Beginning mid-August 2024, MLS participants will be required to enter into written agreements with buyers before showing a home. This means buyer’s agents must be prepared to have more conversations about their fees with clients.
Please understand that written buyer agent agreements are the norm in some states. It’s also important to note that (of course) buyer’s agents will continue to be paid, and compensation has always been (and will continue to be) negotiable. The NAR settlement did not change this. (In fact, listing brokers and sellers could continue to offer compensation for buyer broker services, but such offers can not be communicated via the MLS.)
Knowing that more conversations about fees are in your future, read these ten tips for negotiating with clients.
How to Negotiate with Your Clients for REALTOR® Fees
If you are an experienced listing agent, you are probably used to negotiating your fees with potential clients. However, here’s some advice for new agents and buyer’s agents who may not have had this experience with negotiation.
1. Explain the benefit of having buyer representation
You can negotiate more confidently by explaining your worth to your buyer client. Share research and case studies showing how buyer representation helps clients. It is imperative for buyer brokers to clearly articulate what services and value they provide.
2. Know your worth
It’s not enough to prove that buyers need representation. You must also share your value proposition. Emphasize your experience, market knowledge, and past successes. Show what differentiates you from other agents in your area. In short, prove you are the best real estate agent for this job.
3. Clearly explain your commission structure or fees
One benefit of the recent NAR settlement is that it requires real estate agents to be more transparent about commissions. During negotiations, clearly explain your commission structure or fees. Be open about how commissions are split and the value your client receives from your services. Finally, explain what clients get for the cost. Learn more about this in the next section.
4. Detail your costs
Remind your client that your commission is not entirely profit. Explain the expenses involved in selling a property, such as marketing costs and time investment. There are also expenses associated with representing a buyer, including the time spent showing properties and negotiating.
5. Emphasize long-term value
Buyers can purchase a property without representation. So, it’s up to you to explain how your services can result in a higher net gain for the client even after paying your commission. Explain the benefits of having a licensed professional handle negotiations, paperwork, and the closing process. After all, you’ll not only save your client’s time by taking care of the details of the sale, but you will also reduce your client’s stress levels.
6. Build rapport
Building a personal connection with your potential client can make them more inclined to agree to your terms. Be an active listener to understand their concerns and needs. Build trust to inspire confidence in your services and to make your potential clients comfortable with your proposed commission.
7. Provide options
Offer different service packages at varying commission rates (or flat fees) to cater to various client needs and budgets.
Some seller agents have success with a tiered commission structure, where a higher commission is tied to a higher selling price. If your seller wants to move quickly on the sale, you can offer a performance-based commission, where your compensation is linked to the closing date.
Buyer agents may also find success in accepting a flat fee or hourly fee for services.
8. Offer a satisfaction guarantee
Selecting and buying a home is a stressful process for many. If your client is having a difficult time making a decision, consider offering a satisfaction guarantee. Under the warranty, agree to sell the property without collecting a commission if they are unhappy with the purchase within a given time.
Also, consider allowing clients to terminate your agreement within a certain period if they are unsatisfied with your service.
9. Remain confident during negotiations
Having an upfront discussion about your fees may feel awkward. However, it’s critical that you know the minimum commission rate you’re willing to accept. Be prepared to walk away from the job if necessary.
Of course, if they accept your rates, offer white-glove service to your clients.
10. Remain professional
Approach the negotiations with confidence in your worth, but remain respectful of the client’s concerns. Be polite – always. Building a positive reputation within your community is crucial to your real estate business. A few bad online reviews can reduce your ability to attract new clients.
Show Your Worth: Be the Most Knowledgeable Real Estate Agent in Your Community
Real estate laws, regulations, and practices change at the local, state, and national levels. Stay informed about what is happening in your profession by following the Colibri Real Estate School blog and taking continuing education courses with our sister school, McKissock Learning. Colibri Real Estate (formerly Real Estate Express) is dedicated to the industry. We offer top-tier online real estate license courses for prospective and current agents and those wishing to upgrade to a broker license. Contact a member of our team today to have your licensing questions answered. We can’t wait to help you become a better real estate agent!
Key Takeaways
- Starting mid-August 2024, MLS participants must enter into written agreements with buyers before showing a home, necessitating more discussions about REALTOR® fees.
- Clearly explain the benefits of buyer representation, your commission structure, and the associated costs. Emphasize the value and services provided to justify your fees.
- Provide various service packages and commission structures to cater to different client needs. Consider offering satisfaction guarantees or allowing clients to terminate agreements if unsatisfied.
- Approach fee negotiations with confidence and professionalism, building rapport with clients. Be prepared to walk away if necessary, and always maintain a respectful attitude to ensure a positive reputation.
