At Inman Connect Las Vegas, July 30-Aug. 1, 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.
There will be winners and losers due to the changes coming to real estate. In this interview, Tom Ferry breaks down the mindset and scripts agents need to know for success in the post-National Association of Realtors settlement era.
“I’m three decades into this business,” Ferry said. “This is a once-in-a-lifetime opportunity! No different than when you look back over the history of all great businesses, most of them started during recessions, depressions or moments of change. This is not a recession or depression, but it is a moment of change.”
So, if your mindset is that this is the single greatest time to be alive because I have a ton of value to deliver, I love serving customers, and I am a great problem solver, you’re going to love this market. But if you got too comfortable in 2021 playing pitch and catch, and constantly being thrown the ball, even if you whiffed and you thought you had skills, this market will be a challenge for you.
Gary Keller said it best: “We’ve gone from a speed market to a skills market.” If you can make this transition and develop your skills, you’re going to be just fine.”
After the initial conversation on mindset, we dove right into one of the most common questions sellers have right now. The following are specific scripts he shared that can be put into practice immediately.
Seller: ‘I hear I don’t have to pay the buyer’s side commission anymore. Is that true?’
This is the role-play scripting Ferry discussed when agents receive the question above: “So I’ve had a number of homeowners mention this; tell me what your perspective is on what you’ve heard.” The potential seller says something like, “Well, I’ve just been hearing on the news that things have changed and I don’t want to pay for the buyer’s agent’s commission if I don’t have to.”
Ferry then continued, “When you go deeper into those articles there is a lot to unpack. The first thing I would ask is, ‘What’s most important to you? Is it the highest possible net or is it the fee that we charge?'” (The owner answers “highest possible net,” of course.)
Knowing that the highest possible net is your main goal, if I could get you the highest possible net without paying the buyer’s side commission, you would be interested in that, correct? [Owner answers yes] I would be too, but in my [however many] years in the business, I have yet to see one play out that way.
It’s more likely in a market like this and with a magnificent home like yours that we will have a lot of interest in your home, but if we don’t use the most important tool in all of business then we won’t be able to maximize your net. You know what that tool is? It is an incentive.
You mentioned earlier that you are a schoolteacher and I’m sure you’re a great one. You understand as a teacher that after a certain amount of time you have a very special incentive. That incentive is tenure. But you also have that pension or retirement fund as an incentive as well. If that tenure, or pension were suddenly removed, do you think we would have as many great schoolteachers as we have now?
Ferry then said, “The key is to always use examples that the average person can relate to, and everybody can relate to compensation, getting paid and incentives. Understanding this, share stories the person you are communicating with can relate to in their own life.”
Protip
Ferry then encouraged agents to take the time to review their local MLS to see what percentage of homes are currently listed for sale north of their local average. He mentioned he had looked at the Colorado Springs, Phoenix and Atlanta markets, markets where Zillow kind of goes to test things out, to see if there was a trend happening regarding not offering buyer-side compensation. He said in those three markets that, as of now, fewer than 1 percent of listings are offering 0 percent buyer’s side compensation.
He said, “We know it will be zero come Aug. 17, so this is something you can utilize up to Aug. 17 or a few weeks after. But knowing the numbers in your local market now can provide insight into how to educate your potential listing on the current environment for your local market.”
This is how Ferry suggested communicating this with the seller,
So I took the time to look at the data in our local MLS. I pulled out all the homes that were sold in the last 30 days and all the homes currently listed for sale. Let me show you what I found. As you can see here, roughly 95 percent of all the homes currently for sale are offering an incentive of buyer’s side commission for the more than 20,000 agents in our marketplace to bring their buyers to those properties.
So, I guess one of the questions we must ask ourselves is if our aim, as you mentioned earlier, is to get the highest possible net proceeds from the sale of your home, then in my study of business there has never been a path through cutting costs that anyone or any business achieved the type of record-setting results they wanted. What they did instead is to offer as many incentives as possible to receive the result they desired.
Based on 95 percent of our competition offering buyer’s side compensation, do we want to disincentivize 95 percent of the market and focus on 5 percent? Or do we want to get 100 percent of the buyers in the market looking at your home to allow me ultimately to negotiate the highest possible net price and terms for your home?
The dual agency question
Ferry said another big question in a market that is hot is that the seller might say “I’m okay if you represent the buyer; I just don’t want to pay the buy-side commission.” Ferry shared his opinion and script for answering this question with the potential for dual agency (always being mindful of your state and brokerage rules regarding dual agency).
After being in the business [however long you’ve been in the business], I’ve found that it is always in the best interest of the person hiring me today, which is you, that I am not put in a position of negotiating against you with a buyer. Maybe there’s the rare occasion where a couple is getting divorced and they can hire one attorney, but I’ve not seen one in my lifetime.
In almost every case, you need someone to represent you and to make sure they are negotiating on your behalf. So, if I were to procure a buyer who was unrepresented and hadn’t signed a buyer broker agreement with someone else, let me explain what I would do. I would give the buyer to another agent in my office because my job is to serve you, and if I’m serving two masters, guess who I’m ultimately serving: myself.
I’m not here to just list and sell your home. What I want at the end of this transaction is your five-star review. I want you to tell people about how I was able to stop all the problems and make this as easy and stress-free as possible for you. I ultimately want to earn multiple referrals from you because you can’t help but tell others that they must use me because of the great experience you had. I just don’t know how that can happen representing you and the buyer of your home.
The key to all scripting is to mold them into your own voice. Remember, the scripts Ferry shared will only work in your business if you put them into practice. Take full advantage of the opportunity this change has created, and your business will never be the same.
