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COMMISSIONS

COMMISSIONS. Tuesday June 2, 2009. COMMISSIONS. IN THIS ECONOMY, PEOPLE ARE LOOKING TO SAVE MONEY. WE CAN’T REALLY BLAME THEM FOR THAT. WE ARE THE SAME WAY. PEOPLE WANT VALUE. REGARDLESS OF THE ECONOMY, CONSUMERS ALWAYS WANT VALUE. NO MATTER WHAT THE PRODUCT OR SERVICE IS

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COMMISSIONS

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  1. COMMISSIONS Tuesday June 2, 2009

  2. COMMISSIONS • IN THIS ECONOMY, PEOPLE ARE LOOKING TO SAVE MONEY. • WE CAN’T REALLY BLAME THEM FOR THAT. • WE ARE THE SAME WAY.

  3. PEOPLE WANT VALUE • REGARDLESS OF THE ECONOMY, CONSUMERS ALWAYS WANT VALUE. • NO MATTER WHAT THE PRODUCT OR SERVICE IS • THEY WANT TO FEEL THEY GOT EVERYTHING THEY NEEDED - AND THEN SOME FOR THE MONEY THEY PAID.

  4. VALUE REIGNS SUPREME! • IF WE COMMUNICATE OUR VALUE THE RIGHT WAY, WE WILL PROTECT OUR COMMISSIONS. • IF YOU CAN DEMONSTRATE YOUR VALUE EFFECTIVELY, YOU WILL LEAP FAR ABOVE YOUR COMPETITORS.

  5. COMMISSION MYTH OR MISCONCEPTION • THERE IS A RAMPID COMMISSION MYTH OR MISCONCEPTION AMONG TODAYS REAL ESTATE SELLERS. THAT MYTH OR MISCONCEPTION IS: • “THAT THE LESS A SELLER PAYS IN COMMISSION, THE MORE MONEY HE/SHE PUTS IN HIS POCKET.”

  6. UNDERSTAND THE FALSE ASSUMPTIONS • IT IS IMPERATIVE THAT YOU UNDERSTAND THE FALSE ASSUMPTIONS THE COMMISSION MYTH IS BUILT UPON, AND THEN…. • LEARN HOW TO ARTICULATE THEM WITH CONFIDENCE AND COMPETENCE.

  7. WHY DO YOU CHARGE WHATEVER YOU CHARGE? • MOST OF US CHARGE WHAT WE BELIEVE WE ARE WORTH. • MANY AGENTS HAVE GUILT FEELINGS ABOUT CHARGING THE CONSUMER MORE. • SOME OF US ARE WORRIED THE SELLER CAN GET THE SAME SERVICE FOR LESS, AND WILL CHOOSE SOMEONE ELSE.

  8. WAYS TO DEMONSTRATE OUR VALUE: OVERCOMING OBJECTIONS TO COMMISSION: • DO YOU KNOW YOUR LIST PRICE TO SALES PRICE RATIO COMPARED TO THE BOARD, OR COMPARED TO YOUR COMPETITOR(S)? • WHAT IS YOUR PRICE MARKDOWN PERCENTAGE? • HOW DOES IT COMPARE TO THE BOARD AVERAGE, OR YOUR COMPETITIORS MARKDOWN PERCENTAGE?

  9. WAYS TO DEMONSTRATE OUR VALUE: • EX. – IF YOUR LIST PRICE TO SALES PRICE PERCENTAGE (MARKDOWN) IS 2% AND YOU CHARGE A 6% COMMISSION, THEN THE TOTAL COST IS 8% (PLUS THE CUSTOMARY CLOSING COSTS) • IF YOUR COMPETITOR’S LIST PRICE TO SALES PRICE PERCENTAGE (MARKDOWN) IS 5% AND HE/SHE CHARGES A FOUR PERCENT COMMISSION, THEN THE TOTAL COST IS 9% (PLUS THE CUSTOMARY CLOSING COSTS)

  10. WAYS TO DEMONSTRATE OUR VALUE: • DO YOU KNOW YOUR AVERAGE DAYS ON MARKET COMPARED TO THE BOARD AVERAGE, OR THE AVERAGE D.O.M. FOR YOUR COMPETITOR? • TIME IS MONEY!!! AVERAGE HOME IN THE VALLEY IN 2008 WENT DOWN OVER 2% PER MONTH. • EX. - IF YOUR AVERAGE DAYS ON MARKET IS 60 DAYS AND YOUR COMPETITOR IS FOUR MONTHS, THEN YOU SAVED THE SELLER FOUR PERCENT! MAY CALCULATE IN THEIR EXPIREDS AND CANCELLEDS.

