Re: Why Does Realtor Freak on Commission Split? - Posted by Frank Chin
Posted by Frank Chin on April 15, 2007 at 09:04:50:
Dave:
Been an owner of several smaller businesses, I get caught in dilemmas where I take on jobs to do, which I need to cover fixed expenses, and the customer’s need to cut his costs to the bone.
If I as the realtor, besides waiving my right to the contract, I’m starting agreeing to cut my price by 50% already, and thinking, “I have to put on a happy fact, say ‘what a great idea’, while thinking, ‘I’m doing the best I can, the guy is saying I’m not doing a good enough job’”.
Off course I’ll be ticked off.
It reminds me one time at our business, some guy thought the price of a brake job was too high, so he says “I’ll get the parts, you put it in, and I’ll just pay the labor”.
Of course, the parts the man got wasn’t exactly the right ones, not the brand we normally use and now he thinks the job is taking too long, and wouldn’t we charge less for him helping out too".
In fact, it took us more time to horse around with this customer helping us out. A regular brake job for let’s say $100.00, we would get the parts for $35.00, we mark it up to $50.00, and maybe another $50.00 for labor. We spend time horsing around with this guy to make $25.00, and in his view, helping us out, tying up the rack for over an hour, negotiating, and to make $25.00. More helpful customers like these, the sooner we close our doors.
When I was computer consulting business, some customers think consultants charge too much. So they’ll say, I’ll buy the software, it only takes 15 minutes to load it in, and as you hourly rate is so much, then 15 minutes is how much"?? Knowledge of computer software, etc, never register on their minds.
With hourly rates of $75.00, would I take jobs to make $20.00 each running around and “not freak out”. I might as well run a hotdog stand.
Did I freak out?? Yes.
You have to remember businesses have business models, and guys charging 5% have a certain overhead. I got realtors in my area advertising themselves as 2% brokers, and have the corresponding business model.
Of course, they’ll probably freak out if you tell them, “let me help out with Craigslist if you charge 1%”,
Talking about business models, I did get some guy dropping by, charge me $20.00 to put in a floppy drive for a PC at my business, because everybody else wanted too much. He actually is an IT guy working for a contractor doing work for the local school system, drives around in a truck all day, and sneaks in to my place, on his bosses time, to put the drive in. Because our equipment was too old, I was afraid if I took things apart, it work work. Sure enough, we had problems, we called him to squawk, and he had to come back, give us a new keyboard, mouse, free of charge, all for the $20.00. Did I take advantage of him?? Sure did.
But as I said, it’s all in the business model. He made $20.00 extra for himself. Someone doing it legitimately can not stay in business spending almost 4 hours, and give away keyboards to boot.
BOTTOMLINE, if you choose a full fee broker, negotiate, but be prepared for them to not cut rates. What we did in these cases is negotiate 90 day listings. We ask them, list it at a price where it will sell in 90 days, and we’ll talk them about extending it if we feel you’re doing an adequate job.
My 2 cents.
Frank Chin
