Discount Commission vs. The 7% Solution.

Discount Commission vs. The 7% Solution

Could a discounted selling broker, co-op or buyer agent’s commission (let’s refer to it as “co-op commission”) hurt the enthusiasm of the buyer’s agent and impact the seller’s bottom line in a negative fashion?

You bet it could.

The truth is, a discounted co-op commission can be detrimental to the seller’s bottom line and the reverse can also be true. Using a unique or above-market co-op commission could be the marketing tool that helps sell the listing and puts more money in both the seller’s and agent’s pocket, after all is said and done.

How many listing agents would recommend a discount co-op commission as a sales and marketing strategy to the seller of a new listing or a “freshen-up” or a re-list of a property that is not getting enough attention?

I’m guessing not all that many.

For many years now, decades actually, sellers have been falsely led to believe that a lower total commission equates to a higher seller’s net. This myth can be easily disproved.

Coaching sellers on how co-op commissions can affect sales prices should be the duty and a main focus of every salesperson during a listing presentation. A unique co-op commission can be mutually beneficial for the seller, listing agent and the co-op, despite it being a potentially difficult but necessary conversation to initiate.

It would be a good idea to remind the seller right off the bat of something they already know, but may have forgotten. Helping them to realize one simple fact could impact the saleability and bottom line or net of their home, business or vacant land. Look them straight in the eye and tell them something that most other agents will not. Are you ready for it?  Here it is: “Commissions are negotiable!”

“How much is your commission?”

How many times have you been asked, “How much is your commission?” even before you’ve met the prospect or inspected their property? If your answer to that question is anything other than, “Commissions are negotiable”, then you’re missing a very important consideration of your listing and marketing strategy.

Have you prepared your seller for the possibility of receiving an offer of full price? How many of your sellers actually expect to get the full contracted list price or even something close to it? If you asked your seller on the way out the door, with their signed listing in hand, if they would compensate another agent (which most likely will not be you) an above-market rate of commission to bring them something close to full price, I bet 85 per cent plus would say yes!

It is important to bring attention to how a unique commission structure helps to make the subject property stand out to the agents picking the properties to show, in contrast to other listings on the MLS, which almost certainly do not employ this listing marketing strategy. The seller should also understand how the listing agent, using a unique co-op commission, can create leverage advantageous to the seller, listing agent and even the co-op during price negotiations.

The Commission Coach Summary:

  • Discount co-op commissions can hurt the saleability of the listing, the enthusiasm of the co-op broker and the seller’s net.
  • Most agents would not recommend a discounted co-op as a marketing strategy.
  • A unique co-op commission could gain the “loyalty” of the buyer’s agent.
  • Commissions are negotiable.
  • A unique co-op commission creates the possibility of a higher net for the seller.
  • Creative co-op commissions stand out to showing agents from all other listings.

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