It’s Friday afternoon and you’re desktop computer has given you eyes that long ago have glazed over, a painful pulsing in your temples and an itch to get on with your weekend.
Your phone rings, and it’s your boss’ sec– er, assistant. Your supervisor would like you to stop by her office in 15 minutes.
Being human, you are gripped by anxiety:”What did I do now? Is she going to fire me.”
You affect a casual attitude, sauntering into her office. She looks up, smiles cordially, gestures to a chair in front of her desk and invites you to take a seat.
“I’m sorry,” she begins, “but there’s no easy way to say this.”
Moisture bubbles on the nape of your neck in an instant, then trickles down your back. Beads of sweat wreathe your face. Near-panic engulfs you.
“You know that business hasn’t been great in this economy,” she continues, “so we need to cut back to keep our shareholders happy.”
“Unfortunately, we have no choice but to cut your salary by 16 percent.”
At least that is better than termination. But it is a lot to ask for the same amount of work that you’ve always completed effectively and on schedule without complaint.
When meeting with sellers for the first time, few are those who don’t ask brokers to accept such a pay cut from the beginning. If the commission happens to be 6 percent, taking one point off that fee means a 16 percent loss of income for a broker (or normally 8 percent if two brokers become involved in the transaction).
Is it fair to ask an employee of a company to accept a reduction of such a magnitude? Is it fair to ask a real estate broker to do so?
Maybe yes, maybe no.
But let’s consider a scenario in which the broker agrees to a smaller commission from any starting point, whether, say, 5, 6 or 7 percent.
What if the broker countered by saying that it would be fine to cut a point or two so long as the seller is willing to shave his or her dreams of an exalted “profit” by a proportionate percentage?
The broker would point out that the property will sell faster at a tempting asking price and may even exceed that sum in the not improbable event of a resulting bidding war. It would be in the best interest of all concerned to move in that direction, the broker might say.
The listing broker would maintain that a lower asking price will prove to create a win-win situation: The seller wins by going to contract in a short period at the property’s market value, and the broker wins by having to work for less time than otherwise.
If the seller balks, then perhaps both sides will decide that the time had arrived not to move in the fairest and most efficient direction but, instead, to move on.
Tomorrow: Slow down, you’re goin’ too fast
To take your own bite out of the Big Apple, search for your new home here.
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022
Fair enough. I’ll do you one better. I’ll cut my fee in half. You just have to share the risk and pay it upfront. How many people would float out there at a speculative price with that arrangement? How many sellers would decline a showing then? How many sellers would have a pile of dirty dishes in the sink under those terms?
I’d make the same or better money.
But it won’t happen because sellers don’t want to share the risk, even if it mean substantial savings. So the ones who DO all the right things from go end up paying for the ones who don’t.