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Tim Peters, Winning Fee Objections

The ability to work a fee objection in your favour is a skill that takes time to develop. Tim Peters from Peters Real Estate in Maitland, NSW, is sharing one of his best responses with Real Estate Academy CEO Lee Woodward.

Scenario: an inbound phone call from a vendor asking for agents’ fees. This is a cold call and is no established relationship with this vendor.

Tim Peters: Hello, Peters Real Estate.

Lee Woodward: Yes, I’d like to talk to a sales person please.

TP: Yeah, I’ll just put you through to Tim Peters, the principal of the company.

LW: Yes, hello, is that Tim?

TP: Yes it is.

LW: Yes, hello, I’m thinking of putting my property on the market, and I’ve been ringing around all the agents this morning and I just need to know what are your fees?

TP: I’m speaking to?

LW: Lee Woodward.

TP: Lee, can I ask in the whole transaction of your property what’s the most important thing to you – how much the agent gets or how much you get?

LW: How much I get?

TP: So, would it be fair to say that you’re looking for the best agent, not the agent charging the lowest fee?

LW: But I want to know what you guys charge, because there seems to be a big discrepancy.

TP: There is a big discrepancy, not just in fees, but in service delivery; that much I can tell you. Is it a property you’ve bought yourself or one you’ve built?

LW: Ah no, it’s a property we purchased five years ago.

TP: Can I just take you back to that time for a moment?

LW: Yeah certainly.

TP: OK. Five years ago, how much was it on the market for?

LW: $455,000

TP: $455,000, and what did you pay for the property?

LW: We got it for $438,000.

TP: $438,000, and Lee how long had you been looking for?

LW: About 2-3 months.

TP: And how did this one stand up to the rest you saw?

LW: It was pretty good. There were a few out there, but this was the one we wanted.

TP: This is the one you identified, after 2-3 months, that you wanted to buy?

LW: Correct.

TP: Not a whole lot of fun after the second or third month of looking.

LW: No, not at all.

TP: The kids start to get a bit tired of the whole process?

LW: For sure.

TP: So, what was your first offer?

LW: We offered $425,000.

TP: $425,000, what happened from there?

LW: Back and forth, back and forth; we ended up settling on the $438,000.

TP: OK, can I just take you back to that time? You’ve identified this was the best property over 2-3 months. If you had to, would you have paid $445,000 for this property?

LW: Oh, possibly, I thought it was a pretty good bargain.

TP: Possibly. You thought it was a pretty good buy. At $438,000 it was. At $445,000 you said possibly. I’d put it to you probably you would. I’d put it to you would you have paid $450,000.

LW: Probably not.

TP: Maybe. If I said thanks for the offer at $438,000 Lee, but the people are prepared to sell the property to you today for $448,000 and that’s their final proposition.

LW: Yeah, I probably would have taken it.

TP: But you paid $438,000.

LW: Correct.

TP: So would it be fair to say the real estate agent has a direct impact on your final sale price?

LW: It does, but this time selling I just want to get the best deal I can.

TP: That’s where I’m going here. You told me you paid $438,000 for the property when you purchased it, but you would have paid $448,000.

LW: Yeah probably.

TP: Have you seen anything like a $10,000 differential between the fees from the agents you’ve spoken to today?

LW: No.

TP: What a good agent will bring to the table is negotiation skills.

LW: I appreciate that Tim, but I just want the cheapest rate I can get.

TP: The cheapest rate, OK. You’re probably talking about a low fee, not a cheap fee.

LW: What do you mean, Tim?

TP: An agent may charge you a low fee, but not a cheap fee. The cheapest fee is the agent who gives you the most in the hand.

LW: I appreciate that but Tim, agents are all the same.

TP: Do you have school children?

LW: Yes I do.

TP: Do you think a school teacher has a direct impact on your child’s school results?

LW: Of course, a great teacher would always have an impact.

TP: And a poor teacher would have a bad impact. That’s what I’m saying here, in terms of what an agent will do. Do you follow any team sport?

LW: Yes I do, I follow the football.

TP: Football - so you know who Andrew Johns is?

LW: Yes I do.

TP: At the height of the Super League war he was paid somewhere in the order of $700,000 to play for the Knights. Now, the Knights could have gone out and hired a half back from Maitland Miners, Cessnock Goannas or Macquarie Scorpions for probably 7 or 8 per cent that price, but they got a half back who could change the result. His fee on the face of it looked higher, but it was a cheap fee because of the results he got. And that’s what I’m saying to you - not every real estate agent is the same. Any real estate agent can sell your property, but not every real estate can get you the highest price.

LW: Tim, all agents are the same.

TP: You think so?

LW: I do. You’ve all got websites and local press; you all do open houses; you wear the same suits and cars. You all seem the same to me.

TP: OK. There is not a whole lot of differential between the marketing; some of us have better websites than others, better window displays or signage. But the major thing you are looking for when hiring an agent is a negotiator. What is it that you do yourself, Lee?

LW: Tim, I’m a plumber.

TP: A plumber, that’s a very honourable trade.

LW: Very much so.

TP: How would you rate yourself as a plumber?

LW: Very good. All my work is from referral. I do a good job and I’ve had a good name in the area for a long time.

TP: I’ve certainly seen your name about, and you do have a good reputation. Can I ask you, are all plumbers the same?

LW: No they’re not; there are some shockers out there and they do the wrong thing by the elderly.

TP: And you’d be going to fix a lot of their work, I bet?

LW: Yes I am.

TP: We do the same thing; we’ve gone in to a lot of other people’s properties where the marketing hasn’t been put in place or they’ve hired someone that is not even remotely what you’d describe as a negotiator. So you’re telling me that not all plumbers are the same, and I’ll put it to you that not all real estate agents are the same either.

LW: Tim, I like everything you’ve said to me, however the other agents I’ve interviewed have offered me a far cheaper rate, and I’m getting excited. I think I’ll just go with that deal.

TP: We’ve been having this discussion around fees for just short on 10 minutes. It’s been quite amusing; I have made a few points, fair to say Lee, you’re a pretty tough negotiator.

LW: Look, I want to make sure I get the best deal I can.

TP: I understand that. If you hire one of these agents who is giving you a low fee, you may have hired yourself a weak negotiator. And what happens with someone coming along to buy the property if your house is being represented by a weak negotiator? Do you think you’re going to get the best result?

LW: I hadn’t thought about it that way.

TP: I think you should think about it that way if you want the best outcome.  

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Tim Peters