Commission Reductions – What’s In It For Me?

I read a recent blog (not the first here) about negotiating commissions and fee reductions.

I am the first to admit that I have reduced fees on the back end in the past to make a deal go through.  Might I suggest, dear readers, that (a) this is not the norm and (b) you had better have a good reason for asking, other than you need to make more money on the deal on your end.

Let's say, for the sake of argument, that an agents fee might be equal to approximately $10,000 at closing.  Percentages don't make a difference here.  Let's just use cash.

As a seller, you might think that this fee is a little high.  I will briefly point out that the agent does not get the entire $10,000.  Some goes to the broker, some to his assistant, some to marketing fees, some to board dues, some to the agent on the other side.  Just like any business owner, we have overhead.

Back to the conversation.  You, as the seller, want the agent to consider taking a lower fee.  Ok.  I get that.  You want a lower price.  Life is like that.  Guess what?  I want a higher price.  After overhead, the $10,000 ain't a great payday.

A lot of people ask me what my fee is.  I like to tell them that it is more than you want to be charged, but less than I want to charge you.  It always gets a smile if the person asking the question has EVER been in sales.

Back to the conversation again.  In the event that I or anyone else would consider taking a lower cash fee, there needs to be a reason.  There needs to be upside in the deal somewhere else.  The guy that is just going to cave at the question is going to lose you money somewhere else, trust me. 

So I ask you, Mr. Seller, why should I take a reduced fee?  I'm willing to discuss it, but what else is in it for me?  What do you have to trade? 

• Can I use your timeshare at no cost?  You might pay $250 for the week, but it would cost me $1500 for a hotel room.
• My wife would love a mink coat and the wife you just divorced seems to have left hers in YOUR closet.
• Do you ever drive the dusty 1972 Cutlass in your garage?  I have been looking for one to fix up.
• How about selling me a hot tub at your dealers cost?  You are not out any money, you just don't get a profit.  We both win.
• Is that Mr. XYZ in that picture with you?  I have been trying to get a meeting with him for 2 years.

Now I am not saying that I, or anyone else, are definitely willing to barter for commissions or even partial commissions.  My point is that there needs to be some advantage for both sides if a fee reduction is to be considered.  Agents are taught never to negotiate fees and some might even act insulted.  I think that there are more than 27 ways to skin a cat. 

That said, here is my personal disclosure.  I guarantee you that I will end up with more "value" in the "stuff" than the cash value of the decrease.  Call it New Math.

Now, I need more listings, a hot tub, an alignment on my car, a vacation, the guts of my grill rebuilt, some landscaping, my office cleaned and a bunch of other things.  Who wants to negotiate fees?