How to beat the cheaper agents (part 2)
A few weeks back we published a guide titled 'how to beat the discount agents - part 1'.
This came about because I was hearing from a number of coaching clients that they were finding it hard to protect their fee at listing time.
In a market where owners feel like they are selling at a discount, they want to protect their equity as much as possible, so they understandably lean towards the cheapest option. In a down market, owners don't chase the potential of a premium price (which might help them see the value in a premium agent). Instead, they try to protect their bottom line. In other words, they are more cost-focused than skills-focused.
This happens because they don't understand the value you bring to the table.
It's your job to demonstrate that value during your appraisal and listing presentation.
Here's the key point to remember from part 1:
Discount agents are only a problem when owners see us as a commodity.
If owners think we are all a 'much of a much-ness', they will go with the cheapest option.
If you want to charge more for your services, you need to establish value early and often, and clearly demonstrate what you bring to the table.
So what is our value?
In a hot market, world-class salespeople fill their listing presentations with stories of exceptional sales generating way-above-market outcomes. Auctions that went $250k above reserve. Tenders that attracted double-digit offers.
In a challenging market, those same salespeople share stories about a house they sold after another company tried and failed. Or a home they sold in 2 weeks when the average is 2 months on the market. Or how they attracted multiple offers in a market where buyers are incredibly hard to find.
They might also share stories about how their selling process protects owners from crashed deals, which can erode buyer confidence and lower property values.
World-class salespeople invest time telling stories because those stories are the evidence owners need to see to justify paying a higher commission.
If you don't effectively demonstrate value, all they have to go on is your appraisal range and bubbly personality. So unless you want to buy every listing with a way over-market appraisal (setting yourself up to fail miserably), then establishing value through stories is the only way to stand out from the crowd.
Hot market = share stories about chasing upside
Down market = share stories about protecting downside
Tools to demonstrate value and win more listings
Let's talk about specific strategies you can employ to create an environment where owners are focused on your skillset rather than your commission rate.
Role-play
Sadly, I'm talking about the boring type of role-play here 😃 but to be fair, any kind of role-play will be good practice to build your confidence!
It blows my mind that so many salespeople still choose to practice on the public. When every appraisal is arguably worth $5k - 20k, it stands to reason that just like a world-class athlete, you should train for those events.
Action step: Find a real estate buddy you can role-play with and book a practice session.
In my experience, it's far easier to role-play with a colleague than with your manager or office owner. Find a safe, quiet space and give it a go. What have you got to lose?
Take turns playing the vendor, with the other person responding as the salesperson. Don't role-play the whole appraisal, just tackle one question at a time.
Questions to role-play
- "What is your commission rate?"
- "What do you think our house is worth?"
- "Why should we hire you?" (tell a listing story)
- "Do you have many buyers on your books for this kind of home?"
- "What marketing would you recommend?"
- "What is the market like at the moment?" (tell a listing story)
At the end of each question, talk about your response. How did it feel/sound to you? And to your buddy? What should you have said differently? What did you forget to say?
Hint: All of these questions open up opportunities to share stories that demonstrate your value.
Practising our responses to these key questions allows us to drill down to the essence of what matters most. In real estate, we need to explain complex ideas in a simple way to owners who may not have sold a home for 10+ years, if at all. The more you practice your key messaging, the more likely they are to listen, understand, and take it on board.
Demonstrate value long before you walk in the door
The easiest way to win hearts and minds is to educate your owners before they invite you in for an appraisal.
How do we do that exactly? By sending an email newsletter to all contacts on your database (especially potential sellers) and sharing value-added listing stories through that channel, along with educational Agent Monday content.
Example: "We recently had the privilege of marketing 24 Main Road, which sold in the mid $900k's after a short 3 weeks on the market. This home had previously been up for sale with another company for 4 months, without receiving a single offer. By putting it through our proven Deadline process we were able to secure a timely sale for our owners who are now happily off on their next adventure.
We are working with 3 highly motivated buyers who missed out on this home. If you know anyone thinking of selling, we would love to help!"
Did you know there are only 3 reasons why a property doesn't sell? Keep reading to learn more...
Now obviously this is challenging if you only just met the owners before providing the appraisal, but you can still experience the benefits of this approach by getting potential sellers on your email newsletter list the moment you have first contact.
Every email your potential seller receives before your appraisal, right up to when they choose an agent, will increase your chances of being their chosen real estate professional.
For more ideas on how to nurture your pipeline, check out this guide:
Never bother with discount agents ever again
I know I harp on about it a lot, but if I have learned one thing from a lifetime in property, it's this:
If you consistently keep in touch with enough homeowners in your area, sharing educational, positive content that helps them make smart real estate decisions, you will reach a point where you are often the only agent that gets called into a listing situation.
This is the holy grail of real estate sales and you can get there if you take a methodical, consistent approach.
For a deeper dive into this idea, check out:
Take a top agent to your next appraisal
Offer to share your next listing opportunity with a salesperson you admire so you can learn from their approach. Think of the split commission as an investment in your future earnings. One with a potentially massive ROI!
Are there times when it is ok to drop your commission?
The short answer is, YES. I personally believe we should be flexible on commissions, depending on the circumstances.
It all comes down to supply and demand.
If you don't have any listings right now, you should be prepared to drop your commission to whatever level is competitive (with the permission of your manager, of course).
Once your skills improve and you are getting close to your listing capacity, you should increase your quoted commission rate.
At the same time, many salespeople are far too quick to drop their commission pants out of desperation to secure a listing.
Before dropping your fee, have a few role-play sessions. Work out your key listing stories and practice them. Offer to share your next listing opportunity with a top-notch agent, who will know how to protect their commission, so you can learn what they say in the heat of the moment.
Get better at your craft!
Note: It can also make sense to discount your commission if the property will be great for your profile. For example, it's on a main road and/or will attract a large number of buyers which you will be able to add to your database.
Two more tools to help establish value:
It sounds fancier than it is. Essentially, it's a spreadsheet that allows owners to measure multiple salespeople against each other under a consistent set of questions or variables.
Most owners will interview 3 or 4 salespeople before selecting one. This tool would allow them to make a well-thought-out decision. Similar to the way a company might look at hiring a general manager: Evaluating candidates in a fair and consistent way, rather than falling for the person who built the best rapport and talked a big game, potentially without having the process to back it up.
The magic of this approach is that an agent scoring matrix provides equal importance to all aspects of your proposal, not just commission, appraisal range, or how much you pumped the owners up about their home.
Commission rate becomes just one piece of the puzzle, not the key deciding factor.
Most agents spend far more time worrying about what price to appraise a property at, rather than thinking about how they can add value to the owner's journey and provide an exceptional level of service.
Use this guide to take your appraisal process to a world-class level, and in the process, take the focus away from your appraisal range and commission rate.