Why Discounting Your Commission Spells Doom

Although it’s tempting to try to earn business by undercutting the competition & discounting your commission, especially if you’re new in real estate, doing so can not only hurt short-term profits but hinder your long-term success.

You’re Worth Every Penny

It’s all about value. Ask yourself: Why would you hire you to sell your home? What skills and experience can you provide that in the end benefits the seller? If all you’re going to do is just list the home on the MLS and never have another conversation again with the seller, then yes, your services might not be of value. But if you believe – and I mean really believe – what you can offer has value, then you’re on the right track to a successful career. The key is to know the following in your heart:

-You know the real estate market and can properly price someone’s home.
-You can maximize a home’s exposure.
-You know how to stage a home to increase the size and number of offers.
-You can successfully negotiate on the seller’s behalf.

And maybe you bring other skills to the table. Maybe you have previous experience in marketing or internet advertising; skills that make the difference for someone.

In other words, don’t underestimate the value you bring to a client. Not only can your services increase the amount of the sale, but they can also decrease the amount of time and headaches to the homeowner.

You have to believe it and then go out and apply it for all of this to matter. And if you’re new to the business and not so confident in a particular area, then go out and find a way to get better at it. Take a course. Read a book. Ask for help. Just do something so you know deep down you’re worth every penny.

You’ll Always Lose a Race to the Bottom

Marketer-extraordinaire Seth Godin calls the quest to be a cheaper race to the bottom. Sure, you can get a client quickly this way, but we all know how this story ends. The local retailer loses out to Walmart. The small bookstore closes its doors because of Amazon. The neighborhood hardware store packs it up because it can’t compete with Home Depot. In other words, someone will always come around who can afford to do it cheaper than you. So what do you do? Seth says don’t race to the bottom. Instead, race to the top.

Offer more and do it better than everyone else. People don’t buy Apple computers or iPhones because they’re cheaper. Whole Foods isn’t less expensive than Smiths. There’s something to be said for offering quality and exceeding expectations.

You’ll Believe It

How long do you think you will last if you charge less than what you think your services are worth? How long can your pride take it? What will eventually happen is you’ll become your own self-fulfilling prophecy. What will happen is your value will match your commission rate. Eventually all you will do is just list the property on the MLS and move on to find the next one, because that’s the only way you’ll make any money.

On the flip side, by charging more you know you have to do more. But the good news is you’ll make more, which means you’ll actually have to work less when you really think about it.

Charging What You’re Worth is Good Marketing

If you can’t negotiate with the seller to keep your commission how will anyone believe you can effectively negotiate on the seller’s behalf?

Think about that the next time you find yourself in that uncomfortable moment. When the seller says they’re ready to list with you, but so-and-so broker told them they would do it for a full percentage point less. This is the moment when you cannot buckle. This is an opportunity to demonstrate your skills. When you say there will always be someone who can do it for less, but not too many who can do it better than you. That by listing with you they stand to make more than they will save with a discounter – and will less headaches.

Tony Robbins once said “the only thing keeping you from getting what you want is the story you keep telling yourself about why you can’t have it.” If you’re charging less than what you deserve, think about why. Is it out of fear? Fear of losing the deal. Fear of having to prove yourself. Is that because of the story you keep telling yourself? Change the story and you can change your future. Tell yourself you’re worth it.