Can you look a potential vendor or landlord in the eye and honestly tell them that the market will pay more for their property if it’s listed with you than another agent?
If you’re selling your value well, it should be an easy conversation.
So what’s value and how do we sell it to prospective clients in order to maintain your commission rates?
Qualify the value
When first dealing with a prospective vendor or landlord, it’s important to find out where and how they see value.
Do they believe that the right agent can get them a better price for their property than another agent? If so, what do they believe that agent does in order to achieve the better price?
“What we're trying to do is we're trying to tap into ‘value’ from their perspective first, rather than shooting from the hip and guessing what that is,” Spencer says.
Speedy responses
Your client needs to know that any potential leads are being followed up and followed up well.
Spencer says that based on his own research, around a third of enquiries throughout commercial property campaigns are never answered, so it’s critical to explain to the client just how important those follow-ups are, and how your agency does it differently in order to maximise the value of the marketing spend.
“I would, quite frankly, look the client in the eye and say, ‘Look, every time we market a property like this, of the marketing spend, divide it up over the number of enquiries on average we get’,” he says.
“We know it costs you, Mr and Mrs Vendor, or Mr and Mrs Landlord, $100, $200, $500 per enquiry. So, therefore, when an email enquiry comes through, I have my team ready and rearing to respond to that immediately.”
“You really need to make sure that the agent is accountable and can actually demonstrate how they do it.”
Cheaper does not mean better
There will always be another agency that’s prepared to offer cheaper commission rates.
So Spencer says it’s imperative that you step the client through the reasons why those agencies cheaper, and that you get what you pay for.
“One of the approaches that I would encourage you to do is to do this: say to the client, ‘Look, all agents in our marketplace know what each other charges. We know what they charge. They know what we charge. So the question is, if we're at 8% and they're at 5%, why do you think they only charge 5%?’”
"Why wouldn't they just charge 6% or 7%, and work a third less? Do you know why they don't? It's because if they did that, they wouldn't get any business. So the only way to get your business is to distract you with a lower fee structure.”
Push the value
In the end, a vendor or landlord spending more to market their property with you is a no-brainer if they believe it will yield them a better sales or leasing result.
That’s where the value is: their agent’s ability to extract absolute top dollar out of the property, which in almost all cases will generate a result well over and above the difference in any commission rates.
“If the difference in fee (between agencies) is $4000, and let's say your average negotiation push is $20,000, or $1000 if we're talking leasing. And you can get them up $5000 on the lease per annum, what we're actually talking is a return on investment of five times that, or 10 to 15 times that difference in fee. That's just one negotiation push.”
“So the question really is not just about how much can you get off (the commission), but how much more can you get out of the marketplace, which is what you want to qualify your vendor on.”