By Ross Wilson

A former client called to say they wanted to list their home for sale. Since I’d served them nearly 30 years ago and had faithfully stayed in touch, I happily accepted their invitation. During the initial phone chat, while I gathered details about their situation, motivation and property, they inferred they’d be listing immediately. Consequently, I prepared a detailed CMA and to save them time, prepared most of the listing documentation in advance. When I arrived at their front door with lockbox and camera in hand, I noticed the property’s rather unkempt condition. That first impression was immediately confirmed upon entering the foyer. With the exception of a new roof, they acknowledged that little effort had been made to improve the place. Even the mechanicals were being coaxed well past their designed obsolescence dates.



After I’d finished my presentation and offered a candid considered opinion, they dropped the first shoe. To my dismay, they’d already sought the opinions of several other agents. Well, I’m accustomed to forthrightness from the outset and to my good fortune, unaccustomed to direct competition, particularly in the case of former clients. Either out of ignorance or anxiousness, my esteemed colleagues had apparently unanimously opined a much higher market value.

Then the second shoe made its debut; how short of a listing term would I accept? And yes, there was a third shoe; what would be my fee? They understood and agreed regarding the merits of offering a competitive commission rate to the buyer brokerage, but objected to my own fee. When they said all the other agents had promised a lower rate, I tried to justify my fee, but all they saw were dollar signs.

Our meeting ended abruptly when they said they had to think about it. While packing up to leave, I summarized their expectations by asking if they felt it reasonable to expect a highly experienced broker who is confident in his self-worth and truly cares about his clients, to accept an over-priced, minimum term listing of a sub-standard property owned by someone who doesn’t seem to value loyalty or expertise, and with a heavily discounted commission rate. Significantly, they laughed it off and refused to answer.

Later that day, I was not surprised to receive their call to thank me for my time, but they had chosen to list with another brokerage. I was sure that without a significant price reduction, their property would not be sold any time soon. Hence, I felt I’d lost nothing but a few hours of my time and a troublesome seller. I candidly said that perhaps, to be fair, they should have disclosed during our first phone conversation that I was to be competing on price and commission rate because, honestly, I’d have respectfully declined the invitation. I cheerfully wished them luck. By the way, after more than three long months in prime market conditions, with dreadful marketing, amateur photos and several price reductions, it finally sold by a co-operating brokerage for an even lower price than what I had predicted.

For some time, it’s been a common but unwise practice for property owners to hire a listing brokerage based on the highest asking price. But it’s becoming more prevalent in recent years for that choice, which of course is their right, to be based on commission rate. But be forewarned; a client who is obsessed with the fee usually has little respect for you, your services or our profession.

They need you, but out of fear, refuse to be fair. How desperate are you? Do you rationalize competing on fee by convincing yourself that a piece of the pie is better than none? It’s your choice whether or not to accept an agency. Whenever I succumbed to a seller’s demand for a fee reduction (extremely rare), they ironically and almost consistently proved very unreasonable, sometimes downright obnoxious. They could not be pleased.

Or after I’d invested a lot of time, effort and expense, they’d spontaneously change their minds about selling. Suffice it to say that if – a big if – someone like this later refers anyone, the referred party will likely expect the same full service at a discounted rate. Birds of a feather flock together.

Many agents charge a popular local competitive rate. (I’m not supposed to imply this, but let’s be real.) However, in a strong seller’s market when demand exceeds supply, a seller could expect to negotiate a rate, especially for high-demand property. When supply and demand are more in equilibrium, or when supply exceeds demand, to attract more attention, a seller should offer a higher commission rate – not a lower one. Plus they should provide you with sufficient incentive to invest your time and effort on their behalf. They can’t realistically expect you to work for less and spend tons of money advertising it. It simply wouldn’t be fair, nor under those circumstances, would it make good business sense to accept the listing. Thus, if a seller demands a discount, they should expect discount service.

Over the past few years our fees have been a hot topic, and the controversy has been irrevocably altering our traditional business model. Media articles have intimated that, considering our services, we’re grossly over-paid. But either by design or gross ineptitude, to grab readers’ attention, columnists often neglect to get all the facts. And what draws that attention and its often affiliated ire more than reader’s pocket-books? The adverse effect of such stories on public attitude is palpable.

Have you ever noticed sympathetic stories about our industry? Agents are often depicted as bungling, greedy, narcissistic egomaniacs taking advantage of innocent people. Have you seen any impartial articles stating, for example, that buyer services are normally free, or that most registrants generate a mere handful of sales annually – or none, even though constantly on duty? On average, agents earn about the same as a typical office worker who gets a relatively secure regular paycheque with no business expenses and critically works with significantly lower risk and weekends and holidays off! If we’re all so exorbitantly paid, why do legions fail after a few struggling years? You’ll not likely see such articles because truthfully depicting our members serving satisfied clients without drama would not be entertaining.

Okay, okay – I’ll stop ranting now, but I’m a little sensitive to unfair and usually unanswered criticism of our industry. In this new series, I address the topical issue of fee for service, including how to surmount a demand for a discount. So, stay tuned.