Cutting "Commission Cutters" Down to Size

When I started selling real estate, I was very young with no family in the area and most of my friends were still in college. My hard fought listing appointments were with expireds or FSBO's who usually wanted a deal on my commission. As a result, I was usually up against discount brokers.

They'd list for just 3% and offer 2% to the S/B but hope to double end and take the whole thing. I explained to sellers that the usual S/B commission was at least 2.5% and that agents wouldn't want to show a home that only paid 2% which would result in less exposure and ultimately a lower sale price.

For some reason, it was hard to explain this concept to home sellers but instead of getting frustrated, I set out to prove it to them. I did some research and found various properties that discount brokers had previously owned and sold and in nearly every case, they offered a 2.5% commission to the S/B -- sometimes more!

I'd lay out the evidence, sit back and ask the sellers why the discount brokers would offer 2.5% on their own home but just 2% for their clients? They'd look at each other and then back down at the paper and after a moment of silence, they'd realize that a low S/B commission wasn't in their best interest. I never lost out to a "commission cutter" again!

When selling their own homes, discount brokers wanted to attract as many agents as possible with a high S/B commission -- 2% simply wouldn’t cut it (pardon the pun). Furthermore, sellers figured out that discount brokers didn't care about steering agents away when they listed other people's homes because it meant they'd be more likely to double end the deal and keep the full 3%.

If you can’t find homes that discount brokers used to own, dig up homes they tried to sell at 2% which expired, were re-listed and sold soon after with an agent who offered a higher commission. Lines like "If I can’t even negotiate my own commission, how can you expect me to successfully negotiate the sale of your home?" are great but it’s best to show rock solid proof so they can come to their own conclusion.