Commercial Property Agents – Do Not Discount Fees

Office property tower
Every property sale or lease today takes real strategy and effort

In commercial real estate today, we see far too many agents offer discounts and marketing cost benefits as part of the sales presentation or pitch.  If the client is looking for a discount before they will make a decision on the listing, then they are not the client that you need.  It is better to walk away from these clients.  If they are basing their listing decision on ‘cheap’ and ‘shortcuts’ they are likely to be difficult clients when it comes to negotiations with serious and reasonable prospects.  Here is a tip from our Newsletter.

In this market buyers or tenants are very aware of market conditions, and they will not offer above market prices or rents, or enter into unrealistic negotiations with unmotivated vendors or landlords.  There are lots of other properties to choose from today.

The reality of commercial real estate market today is that sales and leasing transactions are slow and difficult to put together.  The average transaction does not occur quickly or easily.  Real focus and effort is required on the part of the salesperson or agency to resolve the property pain for the client, and that takes time and a strategy.  The word ‘discount’ doesn’t feature as a requirement or have any relevance.

Discounted commission or discounted fees in the sale or lease process create the following issues:

  • The agent will be more inclined to work on properties where the fee is more realistic and appropriate for the volume of work concerned.
  • The agent knows that the client is not totally committed to the sale or lease process and on that basis it is more likely to be an adversary in the marketing and negotiation activity.
  • Sometimes a client will look to the agent to cover the marketing costs as part of the promotional campaign.  Most agents in that case will selectively and restrictively market the property within a small budget.

The reality of property sales and leasing today says that we have fewer buyers and tenants to work with for the average property listing.  Levels of enquiry are slower and negotiations are longer.  Getting the message out to the marketplace is more important than ever before.

So the best agents today in their sales or listing presentation will firmly commit to the following process in front of the client.

  1. They will define the best strategy and timing to take the property to the market.  This will include due consideration for market conditions, competitive properties, methods of promotion, levels of enquiry, and pricing or rental strategy.
  2. They will comprehensively determine the target market that best suits the property to be promoted.  When the target market has been defined, it is much easier to create a specific marketing campaign and seeking vendor paid marketing funds.
  3. They will recommend the marketing campaign across a number of initiatives relevant to the target market.  Most marketing campaigns run for a period of six or eight weeks and then slow right down.  A full 60% to 70% of the marketing funds should be spent and committed to the first half of the campaign.  This is how you build momentum and enquiry.  It should also be said that the every aspect of the marketing campaign should be tracked for results; if something is not working, you change it.
  4. Good agents will personally commit to direct marketing including canvassing the streets and businesses, cold calling, and database contact and review.

There are many more reasons to appoint an agent on a full commission than to provide discounts.  Clients should be given the specific reasons why discounts and shortcuts do not work in this market.

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Author: John Highman

Commercial Real Estate Broker, Coach, Speaker, Author, Broadcaster.