How to negotiate the commission on selling your house and why your Realtor will love it.

in #real7 years ago

I was a Realtor for 19 years and came up with this idea I used to expand my business. This is a form of that idea written for buyers and sellers.

As a future seller of real estate, what if you could set up a system to save yourself hundreds of dollars or even thousands and ten of thousands of dollars on Realtor commission over the course of your lifetime.

No negotiating with the Realtor, no Realtors who cut services for a lower commission and what if I told you that your Realtor would be THRILLED to do it!

Would you be interested?

You as the client have something that all Realtors want. You work with people that you know are in the market for buying or selling a home. You have neighbors, family members, friends and people you are from church or activities your kids are involved in. But you never tell your Realtor, because you just don't want to get involved. You don't want to get in the middle of something in case it doesn't work out for them.

But what if you could use this knowledge to "make" money. Now if you aren't licensed as an agent you can't be paid directly from the Realtor for a referral. But there is another way.

Referrals is what we are talking about here. Every Realtor asks for them, but rarely gets them. If you could make money from giving referrals would you? Just for making a phone call. If I asked you to make a phone call to give someone a name and phone number, I would pay you hundreds of dollars, would you do it? Of course you would. A minute on the phone for a few hundred dollars. Who wouldn't do that?

Here is how you do it and how you explain it to your Realtor. They will gladly go along and if they don't have the vision to see the opportunity here.......find another Realtor.

You invite them over to your house and tell them you will feed them referrals if they go along with your plan. They will listen very attentively.

Someday you will be selling your house and don't want to pay the commission that your Realtor would normally charge you. You should find out from your Realtor what they would charge if you sold your house. You may already know this in your area. Don't try to negotiate this. Go along with whatever is standard for that Realtor or their company.

And here is what you will do for them.

Tell them you will help them find business and in return the Realtor will reduce your future commission a small percentage with each one.

Let's say the Realtor tells you the commission they would charge you would be 6%. Don't negotiate this, just go along. You want to make this beneficial for both of you. A win-win situation. You want to remain on good terms with them and make sure you are both happy.

Tell them if you find them a listing they will reduce your future commission by .25 percent. For each buyer they will reduce your future commission by .10 percent. Set a "bottom" percentage. Say 4%. Once you get your future commission down to 4% that is as low as they will go. The reason for this is when a Realtor puts your house on the market, they may have to pay another company who brings the buyer. You can't "give away" their commission.

And the reduction only will be permanent when the referral closes. So if they are a buyer and can't get a loan or if the are a seller and can't sell their close, no credit is given. If the Realtor doesn't get paid, you don't either. That's fair.

You have a friend. Ben and Sally Green. They need to sell their house and are buying a bigger one. Your Realtor sells the house and sells them another one. You have just earned a .25 reduction for the listing and a .10 reduction for the new house they bought. You had a buyer and seller. Your future commission when you sell your house has gone from 6% to 5.65%. Figure out what your house is worth and do the math. That's hundreds of dollars. And what did you do. Just gave the Realtor the lead. That's all.

Realtors spend a LOT of money looking for new business. I know. I used to be a Realtor.

You explain to them, that this idea will cut their expenses, provide them new business which will increase their client base and now they can do this with all their clients. Providing them an unlimited source of referrals. Tell the Realtor to do their own math if they are hesitant to do this.

The amount they cut your future commission is very small compared to the money they make on the new business that is being handed to them. It's like you are working for them, finding them money they would have otherwise never got. You want them to be successful in the referral so you have an interest in making sure Ben and Sally Green list with them. It gives them an advantage over other Realtors. Ben and Sally will be more likely to listen to you than to the Realtor. The Realtor comes highly recommended from a friend.

The reason you tell the Realtor you get more of a reduction from a listing than a buyer is this. Every Realtor knows listings are worth more. Listings drive phone calls from the sign giving them a chance at even more business, that is why you will get a bigger reduction than with a buyer. Also trying to reduce your commission from our example of 6% to 4% means the Realtor will get anywhere from 8 to 20 referrals from you. Again, they will understand the math. They would be foolish to pass this up.

All you do is make some phone calls and drive the business to the Realtor. For this you make hundreds of dollars. And the reduction stays in place for life. You may to a different house, it doesn't matter. Every time you sell your commission would stay at 4%. If you own a $100,000 house, you would save $2000 (plus appropriate sales tax). What would you do with another $2000, plus let's say you moved again, you would save that much or even more if your house was worth more.

Make sure you have a contract with the Realtor, so that both of you agree on the terms, what the reductions will be and each time you get one, have the Realtor sign off on the reduction. Maybe even make it with their company in case the Realtor quits the business or dies. But if the Realtor moves to a different company, this shouldn't matter. It would follow them.

It's an easy thing to do. And any Realtor who has any sense about them would be more than happy to do this with you.

Make out a referral tracking list.

Name Address
You Your address

Referrals:

Name Address Reduction
Ben and Sally Green 123 Old house Listing .25
Ben and Sally Green 345 New house Buyer .10

Your future commission is now 5.65%

Each time you get them a buyer or seller you add to this. Your Realtor and their broker sign it and start saving yourself hundreds and thousands if not tens of thousand of dollars over your lifetime. And your Realtor will LOVE you for it!!

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