How To Raise Your Fees As A Real Estate Agent
By: Matt Giggs | January 8, 2024
Are you an estate agent wondering how to raise your fees? You’re in the right place. I’ve got some exciting content to share with you today about one of the biggest, most spoken about, and notoriously challenged subjects in our industry: fees. Specifically, How to Raise Your Fees 101. I’ve worked in the real estate market for a number of years and this has always been the biggest challenge for estate agents, so I hope you're looking forward to finding out more.
Before I go on, who am I to be talking to you about raising your fees? What are my qualifications? Well look, I've been in the estate agency industry now for 28 years. I started as a trainee, and I've become a trainer. I've been a director and MD (managing director), as well as a company owner, and I've founded the Giggs Group. But for a long time now I've been coaching and managing estate agents to improve their businesses. So if you're an estate agent who's looking to scale your career without sleaze, or you're a business owner in estate agency, I suggest you continue reading.
So, how do you raise your fees? Well, you know raising them will improve your business's income, revenue, and commissions. It's your future investment. Your fees are your livelihood, and they’re how you pay your team. In other words, raising your fees is how you reward people. It's a huge thing, right? And that's why there's so much pressure on agents to win the instruction, rather than to build trust with the client.
For me, how you improve and raise your fees 101 breaks down into 3 parts:
-Your mindset
-Your tangible value to your client
-Your ability to meet your client’s needs
Read on to learn more!
Raising your fees starts with your mindset
It all starts with your mindset and self-belief. You have to really believe in the value you bring to your client. What I'm going to share with you here is how to mentally prepare yourself to detach yourself from the competition and move away from trying to win the instruction. Instead, you’ll focus on building trust – make sure you also read “How estate agents build trust in the valuation process”, so you can start this process early.
Raising fees 101 isn't about me saying to you, “Go and ask for 2%, 3%, 1%, whatever.” It's about asking you what you value yourself at, because if you believe in your value it's a lot easier for the person on the receiving end to connect with it.
When I first started going out there putting houses on the market, I'm talking about the late '90s, I faced exactly the same problem when it came to raising my fees. Then, we were always up against another estate agent, maybe two, maybe three or even more. Because of that, we were always thinking, “How do I undercut? How do I overpromise the price in order to win the instruction?” And that's a mental mistake.
Your mindset will dictate your skill set, okay? Think about this just for a second, if you're going in there to win the instruction, how do you think that feels to the person on the receiving end?
You really have to change your perception of winning instructions, and I'm going to tell you right now, if you go out to give value, not get the instruction you will win more trust. That bears repeating: if you go out to give value not to win the instruction you are going to win more trust.
Focus on winning trust, not the instruction
So mentally you've got to understand this principle guys, it's very very difficult to lose an instruction if you've won trust. It's very difficult to lose a client if you’ve really won their trust.
Recently, I lost a listing, but what I've taken away from that is that I’d spent most of my time talking to the client showing my knowledge and my experience. I did that to the degree that what I was really showing them was that I was really keen to work with them, if that makes sense. I was probably feeling a little bit insecure while I was out there because I was so keen to get it.
Why was I insecure about this one? Because they mentioned to me that they'd gone on this site where you can get three estate agents to come out and value your property. I was one of the three, so mentally I'm in this block. I'm in this place where all of a sudden I'm thinking I'm one of three, but I'm not. I'm me. I'm one of one, right? There's nobody else.
When you're mentally preparing to go out there and see a client and to value their home, you are not competing with anyone else. You are just competing with yourself. I want you to immerse yourself in two things:
-your mental preparation, and
-your appointment.
When you're in there your focus should be on how effectively present are. If you do that, you’re going to be ready with the answers to their questions. You’re going to pick up on those nuances that help you build the relationship and understand their needs. That will allow you to give the best solutions to their problems and take them on their journey forward.
You won’t win every time - no matter what your fees are
A common misconception is that fees are the reason why you don't win the listing. That’s not it, it’s all about trust. If I had someone round to my house today and I just felt they were talking at me a bit too much and they were a bit too keen, or maybe even desperate, I'm not sure I would want to use them either.
Here's a tip for you about the mindset – be prepared to lose and learn that you're not going to win everything. What can you take away as a lesson for moving forward is to go in there without fear of who you're competing with. Instead, I want you to go in with focus. I want you to go in there and really understand what this appointment is going to be all about before you get there.
How do you absolutely win before you've been? What's your process mentally? What's your process of always being ahead of your expectations and of their expectations before you've arrived? Think about what the communication has been like before you've even gone there. That way, you know the client before you arrive and feel more prepared. Your mind’s on the game, you feel clear about the kind of clients that they are and what they're going to value the most. You know whether they’ll want data, stories, inspiration, or directness. When you know that before you arrive, you'll be prepared with the answers to their questions.
If you know what the client wants from you before you arrive at the meeting, you’ll be able to raise your fees, build trust, and win the instruction.
Prepare yourself to meet their needs
When you arrive at a property, you can see from the outside what kind of client you're about to work with. You can see from the presentation and from the communication that you've had before you arrive how important this appointment is for this kind of client. That’s going to help you in terms of you communicating in the best way. All of this is about mental preparation.
