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Paying the Agent Part Two
Graham Lester
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Paying the Agent Part Two

It is common to think an agent comes along & lists your home, makes a few phone calls, finds a buyer and gets paid 3% of $1 million. If real estate were that easy, it would not have such a high attrition rate.


Real estate agents have two roles, find interested buyers and negotiate the highest price/best terms from each buyer. If the agent can achieve this without putting stress on the seller, even better, i.e. even more valuable.


80% of all buyers now conduct their property search on the internet. Another 10% will be passive buyers that are on agent’s databases or call agents when they see a signboard on a house they like. Finding buyers is so simple there is now almost no value to it. Any value subscribed to finding buyers is not in the strategy, but in the time invested by the agent.


If you feel that you can negotiate better than the agents you have interviewed and you have the time available, have a go at selling it yourself. list it on a few of the main media websites, get some brochures and a signboard done up and the buyers will come.


The number 1 reason people that who attempt to sell privately fail is they overprice the property. Some home sellers still spend up to $10,000 in newspaper advertising and then pay a real estate agent commission on top. If the advertising is going to sell the house, why do you need the agent?


When the agent extracts money upfront for advertising, all the risk is with the seller and the upside is with the agent. Real estate agents commissions are hefty enough without the home owner being lumbered with the risk of the campaign on top. The agent is rewarded with a hefty commission when the property sells and the seller gets a big bill for advertising when it does not sell.


Many who appreciate the power of the internet in real estate marketing are baffled as to why agents still spend so much money in print and newspapers. The answer is to increase their profile in the community and the second is because the seller pays as the agent profits through rebates.


Some consumers know and accept this and some consumers don’t know and wouldn’t accept it.



If consumers make a mistake when selecting an agent and deciding upon fees it is that they underestimate the importance of negotiation in the process. Most agents spend excessive amounts of money looking for buyers and then use flawed negotiation strategies such as public auction to close the sale process.


It is during negotiations that agents become an asset or a liability to your campaign. Whilst you may have felt good when you found the cheapest agent at the time of listing, that good feeling won’t last if your soft cuddly agent is negotiating your financial future with a hard-nosed buyer.


The skill level of the agent will be reflected in the final selling price and terms. The softer the market, the tougher your agent needs to be. Any agent can look stellar when 3 buyers want the 1 property. But what if there are 3 properties and 1 buyer?


Easy losses, hard wins

‘Loose lips sink ships’ is highly applicable when it comes to an agent negotiating with a buyer. Agents that disclose information offer the buyer ammunition. What surprises many buyers is how easily the agents divulge what should be confidential information.


Details such as the number of offers the sellers have received, the sellers lowest price, the price level of other offers, the owners are getting divorced and want to sell quickly, they have bought elsewhere, deceased estate and it goes on. All this crucial information can work against the sellers should it become known to a buyer.


The best way to test an agents negotiating ability is to ask them to cut their commission rate. It is easy to lose out in a real estate negotiation and hard to win at the best of times. An agent that runs at the gums can cost you plenty.


The “gift of the gab” does not automatically qualify someone to negotiate the sale of your most prized asset. Many buyers make an opening offer to see how the agent reacts. many are pleasantly surprised at the response or the information that falls out of the agent’s mouth.


In these instances, the seller has a massive liability on their side. - The agent.


Ironically the best way to test an agents negotiating ability is to ask them to cut their commission rate. The agent’s response to being asked to drop their fee will give you a sense of how the agent handles price objections. Do they just role over and say, “Ok, sure that seems fair”? Or do they hold firm with strength, pride and belief that their track record of quality service and results demands they are worthy of a fair fee.


When you ask an agent to reduce their commission rate, you are witnessing the agent negotiate their own money. In watching the agent negotiate with their own money, ask yourself, do you want them negotiating with your money? If the answer is no, don’t hire that agent at any commission rate.


Whether you like it or not, a real estate agent has massive responsibility when they take the keys to your home and begin marketing it.

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Graham Lester

Graham Lester

Graham is known for his passion and his drive to succeed in all aspects of his professional life. A man with a big vision.

Other posts by Graham Lester
Contact Full biography

Full biography

Graham is known for his passion and his drive to succeed in all aspects of his professional life. A man with a big vision, Graham has immense pride in the company he directs; and is particularly proud of having been awarded the BDH Cup in 2010, and becoming one of the top 10% of performers in Australasia while maintaining a 79% repeat and referral client ratio.




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