Why you should give up part of your commission to close that sale

We’ve all experienced this situation before.  You’ve put forth months of time and effort to get a deal closed and you’re days away from receiving that commission check. Then a problem comes up right before closing. There’s damage from the movers, a repair was done “improperly” in the eyes of the buyer or a new fee comes out of the blue that the buyer or seller was not expecting. All of a sudden, your $10,000 commission is at risk over a stupid issue that can be resolved for less than $1000.   

The first step in resolving these matters is to determine who is responsible for this last minute issue and what their plans are to resolve it. It’s quite simple to identify who bears the responsibility as it’s typically the buyer or the seller. But getting them to resolve the issue is for some reason much more difficult than it should be. These last minute issues tend to result in another round of negotiations and all too often, the agents are left sacrificing a portion of their commission to keep the closing on track.

I find that a lot of “old school” agents are very vocal about never letting their commission become a bargaining chip during buyer and seller negotiations. On one hand, I see their point as it’s typically not my fault but I am the one sacrificing. But on the other hand, I know that conceding a portion of your commission to preserve a closing is simply a business decision that is about a lot more than money.      

If you’ve been asked to reduce your commission and are unsure whether or not to agree to it, chances are you should and here are 5 reasons why.

1.  Your job is to close a home, not maximize your commission - The fact that you perform the same services for a $300,000 house as you would a $100,000 but will be paid drastically different amounts for each sale is an obvious demonstration of how silly the compensation model is in real estate. Stop focusing on every dollar you can make and instead, focus on satisfied clients.  

2.  A bird in the hand is worth 2 in the bush - I have had clients willing to walk away over $100. Buyers and sellers aren’t always thinking straight about spending 3 months working through a difficult transaction. Just because you’re willing to make a “business decision” doesn’t mean that the buyer or seller will. There is a closing in sight and a slightly reduced commission is better than no commission at all.  

3.  You want to maintain a great relationship with your client for future referrals - This single commission is insignificant compared to the referrals you might receive by turning your current client into a raving fan. The better you take care of them, the more likely they are to rave to their friends and family about you. Look at this concession as an investment in future business.

4.  It’s a major distraction to your business - You have a lot going on and unnecessary drama at the end of a transaction is something you should avoid at all costs.  

5.  It happens more often than you think - The higher the commission at stake, the more concessions like these will take place. Don’t think because you are offering up a concession that you are somehow a bad agent. You are actually a better agent than most for focusing on a long term business strategy.  

The other day I had to make a $900 concession on a $450,000 purchase. I made the same amount of commission that I would have made on a $420,000 house. So that’s how I view it - I sold a $420,000 house and I’m thrilled, no need to sulk.

Next time you find yourself in a position where a concession may need to be made, don’t sweat it. Do what is best for your long term business strategy and get that deal closed!  

Keep track of your commission and other transaction details with Nekst! Create custom real estate action plans and share your progress with your real estate team and now with your clients using our real estate client portal.