Reality Sales Training

 Would you like to be a ‘fly on the wall’ and see how other agents handle tricky situations? Often seeing a real life problem and solution helps you to prepare your own approach to similar situations. Mark Dwyer shares the actual dialogue from one of his Sales Trainer support interactions where he helped a client to overcome a fee discount battle.

Hello Mark,

I still haven't closed the sale that I was talking to you about last night. The buyer and seller are a mere $1500 apart! The seller remains adamant that she needs to net $419,000 and to do this she is insisting that I reduce the commission.

I have another buyer that wants to view the property today at 3.00pm. I have told the seller this and she is holding off on an answer until after this buyer has gone through.

I know the seller should take this offer what should I do?

Kind Regards,

Bruce.

Mark’s advice to Bruce

I remember the tactic well, it is what I refer to as – ‘The Late Night Call.’

But in a more generic sense there are a series of steps I take when the fee question is raised. The major key is to keep your composure although you feel this attack on your pay cheque is unjustified. Here is what I do...

If the seller broaches my fee amid negotiations I am immediately thinking to myself 'they are going to take it' and all I need from here is patience and foresight. I keep calm and carry on!

I then direct any conversation to the motive. What are they trying to achieve? Why should a discount make such a difference? Is their deadline stronger than receiving a discount? Does the offer un-discounted permit the seller to fulfil their motive? If the answer is “yes” to these questions then the sale will happen and you shouldn’t discount.

Next I am thinking of the buyer. Are they truly at their final price? Even with a signed Buyer Declaration would they let the property go for another $1000, or for  $500? We need to keep this up our sleeve in contingency, even if the owner accepts!

Now I begin to negotiate the offer...

Is the offer fair? This question must be put forward. It may be less than the owner wants or needs but is it within the realms of reasonable? If so then your fee is fair based on the fact that the job has been done. Why should you pay a penalty based on the owner’s motive?

Explain the margin. Most sellers feel as though they are paying you the entire fee. They overlook the overhead of a business and the fact that once expenses are taken out you are left with a margin and the discount could be the entire margin! In an indirect way they are asking you to sell the property for nothing! There are properties that don't sell and those that do – basically as the agent you take the financial risk on this. When they do, you can't afford to discount especially when the offer is reasonable. Appealing to their sense of fairness often kills the discount mentality.

Assert your position. We are in the business of selling property by consignment - we are paid on result. As I've said you should be in this game for the prize-money not the appearance money. You need to assert that whilst you would be disappointed to lose the sale TODAY that you will go on to make another TOMORROW and another the next day. They, however, are only involved in one sale and the wrong decision will affect them for a longer time than it will you. Be careful with this one as it takes tactful delivery.

Split the difference. The amount when we relate it to fee is usually small so as a last resort I will ask them to consider splitting the difference. If I were able to get the buyer half way would you accept? If they agree I will then ask what the plan is in the event the buyer says “no.”

Take it away/describe the relief. The greatest closing tools are fear of loss and desire of gain. You must explain the danger of pushing the buyer into walking away. If the buyer feels that negotiations are unreasonable this could effectively do this. Alternatively should they accept, imagine the relief, the pressure is gone and they are able to get on with their plans and indeed their lives.

Fast forward the alternative. As an ad on to this you need to take the owner forward and describe the scenarios should they maintain their position and not agree to accept the offer. There is a likely risk that they could be looking at less money down the track.

Demonstrate the risk. This should be familiar but the weight of this point is in the delivery. They are literally betting the net amount (sale less fee) against receiving the small amount (the discount). It is an odds on bet that has no guarantee that it will come off.

Make it their decision. Finally if they still don't agree you must make them aware of the fact that you recommend they sell. Explain that you have done your job and the focus should not be on your fee or even the net amount. It should be on the future and where they are headed. Explain that the small amount (discount) will be irrelevant in a few months time when they get on with their plans. 

What happened next...

What I advised Bruce to do given that the stalemate was reached with the seller adamant and the buyer having signed a Buyers Declaration was to 'take it away' from both parties. This could be achieved with a ‘Late Night Call.’

He had tried the 'tear up (contract and cheque) close' and several of the other approaches described above. So we took another tact.

It was 7pm when Bruce discussed this with me and I suggested he wait until around 9pm at which time he would call both parties explaining that the deal was off. That the other party had clearly lost interest in negotiations and that there was no way it would come together.

I don't think Bruce will mind me telling you that he didn't follow my advice at first. In his initial request you will see that when he spoke to the owner he revealed another buyer and made a time for them. This took all the pressure away and made the outcome more protracted!

Naturally the owner wanted to see if there was any hope with the new buyer! The owner will always hang onto any thread of hope! They even articulate this by saying, “we won't take this offer but don't lose the buyer...” Ridiculous!

In any event when I learned of this Bruce called to tell me that it didn't work; the owner was quite prepared to look for another buyer and was holding off on an answer pending the second inspection.

I explained to Bruce that if he had left both parties thinking the deal was off overnight he would have the sale the next morning as one of them would likely 'crack'.

The result was that the second buyer canceled the inspection appointment and the owner accepted the original offer - DISCOUNT FREE! What did you think?

Mark Dwyer leads the team at Sales Trainer Active - a subscription based service providing real estate agents with real time sales support, superb live and recorded training, web-based sales tools, aids and resources as well as a platform for interactive competitive recognition. Check it out at www.salestrainer.com.au/active or write to mark@shire.com.au.