  11. WHAT ARE YOUR NEGOTIATING SKILLS WORTH? • HOW MUCH CAN YOU SAVE A SELLER ON HOME INSPECTION REQUESTS? • SAVING YOUR SELLER ONE OR TWO PERCENT IN THIS ARENA IS JUST AS CRITICAL AS SAVING THEM MONEY ON SALES PRICE OR COMMISSIONS.

  12. WHAT ARE YOUR NEGOTIATING SKILLS WORTH? • CALCULATE THE AMOUNT THAT CAN BE SAVED BY A SELLER BY HAVING A TRULY PROFESSIONAL AGENT DO THE WORK FOR THE APPRAISER. • A SAVINGS OF 1-3 PERCENT TO THE SELLER CAN OFTEN BE ACHIEVED.

  13. SIX ONE DOLLAR BILLS DEMONSTRATION: • THREE GO TO THE COMPANY AND AGENT THAT BRINGS IN THE BUYER. • ONE GOES TO MY COMPANY. • ONE GOES TO ME AND MY FAMILY. • ONE GOES TOWARDS THE MARKETING OF YOUR HOME.

  14. CARL & JEFF’S 186 THINGS THEY DO WHEN TAKING A LISTING CARL & JEFF BLACK’S 186 THINGS THEY DO WHEN TAKING A LISTING TO DEMONSTRATE THEIR VALUE IS AN INCREDIBLE TOOL. • YOU MUST BE ABLE TO ARTICULATE THE IMPORTANCE OF THIS TOOL, AND FOLLOW UP AS YOU DO EACH OF THESE THINGS. • THEN THE SELLER WILL FEEL THEY GOT THEIR MONEYS WORTH, - AND THEN SOME!

  15. PAST VS. PRESENT • 2005 AVERAGE SALES PRICE OF $640,000 X 2.5% = $ 16,000. • 2009 AVERAGE SALES PRICE OF $350,000 X 3.0% = $ 10,500. • 2009 AVERAGE SALES PRICE OF $350,000 X 2.5% = $ 8,750. CONCLUSION: THE MARKET IS ALREADY GIVING YOU A CUT IN PAY. • IS IT EASIER OR MORE DIFFICULT TO GET A HOME SOLD TODAY THAN IN 2005?

  16. TODAY’S MARKET • DO WE SPEND MORE OR LESS TIME, AND MONEY IN MARKETING TO GET A HOME SOLD IN TODAYS MARKET? • OFTEN IT IS NECESSARY TO SELL THE HOME 2, 3, OR 4 TIMES. • THE DAYS ON THE MARKET IS LONGER NOW THAN BACK THEN. • THE SKILL IT TAKES TO CLOSE AN ESCROW IS MUCH GREATER NOW. • THE CHALLENGES TODAY ARE GREATER, CONSIDERING THE TIGHTENING OF CREDIT & FINANCING, APPRAISAL ISSUES . . .

  17. F.S.B.O’s • F.S.B.O.’S ARE THE MOST ARDENT BELIEVERS IN THE COMMISSION MYTH OR MISCONCEPTION. • THESE SELLERS FORGET THAT BUYERS WHO WANT TO BUY A F.S.B.O. ARE LOOKING FOR A BARGAIN.

  18. STUDIES REVEAL: • ACCORDING TO A RECENT N.A.R. STUDY, THE AVERAGE MARKDOWN OF SELLERS WHO DO ALL THE WORK THEMSELVES (WITHOUT ANY ASSISTANCE FROM A REAL ESTATE AGENT) IS 15.4%!!! • A SEPARATE USA TODAY STUDY CAME UP WITH AN EVEN HIGHER NUMBER!!! • THEY MAY BE PAYING ZERO DOLLARS IN COMMISSION, BUT THE TOTAL COST OF GETTING THEIR HOMES SOLD FAR EXCEEDED ANY COMMISSION THAT SHOULD HAVE BEEN PAID.

  19. BY THE WAY… • WHAT EVER HAPPENED TO ALL THE DISCOUNT BROKERS FROM THREE YEARS AGO? • WHAT HAS HAPPENED TO HELP-U-SELL?

  20. OUR CONCLUSION: SELLERS JUST NEED TO BE EDUCATED AND ENLIGHTENED!

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