Read by More Than 30,000 Agents

2. Are You Committed to Comfort, or to Your Excellence?

Downward pressure on real estate commissions is everywhere these days. On the residential side of the business, agents and companies are up against an abundance of discount companies offering homeowners the ability to list and sell their homes at substantially reduced rates.

On the commercial side of the business, agents are experiencing downward pressure on listing commissions as well as on commissions paid for tenant representation. And in both of these situations, the pressure is normally more intense the higher the amount of the transaction.

On the listing side of commercial transactions, agents are telling me about commissions on $25 million dollar transactions sometimes being in the neighborhood of one half of one per cent. Now this isn't completely across the board for all transactions in this price range, but still one half of one per cent is an extremely low commission rate. Sometimes on transactions of both this magnitude and larger, agents will feel fortunate to negotiate commissions in the 1-2% range these days. And, when the commissions are this low on a property, the listing agents sometimes even require the procuring agents to obtain all of their commission from their buyers.

Now on the tenant rep side of the business, a very successful agent I've known for years told me about what happened with a lease he recently signed while representing a major, extremely recognizable company in Corporate America:

"I've represented this company on a number of large transactions," he told me, "and on this most recent one I was paid a $600,000.00 commission. But the problem was the company insisted I pay them 25% of the $600,000.00 commission just for the right to represent them this time."

The agent then continued with, "But in looking back, I was happy with that agreement. And do you want to know why?"

And of course I answered with, "Yes."

"Because on all future transactions with them, they now insist I give them 65% of my commission, not 25%."

And such is the case in the commercial real estate business these days. On the larger transactions principals insist on digging into the agents' pockets, and taking a big bite out of what used to be their normal commission.

So knowing that this is going on, what may be an effective game plan to counterattack all of this? Well the answer may lie in focusing on transactions that are a bit more below the radar screen, the midsized transactions, and this is because of the following:

1) There's a lot less competition from other agents on midsized transactions, transactions between about $1,000,000.00 and $6,000,000.00, then there is on larger transactions.

2) On midsized transactions, it's still very normal to receive a full 5% or 6% commission from the principals without anyone digging into your pocket for some of it. And normally, in a worst-case situation, you still can end up getting paid a 4% commission on these transactions.

3) On the larger transactions, agents are oftentimes working in teams of 2-4 when representing the landlords on the listing side. And if we're talking about a one half of one per cent commission split between 2-4 people on a $25,000,000.00 transaction, versus a 6% commission on a $6,000,000.00 transaction with all of it going to one agent...Well you do the math and determine which commission check you'd rather be receiving.

4) Midsized transactions are normally far more abundant and easier to find in one's territory than large transactions are. And, in addition, the principals are often more entrepreneurial, too. This oftentimes allows for negotiations and signing of agreements to occur much faster than with transactions involving larger companies.

5) And finally, as one 20-year veteran in our industry once said to me, "Whenever there are more than two agents working together representing a principal, oftentimes very little work gets done. The agents are fully aware of how many ways the commission's going to be split, and they oftentimes want to make sure they're not working any harder on the deal than their teammates."

And, in addition to what I've been discussing here, one of my coaching clients has found what I believe may be the best overall approach to deal with this situation. He's a 20-year veteran and SIOR member, and he recognizes the value of working on these midsized transactions also. In addition, he's become very successful at listing these midsized properties for 8-10% commissions, instead of the more traditional 6% commission rates.

"When I go in and meet with owners," he tells me, "and I mention listing their property at a 10% commission rate, they respond with something like, 'Isn't 10% a bit high?' Then I come back with, 'Well I really wanted to charge you 20%, but 10% will have to do.'"

And he's been very successful at utilizing this approach with the owners he's been representing on these properties, too.

Whatever the case is in your situation, you must find a way to respond to any downward pressure on commissions you're feeling on the transactions you're working on. Your time is extremely valuable as an agent, and you have to make sure you're maximizing what you're worth for every single hour you're working. With this in mind, consider focusing on midsized transactions in your real estate business to maximize your income every single year.

Click here for downloadable E-books and live audio interviews with top-producing real estate agents. These interviews are with industry experts who show you exactly what they do to continually make hundreds of thousands to millions of dollars a year.

2. Are You Committed to Comfort, or to Your Excellence?

Oftentimes when leading a real estate seminar I'll ask the audience, "How much more commission would you make in the next 12 months if you prospected 10-12 hours every single week that you're working throughout the year?"

