Entry by Jennifer Allan

You Can 'Sell' Anything You Think is a Good Deal for the Customer


Just posted a blog over at Active Rain about what we've been talking about a bit here... that if YOU truly believe that what you're offering is good for your customer, you won't have any trouble offering it... explaining it... and "selling" it. Below is the blog in its entirety or you can jump over to Active Rain and read it there! 


I've been watching and commenting on Leslie Rojohn's fine blog called "Time is Money-- Unless You're a REALTOR" - about charging retainer fees. Maybe you saw it, too, since it was Active Rain's headliner of the day last Thursday or Friday.

As typically happens when any topic of non-contingent compensation is featured, the comments came in fast and furiously, most along the lines of "Sounds great, but it will never happen. If buyers (or sellers) can get it free down the street, why would they be willing to pay for it?"

Indeed. Why would they?


That's not a rhetorical question - I'm asking it. Assuming you like the idea of getting a retainer or upfront fee, WHY would a buyer or seller be willing to pay one for your real estate service?


No answer? Well, then there's the problem!

Unless you're some super-duper salesperson who can sell the proverbial snow to an Eskimo, you need to believe that what you're selling is good for your customer. Great, even. AND IF YOU DON'T BELIEVE THAT ABOUT YOUR SERVICE OR YOUR FEES, no one else is going to believe it either!

Of course, this applies to any product or service someone might be pitching, but for our purposes here, we're talking about non-contingent (aka retainer or upfront) fees.

"Sounds great, but it will never happen. If buyers or sellers can get it free down the street, why would they be willing to pay for it?"

Well... in the last few years of my active career, I offered my sellers the choice to pay me $500 upfront... and most took me up on it - happily. Was the guy or gal down the street also charging $500 upfront? Nope. Were my seller clients so filthy stinkin' rich that they had an extra $500 lying around they wanted me to have? Nope. Was I such a super-duper salesperson that I was able to overcome their objections with a masterful script and a mega-watt smile? Oh, heavens NO!

Most of my sellers paid the $500 upfront fee because I made it a good deal for them to do so. And they recognized a good deal when they saw one and cheerfully wrote the check. And because I knew what I was offering was a good deal for them, it was no problem at all for me to "sell" them on the idea.

So... instead of moaning and groaning about how unfair it is that we Work for Free (which we DON'T) and that "no one will ever be willing to pay us non-contingently unless everyone else does it, too," get out of your own way and think about how you could make getting what YOU want also be a good deal for your customers. And you'll be able to sell it All Day Long.


You are right, it is necessary for the offer to be an attractive incentive for the seller to take action when compared to the upfront free offer down the street. 

Jennifer, what was your offer to your clients that motivated them to take you up on it?

Jennifer, I think it is a two way street. Agents feel a retainer will lock in the client and at the same time help pay for some of the upfront costs. Clients also feel they are getting something of value in return for a payment. You get what you pay for works on both sides of the equation.

A recent client called me because they wanted representation and were willing to pay a retainer to get that representation.

Will they possibly go down the street? Yes, but because I don't work for free the agent down the street is welcome to them.

Michael - I agree that it also benefits the agent/consultant and there are other reasons a retainer fee makes sense. But what we usually see in these discussions is tunnel vision focus only on why it's good for us and therefore will never be accepted by the consumer... but the reality is, if there ARE benefits to the consumer, they'll happily go along!

Jennifer, this is what I posted on the AR blog:

Great points Jennifer and something that seems so obvious that we don't think about it. As someone who was regularly paid non-contingently, it really came down to offering the choices with contingent commission being much more expensive when all is said and done then non-contingent fee options where the services were paid for as performed. Why were people willing to pay me non-contingently? Because they were sold on me.

I chimed in.  I think it's bad business to ask for a retainer and commission, in my mind its not a mixable combination.  Either put up or shut up.  And if the buyer/seller is willing to piut up then it shouldn't be to the benefit of the realtor only as 100% of all comments reflected.  ({Except those of this board}

I don't have a problem mixing contingent and non-contingent fees - obviously - but the beautiful thing is that we can each do what feels right for us and if we truly believe it makes sense for both parties, our business model - whatever it is - will probably work!

