How to avoid the dreaded commissionectomy!

Say you’re in a situation as a real estate agent where you’re working on a deal and you’re a few grand apart. The buyer wants to pay $550,000 and the seller only wants to accept $555,000. How are we gonna make that happen? 

You might be tempted to give away some of your commission. Well, in this post, I’m going to talk about how to avoid this potential commissionectomy, and I’ll touch upon some of the times when giving up some of your commission might make some sense. Let’s dig in!

Where does the commissionectomy begin?

It starts with a mindset. A lot of agents are used to splitting commissions with new members on their team. They split the first deal. It’s like a reflex. But you can control this reflex. Sometimes a solution to the potential commissionectomy problem begins simply with having a mindset of; we just don’t do this on our team. Decide that your commission isn’t on the table as a negotiating block. Sure, there always might be some exceptions, and I’ll get to those, but having the right mindset can make a world of difference. It can also help a lot if you have a sales pipeline in place so you’re not starving for each and every commission.

But, if that money’s not coming from you, where is it coming from?

Title Companies

Sometimes we can get some money from title companies. They might be willing to give an investor rate or a little discount, if you have a good relationship with them, that can make up the difference.

The Lender

The lender is also in a position to make some money on this deal, so you can see if the lender might be willing to pitch in.

The Other Agent

Whatever side you’re on, check with the other agent. We want to protect our commission, but the other agent is getting a commission too and maybe they can chip in. The last pocket we want to dig into is our own. 

It’s just talk

Oftentimes, they’re not really going to let a deal die over a couple of grand. They might be talking big but, at the end of the day, many people (though unfortunately not all of them) don’t really want to start over and go back to the drawing board. So, we can work with the buyer and seller and see if we can come to an amicable understanding that makes the deal close.

When is it fine to give in?

Before you get to giving up some of your commission, you want to make sure you’ve exhausted all other options. Don’t start with giving up your commission. Let it be the last option you get to and then evaluate what you want to do. One possible opportunity is if you’re trying to make offers on a property, you could potentially offer some of your commission to the listing agent. Say, hey, if we get this deal done there’s an extra half point in it for you. That can be a really powerful offer, especially if you’re up against twenty other offers. 

At the end of the day, of course, the seller has to choose. We have a fiduciary responsibility to them. If it’s a big deal, and there are unique enough circumstances, giving some of your commission up might very well be the right choice to make things work. Again, there are circumstances where this works, but don’t let it be the place you start. This slight tweak in mindset has saved my agents tens of thousands of dollars a year. It really does add up. 

If you have any questions at all about anything at all don’t hesitate to reach out.

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John Gluch.

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