Starting August 17th, real estate commission details will no longer be displayed or communicated in Multiple Listing Services (MLS) listings. This shift aims to encourage more transparent and direct conversations between clients and real estate professionals regarding fees.
While the MLS will no longer serve as a platform for sharing commission information, clients will still have the opportunity to discuss and negotiate commissions directly with real estate professionals to ensure clarity and alignment with their needs. This will require buyers to sign a buyer/seller agreement that indicates a clear understanding of the anticipated fees and agent commission expectations.
What does this mean for real estate professionals?
Real estate professionals will need to be adequately prepared to have these commission conversations with clients. Discussing compensation can feel like wading through murky waters, so we’re here to help guide you to have these incoming conversations with confidence.
How to prepare for the conversation
With the changes hitting the real estate industry and home buying/selling process as a whole, it’s more crucial than ever for real estate professionals to be comfortable and confident when discussing compensation.
Here are some tips for real estate professionals preparing to have these client conversations:
Prove your value
Now that commission details aren’t listed publicly on the MLS, clients will need to understand why your services are worth the investment from the first conversation. With that said, proof of value is paramount.
Focus on showcasing your expertise, the benefits of your approach, and the results you’ve achieved for past clients. Highlight your knowledge of the local market, your negotiation skills, and your commitment to client satisfaction.
Here are some ways to showcase your value:
- Client testimonials on your website or social media
- A portfolio of past sales made
- Come prepared with a current understanding of the market and the area your potential buyer is searching in.
By demonstrating the tangible value you bring, you can justify your commission and build a compelling case for your services.
Be flexible
Flexibility is crucial in this new real estate environment. Clients will have varying needs and financial constraints, and being adaptable can set you apart from competition and create long-lasting relationships with those clients. A client that trusts you and sees a genuine desire to meet them where they are is more likely to remember that interaction and send you referrals in the future.
Offer different commission structures or packages tailored to different client needs and situations. This flexibility can include varying rates based on the complexity of the transaction or providing other negotiable incentives.
Know when to walk
While it’s important to be flexible, it’s equally as important to know when to stand firm or walk away. Not every client will be a perfect fit, and sometimes, despite your best efforts, the terms of a commission agreement may not align with your business goals or values.
Be prepared to set boundaries and walk away if a situation becomes untenable. Go into the conversation having a minimum acceptable rate and stick to it. Be aware of how much you can provide in return and never make promises you aren’t positive you can keep.
Knowing when to let go can prevent frustration and allow you to focus on clients who value your services and are willing to invest appropriately.
Communicate clearly and frequently
Effective communication is the cornerstone of successful commission discussions. With the absence of MLS-displayed commission details, it’s crucial to be proactive in initiating and maintaining conversations about fees.
Ensure that you clearly outline your commission structure from the beginning, and be open to addressing any questions or concerns your clients may have. Regularly update clients on the progress of the transaction and any potential changes that could affect the commission.
Clear and frequent communication fosters trust and transparency, making it easier for clients to understand and accept your terms.
Sample conversations
Below are some examples of commission conversations that showcase the agent clearly displaying their value, knowing how to negotiate within their boundaries, and having confident communication with the client.
Sample 1: Basic commission conversation
Agent: “Thanks for meeting with me today. I’d like to discuss how my commission works so we’re both on the same page. For my services, I typically charge a 3% commission on the sale price of the home. This fee covers everything from the initial home search to the paperwork and final closing process.”
Buyer: “I understand. However, I’ve seen some agents offering lower commission rates. Is there any flexibility with your fee?”
Agent: “I appreciate your concern. While my standard commission is 3%, I believe it’s important to consider the value and expertise I bring to the table. My goal is to ensure you get the best possible deal and a smooth transaction from start to finish.”
Buyer: “I see your point. What exactly does the 3% cover?”
Agent: “The fee covers comprehensive services including personalized home searches, negotiating the best price, handling paperwork, and providing ongoing support throughout the process. I’ll also be available for any questions or concerns you might have. My aim is to make the home-buying experience as seamless as possible.”
