Never give your money away

Unfortunately, there is a very common practice of amateur real estate agents: chipping in money to get a deal together.

Chipping in money to get a deal together is a subset of discounting your fee. You either charge a full fee or you do not. Therefore, if you charge a full fee but then give it away - you are a discount agent.

As Steve Shull says, "if your client needs your $____ to buy the house, they shouldn't be buying a house!" You really gotta get that: NO ONE, and I mean NO ONE, needs your commission to buy or sell. Even when people are underwater on their homes. They are adults that made adult decisions, and every decision has ramifications. 

Back to chipping in, whether it is at the beginning of the deal, the middle, or at the end, it is an absolutely terrible practice. 

First off, realtors are not part of the transaction. Most state-drafted real estate contracts say that the purchase contract is an agreement entered into by seller and buyer. Agent commissions are specified elsewhere - like in the listing agreement and in the MLS (for the buyer's agent)

Would anyone disagree that the commission is clearly specified OUTSIDE of any purchase agreement between seller and buyer?

Okay, so why do agents give their money away, and why should younever do it.

First, why do agents do it? Because they are desperate for business. Most human beings, and especially real estate agents, have a scarcity mindset and are wired for fear. They fear if they don't do something to make the deal go together they will do no business, ie. make no money. Hence, something is better than nothing.

Many agents are not aware that scarcity and fear are what is driving them. Nor are they spending much time on their professional development so that they are clear and confident in their ability to negotiate for their own money. (Which is why many agents discount their fee to get business - a whole other discussion)

Giving your money away is a BAD habit. You are what you repeatedly do. If you constantly give in, then what kind of negotiator are you? How can you take a stand for the service and value provided when you are often giving in? In other words, every time you give in (separate from giv-ing), you degrade yourself. You are saying some version of - implicitly or explicitly:

• I don't believe in my ability to negotiate
• I don't believe that there is more business out there
• I don't believe I can do business with great clients who are willing to pay my fee and/or don't ask for my money back

Real estate has no true education and training. You are required to obtain a license, but there really is no formal training on how to be a professional realtor. Conversely, if you go to medical school (for four years), you then have at least four more years of residency to be trained in how to be a good physician. Real estate: 4 months to get your license. Then go practice on people and (often) large financial transactions. Most of the training that people receive (if any) is about how to "get" business. You know what I am talking about: how to cajole, convince, and close people, often at any cost.

Great! Let me hire a surgeon who gets and does business at 'any cost'. Let me hire an attorney who gets and does business at 'any cost'. Or let me hire a financial advisor who gets and does business at 'any cost'. That's absolutely ridiculous! This profession has NO FORMAL STANDARDS! It is simply a Wild West of who can beat their chest the loudest. 

Sure, there are plenty of agents who are truly exceptional. Unfortunately, they are the minority, and they are usually NOT the ones being modeled in training and development programs.

While this rant took many turns, the main point is this: if you are giving your money away to either get business and/or keep deals together - you are not being a professional. Anyone can give away their money. The moment you take a stand to get paid what you are worth, what you are worth increases. You become the standard you set for yourself.