Thinking About Discounting Your Fee? Think Again

by Steve Shull, Founder & Head Coach

I’ll be honest: it is not the easiest time to be a Full Fee Agent.

With inventory this low, competition for listings is at its highest. Any potential seller who calls you is almost certainly talking to other agents, and most of those agents are discounting their fees.

The pressure to follow suit is real.

If you don’t discount, you have to answer the uncomfortable question: why are you worth more than the others?

To be clear, this is ALWAYS the crux of the commission conversation.

Regardless of market conditions, there will ALWAYS be discount agents competing with you. These days, there are just more of them than usual. 

Still, the fundamental nature of the commission conversation remains the same.

If you’ve read The Full Fee Agent, you know that you do not get hired based on your fee.

You get hired (or not) based on whether you’re the Favorite or the Fool.

The Favorite is the person they want to work with—the person they trust to guide them and protect their interests. The Fool is the straw man—the person they “consider” just to gather free information and confirm their choice of the Favorite.

If you’re the Favorite, they will pay your fee, even if it is a little higher than everyone else’s. If you’re the Fool, they won’t pay your fee no matter how low you go.

This is how the world works 80% of the time. 

It’s true, once in a while a seller will hire the Fool if the financial incentive is big enough. When you feel desperate for a deal, it’s tempting to try to make that happen.

Something is better than nothing, right?

WRONG. 

First of all, discounting your fee eats directly into your bottom line. What sense does it make to spend your time and effort on a deal that barely puts any money in your pocket?

Second, discounting sets a precedent. You think you’re just discounting one deal, but what are you going to do if that client comes back for another deal or refers someone to you? You’ll feel obligated to give them a discount again.

Third and most importantly, bargain hunters are the WORST kind of client. 

You weren’t the one they really wanted to work with, so they don’t trust you and will probably resist you at every turn. 

Their primary concern is getting their money’s worth, so they’ll be extremely demanding and suspicious.

And because they’re so hard to please, they’re also the LEAST likely to bring you repeat and referral business in the future.

I know, it’s painful to watch a seller choose a discount agent over you, especially when you’re so hungry for business.

You assume they chose that agent because of their discounted fee.

You assume they would have chosen you if you had lowered your fee.

Both of those assumptions are probably FALSE.

And if they were true, that means the seller is a bargain hunter client who would have made your life miserable and generated little to no benefit for your business. 

This is why it’s more important than ever to MASTER the commission conversation.

It takes practice, and live role play is the best way to get your reps in. That's why I run a group coaching program that includes daily role play calls, where agents take turns practicing tough conversations with me and getting real-time feedback.

Even without a coaching group, you can still practice through role play. Do it with your fellow agents, or rope a family member or friend into acting as a stand-in seller. If you hone your skills before you use them with real clients, you're much more likely to get the full fee you deserve.