the agent is putting less time and effort into selling it, knowing he/she isn't going to make a full commission? Also, point out that this agent may sell their house for a lesser amount, resulting in lower returns for the seller. Suddenly the other agent might not look as promising.

It's worth letting the seller know that if you reduce the commission, the buyer's agent will receive less of a commission too. Because of the low commission, some agent will not want to show the property.

When should you consider reducing your commission?

  • When the market isn't in favor of the seller and they could lose money on the sale
  • An error is made on the listing or during negotiations
  • House goes under contract and then is appraised for less than expected
  • A high dollar property

Nearly every agent will be faced with a request to lower their commission. When asked, pause before providing an answer, ask them why the want a lower rate, then begin applying some of the suggestions in this article. There may be times when agreeing to a lower commission fee will feel right, but you should take your time before considering a reduction.  If you're offering to do everything in your power to get their house sold, you know you're worth your full commission.  

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