\nCutting your commission is a dangerous game.<\/p>\n<\/figcaption>\n<\/figure>\n
Over the course of my career, I\u2019ve lost count of how many times an agent has come to me frustrated\u2014upset that a listing agent reduced their commission, and now their client is ready to submit an LOI. They feel cheated. And understandably so. When commissions are cut, or are below standard rates, it creates confusion, tension, and often, resentment. But why does it happen?<\/p>\n
Let\u2019s take a closer look.<\/p>\n
The Allure of Winning a Listing \u2014 At a Price<\/strong><\/p>\nIn our company, we don\u2019t allow agents to cut their commissions. Here\u2019s why: once you start down that path, it\u2019s incredibly difficult to turn back. The industry is small\u2014word spreads fast. If you\u2019re known as the agent who negotiates fees, you\u2019ll quickly find yourself trapped at the bottom of the pricing ladder, unable to climb back up to market rates.<\/p>\n
You may win a few listings at first, but over time, you\u2019ll be seen as a discount agent. Some agents may avoid showing your listings, thereby hurting the actual client, and causing more work, with less transactions for the company that is cutting the offered commissions. We\u2019ve watched this happen repeatedly with discount brokerages and agents. They rarely become long-term players in the market. In fact, most fade out after a few years or have to change their business model to stay competitive.<\/p>\n
Commission Cuts During Market Cycles<\/strong><\/p>\nIn tight markets with low inventory, we\u2019ve experienced pressure to reduce commissions\u2014especially from sellers or landlords trying to cut costs wherever possible. In rare cases, we\u2019ve made slight adjustments, but we\u2019ve always protected the buyer\/tenant representative\u2019s full commission that they expect to receive.<\/p>\n
That\u2019s key: relationships matter. Our philosophy is simple\u2014play the long game. If you want to maintain good standing in the industry and continue doing deals with other professionals, you must think beyond a single transaction. The most successful agents consider what\u2019s best for everyone involved, not just themselves or their client.<\/p>\n
That mentality builds trust. It keeps you in business. And it encourages others to work with you again.<\/p>\n
To Show or Not to Show? The Discount Dilemma<\/strong><\/p>\nThere\u2019s a real, and sometimes uncomfortable, question that arises in our industry:<\/p>\n
\u201cShould I show a property with a discounted commission?\u201d<\/p>\n
Ethically and professionally, the answer is yes\u2014you are obligated to show your client all properties that meet their needs, regardless of the commission offered.<\/p>\n
But let\u2019s be real: many agents simply won\u2019t.<\/p>\n
Why? Because they feel disrespected. If a listing agent is willing to discount their value, it casts doubt on the professionalism of the entire deal. The thought becomes: Why should I invest time and effort working with someone who devalues their own services?<\/p>\n
Over time, those listings get ignored. The agents behind them become isolated. And that\u2019s not good for anyone\u2014especially the client.<\/p>\n
It can also appear to be a redflag to the potential tenant, if the landlord isn\u2019t willing to pay a market rate commission, what other \u201cshortcuts\u201d are they taking when it comes to managing the building?<\/p>\n
A Workaround for Buyer\/Tenant Reps<\/strong><\/p>\nThere is a way for buyer\/tenant agents to protect themselves in discounted deals. Agents can enter into exclusive representation agreements that clearly state the buyer or tenant will make up the difference in commission. Some states already require that an agent working with a buyer must have a buyer representation agreement spelling out how the commission structures will work.<\/p>\n
It\u2019s transparent, it\u2019s fair, and\u2014most importantly\u2014it keeps the relationship between agents and clients honest and upfront. If you go this route, make sure your client fully understands and agrees to this clause. Communication is key.<\/p>\n
Looking Ahead: What the NAR Lawsuit Could Mean<\/strong><\/p>\nWith the recent NAR lawsuit shaking the industry, we may see sweeping changes to how commissions are handled\u2014particularly around transparency. This could have a major impact on both residential and commercial real estate, but likely a larger impact on residential real estate transactions.<\/p>\n
One thing is certain: now more than ever, agents must lead with integrity, clarity, and professionalism. Cutting commissions might seem like a shortcut to win a deal, but in the long run, it can damage your brand, your relationships, and your, and your clients\u2019, business.<\/p>\n
The mindset should always be about building a business that will be sustainable well into the future.<\/p>\n<\/div>\n\n","protected":false},"excerpt":{"rendered":"
Author: Joe Killinger This post originally appeared on Joe Killinger Blog and is republished with permission. Find out how to blog with us on theBrokerList. Cutting your commission is a dangerous game. Over the course of my career, I\u2019ve lost count of how many times an agent has come to me frustrated\u2014upset that a listing […]<\/p>\n","protected":false},"author":1,"featured_media":254251,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[99],"tags":[11530,18901,2070,17752,4856,1256,482],"dealstore":[],"offerexpiration":[],"class_list":["post-254250","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate","tag-agents","tag-commissions","tag-cut","tag-dangerous","tag-estate","tag-game","tag-real"],"yoast_head":"\n
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