Increasing Sellers Net Profits

In today's tough market, many sellers are leaning away from the full priced commission. Depending upon the sellers personal circumstance, the properties declining sales price simply may not warrant the agent insisting upon top dollar commissions that could range from 5-6% of the actual purchase price.

Some markets are overwhelmed with distress sales such as short sales, where the sales price is lower than the encumbrance on the property. In these cases, the seller will likely not receive any proceeds from the sale, and the commission amount payable to the agents on both sides of the transaction must be approved by the homeowners lender.

Because of the wave of flat fee and limited service brokerages, it is important for brokers and agents alike to move with the tide. Changes are on the horizon, and the set-in-stone commission pricing mentality is becoming a thing of the past. Providing options for sellers will become a critical aspect of successfully servicing your client base.

Other things that you can do to increase sellers net profits include:

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  Educating your clients about all aspects of the market, and getting them to understand the true value of their property in a declining market. Pricing the home appropriately up front enhances the profit to the seller by eliminating wasted days on market times at the wrong pricing, and loss of potential prospective buyers.
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  Understand your clients needs up front and their circumstances. This is achieved by asking pertinent questions at the listing appointment.
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  Obtaining the Preliminary Title report as early on in the process is also important, to determine whether or not there are any liens or encumbrances that the seller has forgotten or was unaware of.
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  Obtain a copy of the deed to review how the title is held can also avoid potential delays to the escrow by catching any problems in advance.
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  Prepare a detailed sellers net sheet in order to provide both you and the seller a clear picture of profits and fees paid, including commissions.
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  Obtain pre-listing inspections. Your sellers want to list a property as-is, but what does as-is really mean?

If you have pre-inspections in place, when you present the property for sale, you can say to the buyer... "The sale price is... the repair work is... the issues with this property are... and it is being sold as-is." Contract renegotiations often occur after an offer has been accepted and the inspections result in issues that neither buyer or seller were aware of. When problems and repair issues are identified up front, pricing adjustments can be discussed and made prior to posting the listing to the public.

The main objective is to increase your sellers net, while being fairly compensated for your professional services, however, determining how realistic your client is upfront is also vital.

How much time do you want to spend or waste with a client that you know is unrealistic? If they are insisting upon selling their home for 20% higher than comparable listings, in an oversaturated market; sometimes, it makes more sense to walk away, then accept a listing at a price that you know will not sell. - Jacalyn Evone, Broker