Published
January 8, 2023

I tried to charge less commission but sellers wouldn't go for it.

Trying new ideas can be a good thing. In my experience, sellers expect to pay the market rate. Don't drop your rate, improve your service.

"Real Estate Commission Reform."  That was the name of the program I created back in 2011 that would disrupt the way real estate agents charge their seller clients to list their home.  I was offering full service represenation complete with a home staging consultation, interactive floorpans, custom website, professional photos and everything else you get with a full-service agent for $4500 or 3%, whichever was less (this did not include the additional 3% that would be offered to the buyer’s broker).

Essentially, I was putting a cap on the total commission I charged to list a home.  If  your home sold for $500,000, as your listing agent I would receive $4500.  A $200,000 sale would still pay me $4500 but a $100,000 sale would only pay me 3% which is $3000.

My sales pitch was simple.  "I do the same amount of work for a $150,000 home that I do for a $300,000 home.  So why should you, Mr. and Mrs. Seller, be forced to pay more simply because you’ve worked hard enough in your lives to afford a nicer home?”

Whether or not most agents want to admit it, we don’t vary the listing and marketing process much for homes that sell in the middle of the market.  For total dumps, we generally reduce our services (no open houses or 3D Tours) and for luxury listings, we should be spending more money to reach high end buyers. But for the 80% of homes that sell in the middle, we tend to offer the same set of services across the board. 

Real Estate Commission Reform (RECR) was modeled after the stereotypical political ad.  I shot a series of videos in multiple locations explaining why change is needed in real estate.  How great my systems are for selling homes and how improvements in technology has made it easier for an agent to handle more business at one time, which is why I can afford to charge less.

I put about $10,000 into a branding, a custom website, beautifully produced DVDs with a trifold case (not sure what I was thinking, I guess I DVDs were more popular back then) and mail blasted Expireds and FSBOs with my message. Then, I sat next to my phone and expected to get crazy busy.

But nothing happened.  

I started sending out additional followup letters and posting my video links to local websites and on social media but still saw little interest.  After a couple weeks, I finally was able to generate a few listing appointments through sheer effort and persistence.  I knew that as soon as I shared RECR in person, the seller would instantly see the benefit and list with me on the spot.  

I remember my first RECR listing appointment like it was yesterday.  We toured his $750,000 house, I asked insightful questions, we talked about the Bengals, I acted like I wasn’t bothered by his dog humping my leg, the usual.  We talked through the market, my impressive sales statistics and my strategy to sell his home.  Things were moving along great.  Then I ended my presentation with a bombshell - my compensation was only $4500!  

His response, "so what’s the catch?"

This line was the same line I got on the next 3 appointments. Things got awkward each time I revealed the significant savings they would receive.  Instead of creating excitement, I created confusion.  Every seller felt the need to do additional research on me and my brokerage because in their mind, there was definitely a catch. 

I was working with a real estate coach who asked me a very important question that made me completely rethink my strategy.  He said “There are plenty of agents charging a full 6% commission rate and plenty of sellers happy to pay it. Why not just be a better agent and charge more?" 

At first I argued. I had already invested a lot of time, money and brainpower into RECR and it seemed like too good of an idea not to work.  But I decided to take his advice and I removed all mention of RECR and the $4500 commission rate from my listing presentation.  Fast forward to my next listing appointment where we talked through the market, my impressive sales statistics and my strategy to sell their home. When asked about my commission rate, I stated “6%.”  Listing signed that day. 

New companies are popping up all the time with interesting pricing and marketing strategies that threaten the traditional way Realtors do business.  And although most of these companies can’t even show real traction in their local market, the Real Estate Establishment is quick to pounce and tear them apart for being different.

But we need these companies to try new things and more importantly, to fail.  It reinforces that the traditional way of representing a buyer or seller through a transaction is what the general public wants and is willing to pay for. I tried to disrupt an industry that had no real interest in being disrupted and learned my lesson. Sometimes it’s better to outperform the competition rather than to simply be different.    

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