There are steps here that you can take mentally to prepare. The first thing is to think about your value and believe in it, right? You need to know why you are the agent for these clients to work with, and that's not going to be because you're undercutting and overpricing. It's because you are going to meet their needs, okay?
During this process of believing in what you can do for your clients, stack up the value that you've got in yourself first. You’ve got to pump that right up before you start – if you don’t believe it, why should they? To help, you need to have things prepared before you speak to them.
Soon, I’ll be publishing a post that lays out the steps that you can take to lay out the structure of the appointment so you’re actually in control of getting them to their outcome. That will strengthen your mental preparation even more than what we’ve talked about here. In the meantime, remember that it's all about mindset because if you get your mindset right the skill set will follow.
Provide tangible value to raise your rates
The second thing you need to understand to raise your rates is what tangible value you bring to that client and how to communicate that to them. So what I'm going to say to you here is that you need to know right now how good you are at working for this particular client. Why? Because we're talking about clients that are selling their homes, so what are they going to want to see and feel from you? What is it about you that will take you beyond anybody else?
One of the first things you need to know is what difference you actually make for your existing clients right now. You can have testimonials, for sure! People talking you up, absolutely! Five-star reviews and the works, but most clients are really interested in what goes in their back pocket.
It's their net value that you want to be focusing on, so the biggest thing that you want to talk about is how you negotiate with buyers. This is especially true in 2024 because we are in a buyer’s market.
What value do you bring in terms of negotiation?
Here's a tip for you guys, look at your last 10 sales. Look at the first offer that was made and then look at the offer that you sold at. What's the gap between those numbers? Once you have that number for each of your last 10 sales, add them all together and divide by 10 – that’s your average.
For example, if you've got 10 sales and on average, you negotiate to raise the price by £10,000, that's £10,000 of proof to your client that you can negotiate on their behalf.
Now if you think about the average price range in your area, it could be £300,000, £500,000, whatever it is, you'll have an average negotiation level that evidences your value for their equity. That will show them that you can handle their equity. That’s the value that you can bring to the client – the money you can put in their back pocket.
But let's not forget the other factors around the market. When you're in a buyer's market, you're seeing estate agents drop prices like there's no tomorrow, right? In one market that I've worked in with a client recently, the average price reduction for sales was around 7% of the initial asking price. That means you've got estate agents taking 7% of someone's equity.
You need to have these figures for your clients because they need to know what the landscape of the market is. This is how you demonstrate your tangible value.
Winning in a buyer’s market
When you talk to your clients about the reductions that vendors are making across your marketplace, you need to emphasise what you're bringing to the table, your value of negotiation. You need to show them that though the current market may mean they’ll have to accept less than they’d like, your negotiation skills – evidenced by the average you calculated before the meeting – mean that you can protect their equity.
In other words, you're compounding your value as an estate agent. If you haven't got those figures to hand, then it's time right now to go and find out what they are.
Really, get the figures now, because if you don't know them, how can you be prepared to answer those questions about why you’re more expensive than the other agent?
To start answering that question, you're not more expensive than most agents, since agents don't charge a fee up front these days. It's all on completion, so what's the risk if you invest in the right agent, right? That's what we're looking to get across here, it's your tangible value that allows you to raise your fees.
Meet your client’s needs to raise your rates
The third thing you need to know if you want to raise your rates is that your client’s needs come first, not yours. Like I said above, you’ve got to go in with a give not a get mentality. You've got to go in and understand what it is that they're looking to achieve. What are their goals? What are their desires? What are their outcomes? What's their impressions of the market?
In short, you need to be walking a mile in their shoes, not your brogues, okay? You need to be thinking about your clients, not you and when you're desperately trying to win an instruction because someone's going to give you a hard time if you don’t, or you want to pay the bills, or whatever it is. If you don’t focus on their needs, your desperation will come across – people smell desperation and no one buys desperation. But they bloody do buy confidence, right?
So, you’ve got to be confident that you know what they're looking to achieve. Ask what is their goal? What is their outcome? Where are they looking to get to? You need to know the answers to these questions and know that your plan will take care of it. That’s where your confidence comes in.
Want to raise your rates? Have a plan!
So many businesses that I’ve coached and mentored have come to me and asked for my support and help. When I ask them what their goals are and what they want to achieve, they can give me those. But then I say “Well, where's your plan?”, they don't have one.
Come on, we're in 2024 – you know how to build a plan. It doesn't have to be mega detailed, but you've got to be able to show someone how you're going to take them from where they are to their goals, to their dreams, to their desires, to their outcome. You’ve got to have a plan.
No matter what kind of vendor we're talking about, everyone needs to have a goal when it comes to selling their home. If you don't know what it is and why it really matters to your client, you're missing out.
So there you have it, there are my three steps for How to Raise Your Fees 101. Now, I have so much more to give than just these three steps, but I don't want to take up all your time today. Take these three away, and if you like them share the post with your colleagues. If you've got something to say or ask, pop it in the comments. Don't forget to subscribe – you're going to get to see more and more content which is going to help you fulfil your needs in terms of building and scaling your estate agencies. Finally, check out my YouTube channel for more great content. Thank you so much for coming on this journey with me. I look forward to sharing more soon.
