Chapter News

The debate: Should sales agents be willing to be negotiate on commission?

We ask REINSW members which side of the debate they fall on.
 

YES

 
Aris Dendrinos
Licensee-in-charge at Richardson & Wrench Marrickville

While every agent worth their salt would defiantly claim they never reduce their standard commission in order to secure a vendor's business, I think the reality is very different.

As agents, we work in a totally deregulated free market system with no hard and fast rules regarding what we can charge. It is dog eat dog and extremely competitive. To survive and prosper you have to be adaptable and think on your feet.

So what does an agent consider before they decide to reduce their commission?

There are three key elements:

  1. The vendor's motivation
    All owners start with a preordained price in mind but the ones who are selling for a strong reason will adjust if need be, as a skilled agent proves to them what the current market will reasonably pay.
  2. Level of agent competition
    It's easy to stand your ground on commission when you are the only agent the vendors have spoken to. But it's an entirely different story when you are up against multiple competitors, several of which you respect and know can quite successfully sell the property.
  3. Level of purchaser competition
    Some homes are clearly more popular than others. They usually fall in a high demand price category and have something unique about them which is attractive to a wide range of buyers. A fantastic street that trades rarely is the most obvious example.

These types of homes provide much more than a commission. They sell quickly and efficiently. Most important of all, due to their attractiveness, they sell spectacularly generating huge interest and future business through other local owners you meet in the selling process.

In these circumstances, and these alone, I think it is very logical to consider reducing standard commission rates.

By all means fight the good fight with the vendor and limit the discount to as low as possible. But if it's one of those hotter than hot listings, is it really worth your competitor getting it for a fraction lower?

No, I didn't think so. 
 


    

NO

 
Bryce Gibson
Principal at LJ Hooker Cessnock

You wouldn’t go to a doctor for example and say, ‘great, thanks for your expertise and service, but I don’t want to pay your full asking price’.

 

It’s the same in real estate. We are professionals and we offer a great service. The first thing you need to do before you sell real estate is sell yourself. You need to have confidence in yourself and your ability to sell.

We have a very healthy market share in the Hunter area and are able to charge higher commission rates.

The reason we can confidently do this is because my team and I are well trained, highly skilled and motivated to get the job done. Our numbers don’t lie and if you and your team as a collective aren’t all the things you say you are, you won’t get the calls and you won’t seal the deal.

This is how I can easily justify charging higher commissions than the others. It’s pretty simple really.

We offer vendors access to the 14 different real estate websites both here in Australia and overseas. These websites included Hunter Homes, LJ Hooker and overseas offerings included Juwai.

Our multi award winning LJ Hooker Cessnock team also successfully competes with other real estate networks and agents who offer free marketing. We don’t need to offer free marketing because we have a diverse skill set, are expert marketers and negotiators. I’ve done more than 1,000 hours of training over the past 12 years.

I started selling real estate when I was 16, so I am very confident in the sales process, am very knowledgeable and my skills are valuable.

Most people recognise this and that’s why we consistently get the business.

The kicker for me is that you hire a professional for their sphere of expertise and you trust them with your business so you are charged accordingly – you don’t negotiate with a professional.


This article was first published in the November 2013 edition of the REINSW Real Estate Journal.