Stop Apologizing for Charging for Services
Real estate and relocation professionals, need to stop apologizing for what we charge for our services. For some reason, the real estate industry has done a really bad job of educating the public on how and when and what they get paid for. If we were to stop people on the street and ask them how a real estate sales person gets paid, I suspect most of them would either say they don’t know or ‘from the sales commission’. But they really have no concept of where the money comes from, or how it is divided. That’s on us. Somewhere along the way, because math is involved based on percentages and splits, it became too complicated to easily articulate without a calculator, a white board and finger puppets. People think the paycheck is X% x property sales price. Way off. Lots of fees, splits, taxes, expenses, marketing costs and other random stuff diminish the take home and it further complicates the story. The entire commission model creates confusion, but it is how agents and brokers currently get paid, so I suspect it is here to stay for now. Some agents do a brilliant job of defending their commission, others easily cave to get the deal. If you are providing value above all others, there should be nothing to defend.
I remember during the last market downturn, a friend of mine who sells insurance said to me “why don’t Realtors have to take a pay cut when the market is bad like I have to?” I laughed out loud. I responded that not only have they taken a pay cut due to reduced sales prices, but they had to work twice as hard and spend twice as much to market homes that you couldn’t give away.
People aren’t really comfortable in general talking about how we get paid, particularly before the services have been rendered. When you go into a sit down restaurant, you don’t pay before you get the food, but it is clearly outlined what you will pay and then the tip is up to you to validate the overall experience. I think part of the rub for people is that even if the agent does a terrible job, they still get paid the same as an amazing agent. But what’s different now, is court of public judgement. Online reviews have improved the overall service delivery in our industry. One rough online review can cost a lot more in future business than the commission earned on the deal that went sideways.
Charge for your expertise
In relocation, the clientele is partially made up of prospects, recruits, renters and possible transferees that may or may not ever move and buy or sell a home, but require our services. They may have not yet committed to the job or to relocate or they don’t have the ability to buy. Often brokers and their agents are expected to spend hours and sometimes days hauling them around to sell the city to help the company lock down this prospective employee. There is nothing wrong with that as long as their time is paid for. If a potential employee has not accepted a job in that city or they cannot buy, then the agent’s time should be paid for.
It’s often confusing to the source who delivered the relocation client to the broker because they know agents and brokers get paid from commission, but there isn’t commission when you are touring people and doing exhaustive research and previewing properties. You are in essence, taking the agent away from paying clients who are a guaranteed buyer or seller when you ask them to provide tour services for free. Whether it’s hourly or by the tour, it should be compensated if there’s not a sale at the end of it. It would be like asking an attorney to spend a day going over a contract, they are happy to do it, but you better know you are paying them by the hour for their expertise.
Tell them what you charge
I think the challenge is that since sales associates and their broker get paid when they sell a house, and it magically comes out of the proceeds of the sale, sometimes they really aren’t comfortable addressing other services that are performed outside of an actual purchase or sale of a property. So the key to that is to have a sales sheet that explains exactly what various services cost and what you get for them that is presented up front.
Help them understand the value you bring
Since many corporations use relocation management companies, sometimes the RMC has already established their own pricing they will charge the corporation for facilitating the service. But they shouldn’t dictate what a broker is paid, you have to decide what a fair price is in your market and stick to it. In some markets, healthy commissions are paid on rentals, but some markets very few commissions are paid. Know how to explain it and don’t apologize for it. When someone buys or sells a property, commission pays for that, everything else should be fee based. Think about how many times agents have hauled around potential buyers for days and they end up using another agent or renting. There is enough pain in those situations to merit ensuring all other payment for services are agreed to up front.
Even if you provide a rental tour and they don’t find a rental that day, you are still performing a service that should be compensated. If you provide an area tour and they don’t accept the job, you still are providing market experts to perform a service, just like an attorney does. Have you ever heard an attorney apologize for their hourly fee--they usually wear it as a badge of honor. It’s also important to put the emotional and tangible deliverables directly in the invoice. How did your services help the customer and the source of the business?
If a corporation or RMC tells you they don’t pay for that service, then be prepared to defend why your brokerage doesn’t do it for free. Articulate your value. Sometimes the person in the corporation minding the benefits packages is too far removed to understand each market nuance. People that do these things for free are typically trying to get their foot in the door and it may be a shortsighted tradeoff for trying to get the buyers and listings. But keep in mind, someone at that broker is providing that service for free and that someone may not be the one who benefits from the next buyer or seller. Stick to your guns and proudly charge for the services that help a family decide to accept a job and decide to relocate, helping their corporation win the war for talent. It’s smart business.
“Earn your success based on service to others, not at the expense of others.” ~ H. Jackson Browne, Jr. , Author of Life’s Little Instruction Book