The average commission is right around 5.5%. A commission of 5.2% total with a $500 non-refundable isn't much of an incentive for most sellers. Michael will get his wish--the agent down the street will do 5% or lower and get the listing. The issue here, is when is it necessary to shell out funds and still come out better then going in. 

Well, it worked beautifully for me. If the numbers don't add up in your market, then tweak them to make them work. Or, if you don't like this approach, come up with one you do like. But it's not about the numbers or the model; it's about finding a good model that you believe in and making it work for both you and your customers.

Besides, as Mollie mentioned, not all real estate clients shop solely on price. In fact, most don't. I was an exceptional listing agent - the best in town in my humble opinion ;-] and that belief was reflected in my demeanor - and was quite persuasive regardless of the numbers!

I don't like discussing fees outside of my office. The Sherman Anti-Trust Act frowns on it. I will tell you it works for me.

William my wish isn't that they go to the agent down the street. I know the value of my time and I will not cut my fees to buy a listing. I'm talking from a lot of years of experience. It isn't worth my time.

Jennifer, I agree come up with a model that you believe in and make it work.

Glenn, retainer fees have their place. Drive a client/customer around for a couple of months only to have them purchase from another agent. They do pay for a portion of your time when a deal doesn't work out.

Michael, my point was that if your being paid as a consultant then why would your time not be paid for anmd secondly Jennifer, et al, if you are being paid for everything you do why would there be any commission to pay at the end?

Glenn - that's just one model - retainer fee + contingent fee (not necessarily a commission based on the sales price). I happen to like a Pay for Performance model, so I probably would never offer a 100% non-contingent listing package. But that's just me. I don't have any problem with the concept, it just doesn't suit me personally.

First, I would like to ask you guys a favor and not take it personal when others take the opposite side of an issue. Like others, we are just giving the lay of the land the way we see it. 

The fact remain, that a consulting model is dubious only because it hasn't caught on in the industry widespread. That's what I took from the Active Rain post and I gave my opinion. That isn't to say hasn't work for some. 

It seem to have worked out extremely well for some. I personally congratulate you on all that you have accomplished. But, what other are saying--myself included, you and other who are successful with a particular model are the exceptions to the rule. 

And no, people do not shop solely on price, but to most price is a factor. You also say that the numbers and models don't matter, but you follow that up with, "it's about finding a good model etc."  A model is only as good as the returns that it brings anyone. 

I would like to hear numbers. You don't necessarily have to talk about fees, but what are your total commission + consulting fee sales compared to you straight commissionable sales. Show me in numbers how fast the home you list in the same MLS sells as compared to the average agent in your market. 

Now if you tell me that it not about what you do in numbers--then what is the point of engaging people in this dance. I thought we wanted ideas that could further the cause. 

When selling anything, product or service, the consumer buys the benefits.  If your offer of services is benefit laden and value driven toward the customers needs they will be happy to pay for the service either on a contingent or non-contingent basis. It really does come down to how you present the services and the fee structure.  If you believe what you are doing provides true value to the consumer and they believe they are getting more value than what they are paying for, compensation will never be a problem. 

That is the fact of the matter--value, who gets its and who gives it. The consumer has the right to ask for it and we are obligated to give it, less we feel we have a monopoly in the market. The demand to be compensated for the risk doesn't compute in the mind of the consumer. Some consumers feel that our costs have decreased dramatically due technology and that we refuse to pass any of the savings to them.

It is necessary for us to realize, that it's not only the pressure from within the industry to changes how we operate, but more so the external forces at work here. 

Here is what I suggests. There is a great webinar taking place today titled;

"The End of Business As Usual: Rewire The Way You Work to Suceed in the Consumer Revolution"  http://video.webcasts.com/events/citr002/40617

I know most of pretty astute with stuff like this, but give it a try, it might refresh us all.

Here is the actual registration page for the webinar;


Just replace the name in the registration form with your own contact information. A 2pm eastern start, so you still have time to participate.

This page contains a single entry by Jennifer Allan published on January 17, 2012 9:11 AM.

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