Buyer: “That makes sense. I appreciate the detailed explanation. Let’s proceed with the 3% commission.”
Sample 2: An added negotiation factor
Agent: “I’m glad we could meet today to discuss how my commission works. My standard commission rate is 3%, which includes full-service support throughout your home-buying journey.”
Buyer: “I’ve noticed some agents offer lower commission rates. Can you offer a discount or any additional services to justify the 3%?”
Agent: “I understand where you’re coming from. While I do charge a 3% commission, I’d be happy to offer something additional to enhance the value of my services. For this rate, I can provide a complimentary home inspection and appraisal consultation, which are usually valued at over $500.”
Buyer: “That sounds interesting. Can you explain more about the home inspection and appraisal consultation?”
Agent: “Certainly. The home inspection will help identify any potential issues with the property before you make a purchase, allowing you to negotiate repairs or adjustments with the seller. The appraisal consultation will ensure the home’s value aligns with your offer, which can be crucial for securing your mortgage. Both services are designed to give you added peace of mind and potentially save you money in the long run.”
Buyer: “That does add significant value. I’d like to take advantage of those services. So we’ll go with the 3% commission.”
Agent: “Fantastic! I’m glad we could find a solution that works for both of us. I’ll make sure to arrange the home inspection and appraisal consultation as part of our services. Let’s get started with your home search!”
Sample 3: Not the right fit
Agent: “It’s great to meet with you. Let’s discuss my commission structure. I charge a 3% commission on the sale price, which includes all of my services throughout the home-buying process.”
Buyer: “I’ve done some research, and I’ve seen some agents offering 2.5% commission rates. Can you lower your rate to match that?”
Agent: “I understand that lower rates can be appealing. However, my commission rate reflects the comprehensive level of service I provide, which includes personalized home searches, negotiations, and ongoing support throughout the transaction.”
Buyer: “I appreciate the explanation, but I was hoping to stay within a tighter budget.”
Agent: “I understand having a tight budget. My services are designed to ensure a smooth and successful home-buying experience, and I believe the 3% commission is fair for the value provided. However, I’m happy to add in a complimentary home inspection and appraisal consultation. That’ll add an additional $500+ value during your home buying process.”
Buyer: “I still think I’m going to try finding someone who offers a lower commission rate and a similar level of service. Thank you so much for your time”
Agent: “Thank you for considering my services. If you have any questions in the future or need assistance, feel free to reach out. Best of luck with your home search!”
Buyer: “Thank you. Good luck to you as well.”
How can CallRail help?
CallRail offers valuable tools to help real estate professionals prepare for commission discussions more effectively. By tracking where clients find you, you gain insights into their needs, allowing you to tailor your pitch accordingly.
Conversation Intelligence® helps you anticipate frequently asked questions by tracking client inquiries, enabling you to have the insights you need to create a detailed FAQ page on your website and include relevant customer testimonials. This preparation ensures you address common concerns proactively and are highlighting your value upfront.
Additionally, CallRail’s self-reported attribution feature reveals how clients are finding you and who’s referring them, enhancing your understanding of your referral network and the effectiveness of word-of-mouth referrals.
With the ability to record and summarize client conversations, you can keep accurate logs of interactions, making it easier to recall key details and maintain continuity in your client relationships. Convert Assist goes a step further by providing action steps, personalized call coaching, and AI-powered smart follow-up for each call. This ensures that you are not only keeping those client relationships as stable as possible, but it creates even more opportunities to convert potential leads into loyal customers.
These features collectively equip you to handle commission discussions with greater confidence and precision.
Discuss commission with confidence
Adapting to the new commission disclosure regulations requires real estate professionals to be well-prepared and proactive in their client interactions. By proving your value, being flexible, knowing when to set boundaries, and communicating clearly, you can handle these discussions with confidence.
Leveraging tools like CallRail can further enhance your preparation by providing insights into client needs, tracking referrals, and maintaining detailed conversation logs.
Dive into these conversations with confidence by signing up for a free 14-day trial with CallRail.
