Saturday, June 16, 2012

Commercial Property Agents - Tips for Negotiating Commission

businessmen meeting for lunch
So they want to discount your commission?

From a commercial real estate agents point of view, the commission that you charge is the lifeblood of your business.  The process of discounting commission at the request of the clients we act for should be declined at every opportunity.  The real question is how can we do that and on what basis?

Discounting commission in the sale or lease of commercial property is a poor a business decision given the large degree of intense work required in this property market today to achieve a successful transaction on behalf of the client.  Specialist commercial agents work really hard and they know their property market very well.  That requires a fair and reasonable commission in keeping with the successful outcome that can be obtained.

The fact of the matter is that the commission is not paid until the transaction is completed.  Through the process there are some clear strategies and issues to be implemented on behalf of the client by the agent.  Try some of these as an example:

  1. Comprehensively listing the property so that all the details issues and hurdles are addressed prior to the marketing commencement
  2. Giving the client a substantial marketing strategy that addresses the property type, the prevailing market conditions, and the target audience.
  3. Promoting the property through the different media channels to attract enquiry during the campaign
  4. Qualifying prospects when they approach you for more property detail.
  5. Reviewing your database for any previously identified prospects that may now be considered candidates for the new listing.
  6. Directly promoting the property on a one on one basis to property investors and local business proprietors.
  7. Taking qualified prospects through the listing details and to the property and in doing so, showing them the features that are relevant to their needs.
  8. Negotiating the best outcome for the client based on the factors of the prospect, the attributes of the property, and the pressures of the surrounding competing listings.
  9. Documenting the sale or lease as the case may be so it can be facilitated and closed successfully by the clients solicitor in an effective way.
  10. Protecting the client's interests through closely monitoring the transaction and the terms and conditions of the deal
  11. Identifying any further changes and conditions that can have an impact on the clients best interests

It is very easy to use lists like this with your client so they can see that the discounted commission process is really counterproductive.  If they want a discount your fees or commissions, ask them what parts of the above points they would like removed from your services.  It's an interesting question.