Intertec™ Commission Presentation Flashcards
1-23 demonstrate the benefits of a Full or Bonus Commission. 24-32 are used when the seller asks for your commission rate before you have made a listing or pricing presentation
Million Dollar Lawsuit
Suppose you were suing someone for $1million. You are in the right and deserve to win, but there are a lot of complicating factors and the case could go either way. You need an attorney with special expertise. You have three choices. One will take the case on contingency, but he wants 30% of the amount you win. That’s $300,000 if you win all; $150,000 if you settle for half; $75,000 if you settle for ¼. You decide to pass.
The second attorney believes you deserve every penny and says he will leave no stone unturned to win a judgment for the entire amount. He will require a $50,000 fee.
The third attorney also believes you deserve the $1 million but expects to reach a compromise somewhere in the middle. He will discount his fee and take the case for $25,000.
If you take the second attorney, you will win a full judgment and leave the courtroom with $950,000.
If you take the third attorney, he will ultimately encourage you to accept a $500,000 judgment.
What would it cost you to engage the discount attorney? Do the math: You would lose $475,000!
Target Market
When we use the term ‘marketing your home’ we need to ask: who or what is our target market? The answer is: the 80 or so active agents who focus on this area.
Four Keys Factors
There are Four Key Factors to getting your home sold for the most money and in the shortest time:
Agent … Price … Showability … Commission.
To get YOUR home sold quickly and for the most money, you MUST
- Select a listing agent who understands the problems and has solutions.
- Price your home to sell, not to list. Consider slightly less than competition.
- Make and keep your home and grounds very attractive.
- Consider commission as a Marketing Tool. Give all local agents an incentive to show your home – consider a bonus.
WOW Factors
To get the most money, the quickest sale and the fewest problems, give you home three WOW Factors. Your target market is the real estate agent who will find the buyer for your home. We don’t know which of the 80 or so local agents will find that buyer, so we need to give all agents three places to say Wow! Wow, this home is really priced right! Wow, this home really shows well! Wow, I can get a bonus commission!
Magnet/ Repellent
When you list your home at more than 6% (or local average) … your commission becomes a magnet. More salespeople will show your home … and with greater enthusiasm. But… when you list your home at less than 6% … your commission becomes a repellent. Salespeople will tend to show other homes. Do you want your commission to be a magnet… or a repellent?
1% Increase v. 5% Reduction
A 1% increase in commission will offset a 5% reduction in price every time.
Assumption
If you start with the assumption that a home will sell for X dollars and in X time regardless of who sells it, then finding a discount broker or a discount makes sense.
But … when you understand that a skilled full service agent can cause a home to sell for more money and in less time than the local average … then, finding a flat fee discount broker or agent is not a good idea because it will usually result in losing money.
Indirect Expenses
Keep in mind that if it takes longer to sell your home, you may have indirect expenses that eat away at your net.
Consider this: it often takes sellers an extra 90 days or more to sell through agents who discount … and … that can cost them a lot of money.
When sellers have already purchased a new home, already own their retirement home, have been transferred and are paying rent in their new location, or have any other place to live, every extra month it takes to sell the current house wastes about $1,500. On average interest, insurance, maintenance and utilities costs $1,500 a month. In 90 days that amounts to another $4,500 … gone … wasted! — How long would it normally take you to earn $4,500 after taxes?
What will it cost you if it takes an extra 90 days … or six months … to get this home sold?
Auction
If you offered something for sale at an auction and three people wanted it, you would get some bidding, right? (WFA) If ten people wanted it, would you get higher bids? (WFA) That’s the power of offering a Bonus Commission. You improve your chances that more agents show your home, more buyers see your home, and better offers are made.
Sellers Instincts
Most sellers instinctively want to raise the asking price so they have a chance to get a better offer or to leave themselves some negotiating room; instinctively want to lower the commission to minimize that expense; and instinctively want to sell the home pretty much as it is.
Experience, on the other hand, has proven that to NET the most money, get the quickest sale, and have the fewest problems, it’s much, much better to lower the price, raise the commission, and clean, de-clutter and stage the home for maximum showability.
Marketing Tool
Commission is not a liability or an expense: it is a Marketing Tool. It can be magnet that attracts the agents who have potential buyers … it can be neutral … or it can be a repellent that keeps agents away. Therefore, it can be an Asset or a Liability.
The question is: How do you turn the commission into an asset?
Your Decision
It’s your decision. Based on the information I have just given you, what commission do you think will get the most interest and activity from the real estate agents who will most likely find a buyer for your home?
Great Decision
Ok, Mr./Mrs., you have just made a great decision on the listing price. Now, let’s see about making a great decision on commission. (If listing price is only good, not great, say ‘good decision’.)
Offer v. Net
Which is more important… how much you offer … or how much you net?
Sellers Don’t Pay
Good news! Sellers don’t pay the commissions. Buyers pay.