And typically, the majority of the audience responds by telling me they would at least double their income over the next 12 months, if they focused on doing only this in addition to what they're currently doing in their business. Some audience members tell me they would even triple their income, and most everyone in the room tells me that they would increase their income by 50% or more.

So if this is such a simple formula to increase one's business as a real estate agent, why aren't more agents doing it?  And the answer lies in determining how committed one is to excellence in their real estate business, versus how committed they are to just being comfortable.

When you think about it, the difference between top producing real estate agents and mediocre ones often has nothing to do with the amount of hours that they're working. It has more to do with what's being done within those hours instead. Average agents often invest a good amount of hours in their business, but what they do with that time often involves doing activities that simply make them feel comfortable. But these activities will often be quite different from the activities that will really build one's business to extraordinary levels.

Shuffling papers, continually looking at information on various properties, not doing your prospecting, and having your day determined more by who calls you instead of who you're calling, are all death traps to the mediocre agent. Top agents, on the other hand, are in control of their own time and make sure they're talking to the people everyday who will help them build their business to new levels.

Average agents can also get sucked into not contacting many new prospects once they have enough relationships in their business to make them feel busy. But you have to be willing to ask yourself the question, "Are these people who I'm busy working with the ones who will lead me to building an extraordinary real estate business, or are they really just taking up a lot of my time?"

Once again, you can always feel busy throughout your real estate career. But are you busy working with the kind of people and on the size of transactions that will lead you to the income you want for yourself? Or are you busy working with people who take up a lot of your time and don't make you a lot of money in the process?

That's why it's important to continually prospect in your real estate business no matter how long you've been working in our industry. When you constantly prospect you find better people to work with than some of the ones you're working with right now. You also find greater numbers of people needing larger transactions than some of the people you're working with right now, too. And what this then does is it allows you to let go of some of the more marginal leads you've been working on, or hand them off to other agents who will pay you referral commissions. And a 10-25% referral fee on a smaller transaction, requiring no further work from you with the prospect, will oftentimes be a much better investment of your time than working with the prospect directly. Let someone else put in all the work and you just deposit the referral check when the deal closes. But the key to being able to do this easily is constantly having bigger and better leads to spend your time on.

The way to ensure this is through doing ongoing prospecting. When you're prospecting 10-12 hours a week, you're constantly swimming in an abundance of opportunity. You're continually digging-up bigger and better leads to work on, and you feel as if the real estate gods are constantly smiling on you. Show me an agent who doesn't have an abundance of opportunities to work on, and I'll show you an agent who probably hasn't been doing their prospecting.

Keep in mind that there's always an abundance of new opportunity out there just waiting to be discovered by you. The fact that you have tens or hundreds of agents working in your area all closing transactions every year that you're not involved in proves this. But what you'll now be doing by prospecting 10-12 hours a week is redirecting these leads your way, instead of passively letting them go to your competitors instead.

In addition, when you're prospecting 10-12 hours a week, you become much more effective at getting all your other work done. You find yourself wasting very little time, and you begin communicating with more certainty to people, having them get in alignment with the direction you want them to move in more easily.

In summing-up, what we're talking about is making the choice between being excellent at your real estate business, or just being comfortable. Now mind you this involves not spending any additional time working in your business, but instead involves changing how you're spending your time right now during the hours you're already working.

With this in mind, how much more commission would YOU make in the next 12 months if you prospected 10-12 hours every week that you're working?

And if you like the answer to this question, just move forward now with no excuses, and get the prospecting done.

Click here if you'd like more information on my one-on-one coaching program to take your real estate productivity to the next level. One-on-one coaching is available for both real estate agents and company management.

Click Here for More Testimonials

Subscribers to my E-newsletter receive FREE online training. My training course is designed to take you to the next level in your real estate sales career regardless of where you are currently at in your career right now. If you're not currently a subscriber to my FREE E-newsletter and you'd like to subscribe and receive my FREE 7-Day Online Real Estate Training Course, click here.

If you arrange for me to lead a seminar or training for your real estate company you qualify for FREE coaching! Call me or email me for more information.

Please forward this E-zine to anyone you know who is interested in becoming a better, more productive real estate agent.

To subscribe to Jim Gillespie's 
Advanced Real Estate Supersales E-zine

 Click Here

To unsubscribe and bring tears to my eyes follow the directions below.