Buyers and sellers normally expect a reduction in our fees; since so many do this, it makes it much more difficult for those of us who understand what it takes to be in business for ourselves and survive. Here are some affirmations to remind you what is your worth:
I am absolutely worth what I charge.
You have to believe it yourself before you can convince others. Do you believe this statement to your core?
My value is measurably greater than the competition’s.
The key word is “measurably”. Is there a scale or measurement that can prove through empirical evidence or data that you sell the home in less time or for more money? Can you prove factually, not subjectively, that you are better and provide more value?
The value of my services clearly exceeds my cost.
If you can show and define the value of each component of your service in dollars or percentage of sales price and then compare it to the actual cost, you can tip the scales in your favor.
I don’t give away my hard-earned and well-deserved fees.
To reach the Champion level in earnings, we have to stop giving away our fees. When we adjust our fees, we are merely adjusting our net profit. All of the commission fees we fail to collect are revenue that would have flowed straight to the bottom line. We are giving away our net profit… that’s all! There are some Agents who are embarrassed to charge what a good Agent charges. They feel it’s “too much” for what we do.
What consumers, and even Agents, fail to recognize is the risk to reward relationship in our business model. We, as an industry, could charge lower fees if some of the risks were shifted to the Seller or Buyer. Because we are assuming all of the risks, our fees need to reflect that risk we assume. We risk our time, energy, money, knowledge, and emotion with an expected return when the home sells or the Buyer buys. What if the home doesn’t sell or the Buyer doesn’t buy? We have to amortize the cost of our service over fewer transactions. This raises the costs of our service on a per transaction basis, thereby reducing our net profit.
Even if a full fee is acquired at closing, we have paid for all of our time, living expenses, marketing, and advertising dollars out of our own pocket. Additionally, in most cases we do not receive 100% of the total commission; we split the fee with another co-op Agent. Our broker receives some of the compensation in percentage of the commission or desk fee. We then need to account for our expenses in marketing, advertising, pro-rate share of car, insurance, gas, E & O, cell phone, Internet site, Assistant’s salary, and all other fixed costs for our business.
We also need to pay our taxes. Since we are, in effect, self-employed, we pay the employer and employee section of the payroll taxes, FICA, Medicare, etc. The tax rate is usually 15% total for self-employed people. We then must pay our federal and state withholding amounts, which can be up to 33% federal and often up to 10% for the state. Many of us pay in excess of 50% of our net income, after expenses, to taxes. When you calculate the “real” net dollars earned, it’s easy to see why you don’t want to give away your hard-earned and well-deserved fees.
I firmly believe that cut-rate fees accompany cut-rate service.
It is not possible to provide more service for less money. When the cost of service goes down, the service goes down, as well. Discounters have to cut something out. Southwest Airlines is often used as the model for discount fee success. Their cheaper tickets are accompanied by cheaper or cut-rate service. You get peanuts to eat. You can’t ever buy a snack on board. You don’t know where you are going to sit until you compete with others for the best seats. There is no option for an upgrade for the frequent flyer group. They fly smaller planes, only 737s. They have zero wide body or two aisle aircraft in their fleet. This lowers comfort for flyers on longer cross-country flights. There is no entertainment on board except the flight attendants. Cut-rate fees always accompany cut-rate service. Most consumers, when working with a Real Estate Agent who discounts, don’t think they will receive cut-rate service. They expect to receive high levels of service for low levels of fees. In the end, life and business don’t work that way.
In the end, you get what you pay for.
We don’t usually beat the system, although we all secretly wish we did. We get what we pay for. There is a reason that a Mercedes sells for far more than a Kia. The question is do you want a car to get from point A to point B? A Kia will do that. In real estate sales, your safety, future appreciation, current sales price, and net dollars at closing could be compromised by selecting the discount Agent.
To be a Champion caliber Agent, we have to believe in our service, value, and fee structure. We don’t have to lower our fees because a few, or even most, Agents in the marketplace can’t demonstrate and defend their value.
We need to say, read, rehearse, and internalize our affirmations daily. Put them on a few 3 x 5 cards. Put one on your mirror, so you can see it each day when you get ready in the morning. Put it on the visor of your car and computer screen – anywhere you will see it and be reminded to say it a few times a day. To sell your value, you have to believe it first.
Author: Dirk Zeller
Why Use AMPI?
AMPI is the national association of real estate professionals that have, since 1956, gathered under laws and codes of ethics and conduct to create a reliable, trustworthy an efficient real estate environment in Mexico.
AMPI consists of separate autonomous sections all throughout the nation, as well as more than 4,000 associates and affiliates. Each section is independent and has its own board of directors, only surpassed by a national board of directors comprised of twenty associates from all over the republic.
Developed over the years with the input and knowledge of its members, AMPI is much more than just a collection of offices. AMPI has been a solid and recognized institution in Mexico for the past 27 years. It was originally established in 1956 and was consolidated in 1980. AMPI is currently represented in all the principle cities and regions of Mexico stretching from Tijuana to Cancun.
The Riviera Nayarita, Vallarta and Compostela chapters of AMPI are dedicated to promote the best practices in real estate by providing its members with education to reinforce the standards of ethics that give our industry the credibility which our clients deserve.
AMPI is committed to giving our membership access to a multiple listing service that forms the platform from which our industry can expand locally and into other markets while giving our members precise and up to date information that is vital to continuous improvement and growth.