How often do you discount your commission?

Question

Obviously discounting commission on a low priced property ($100,000 for example) isn't worthwhile for some agents because the return is minimal, but would you consider discounting your commission on a property priced around $500,000 or even a $1,000,000 knowing that you'd potentially be netting around $12,500 before other expenses (and let's say the commission was discounted from 3% to 2.5%)?

Drew Francis · Answer

@Russell BrazilI agree with you on certain situations and/or for very large purchase prices. When I'm calling expireds and someone says something to the effect of so and so will cut their commission I use that as an opportunity to point out the agents potential weakness.

Joel Owens · Answer

On the commercial side I fight for every basis point of a commission.

Some larger commercial firms take a reduced fee for commission if they are getting a couple hundred million in a portfolio of properties to sell.

When I represent buyers I am only getting the benefit of the one transaction they are purchasing unlike the listing brokerage. So in those cases I ask for the full 3% to me and see what happens regardless of what the listing broker agreed to.

Often the sellers will pay my fee to get the buyers.

Some commercial developers the listing brokers take a smaller fee but the developer is constantly giving them property after property to sell versus a one off transaction.

So if you are given 50 million to sell in a year for your side from one client where you make 2% and then give that or more to the buyer broker it looks different than getting 3% of one 3 million deal. You are looking at 90,000 in commissions versus 1 million.

You have to look at the potential book of business and how demanding a client will be and how hard the properties will be to sell ( work involved ) and see if it makes sense.

Since I am a principal broker I make calls daily on who I work with and why for my business.

Russell Brazil · Answer

Nope. And I have dealt with listings at that price. A listing at that price might also cost me 2-3 grand out of pocket to service.

Russell Brazil · Answer

Well I do not consider going from 3% to 2.75% or 2.5% to be discounting.  If I am at any of those levels, that is just what I need to to do to get the business. Now going below 2.5% I will almost never do. The rare instances where I will is if I am helping someone upgrade there home, so they are buying a new home where I am getting a market rate commission, then if I sell their old house then I might discount my commission, since I am getting both transactions. I would only do this though if I got the buy side first. If the sell side was first, there would be no guarantee of getting the buy side unless the client was someone I had a relationship with.

Though honestly my commission rarely is something people even want to discuss since most of my business is referral based....and if I am doing two transactions with them in a short time, which is usually the case for someone selling, then I list at 5% (or 2.5% for my side).

Drew Francis · Answer

If an agent is willing to negotiate down the money they feed their family with how do you think they will negotiate on your behalf when contracts are presented?

Mindy Jensen · Answer

I discounted my commission for friends who didn't have a ton of money. It was also my first sale ever, so I felt comfortable discounting my services because:

A. They were friends

B. I didn't have the experience to justify the full commission

C. The amount of work to list and sell a house in one of the hottest real estate markets in the country was pretty low.

That said, there is a TON of work involved in selling a home - and having clients that were friends didn't really make it easier.

Discounting by .5% doesn't seem like you're giving a huge discount - $2,500 on a $500,000 price. It may get you the business - especially if you are in a hot market with a ton of competition.

I would recommend that you offer the full buyer's agent commission.

Rick Santasiere · Answer

@Jorge MaassThis is a tough scenario, and I will share my thoughts as well as my perception from others.  I, personally think it's completely fine to discount my commission.  But I am a broker and own my own business.  The problem lies in the precedent.  If "word" get's out that you reduce your fees, your colleague's could fins out and call you a "discount broker." They could say that you as the agent would provide discount services (downplaying your value to other sellers in the area) So it's tough.  Have I done it? Yes.  Do I broadcast it and tell the world? Nope.  I do something with most of my listings, where I reduce my commission by .5% if I bring in the buyer for the property.  This works for me AND the seller in that I get to lock up a double dip commission, and they save some $$.  It also makes it easier when treading in a transaction where I am representing both parties.  Does your broker allow you to reduce commission post contract signing? I know mist big box shops only allow you to go so low anyway, so most won't allow it..

Jorge Maass · Answer

Would you do it if it was a million dollar price? I mean 2% of one million still beats 3% of $350,000 by a lot without much added work.

How often do you discount your commission?

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